The Economic Impact Of The 2011 Rugby World Cup In New Zealand

New Zealand’s hosting of the 2011 Rugby World Cup offers the country a unique opportunity for economic development on an unprecedented scale. Hosting global events is an inherently loss making business in the short term, but if leveraged correctly, the long term legacy benefits can go far beyond even the most optimistic expectations.

In 2010, it was estimated that the 2011 Rugby World Cup will make a NZ$39 million (US$30.4 million) loss, two thirds of which will be underwritten by the New Zealand Government and the other third by the New Zealand Rugby Union (NZRU). While this figure has yet to be updated in the wake of the Christchurch earthquake, the loss pales into insignificance compared to the NZ$700 million (US$546  million) that Reserve Bank of New Zealand governor Alan Bollard predicts the country’s hosting of the event will bring.

"New Zealand’s hosting of the 2011 Rugby World Cup offers the country a unique opportunity for economic development on an unprecedented scale"

The catalytic effect

The thing about estimates is that they are simply that, estimates. Whether the Rugby World Cup brings exactly an additional NZ$700 million (US$546 million) to the economy is largely irrelevant. What is more important to realise is the catalytic effect that the Rugby World Cup is having on New Zealand.

Hosting a major global event like the Rugby World Cup has the effect of focusing the attentions of the host nation. It creates a reason for internal reflection, which externally manifests itself in the creation of a long term development strategy, based around the event in question.

In New Zealand’s case, the country has invested over NZ$250 million (US$190 million) in infrastructure upgrades alone, including stadium refurbishments, as well as development of Queen’s Wharf, Auckland’s waterfront. The key here is that these developments would most likely have taken place anyway, but the country’s hosting of the RWC creates a catalyst to speed up development, as well as categorical deadlines which must be met, drastically reducing the likelihood of delays which all too often characterise public sector led development projects.  

In addition to these physical improvements, the real benefits, and value added, of hosting the RWC will come through New Zealand’s businesses being given the opportunity to market themselves on a global scale.

RWC 2011: The business opportunity

While it is easy to quantify the tourism benefit of the RWC in figures, it is far harder to do that with businesses. The benefits to New Zealand’s businesses are, however, potentially far greater in scope and longevity.

The tournament offers several immediate opportunities for New Zealand’s businesses: 1) Supplying goods and services to RWC 2011; 2) Business from those organisations associated with the tournament; 3) Joining the RWC 2011 commercial family as an official sponsor or official supplier; 4) Benefitting from the influx of people for customer service based companies; 5) Contracts or subcontracts related to the infrastructure build-up for the tournament. These direct benefits, however, are only the beginning of the business opportunities on offer.

"While it is easy to quantify the tourism benefit of the RWC in figures, it is far harder to do that with businesses. The benefits to New Zealand’s businesses are, however, potentially far greater in scope and longevity"

Auckland Plus, Auckland’s development agency, has placed great emphasis on foreign investor attraction in the build up to the RWC. The RWC 2011 business club offers opportunities that link local businesses to investment prospects. Launched in April 2010, the business club will see foreign businesspeople that visit New Zealand during the RWC hosted by local businesses who work in the same sector. Organisers hope that long term professional relationships will subsequently be built, which could encourage foreign direct investment in the future. In addition, in the build up to the RWC, Auckland Plus has also hosted a number of offshore events, such as the one in London in 2008, where the Auckland business brand has been promoted, with the opportunities offered by the RWC at the core of the conversation.

During the RWC itself, Auckland Plus will also be showcasing a number of chosen business sectors in events and displays on Queen’s Wharf. Playing to their strengths, Auckland Plus will look to showcase the offering of its food and wine,marine construction, information and communication technologies, health IT and biotech, as well as film industries. Queen’s Wharf will be the hub of activity for international visitors during the RWC and the event offers Auckland, and New Zealand, the opportunity to demonstrate their business aptitude to the world.

The world’s eyes are on New Zealand

Although the long term business benefits of hosting the RWC are largely intangible at present, New Zealand, and Auckland in particular, seem to be following a realistic and pragmatic strategy in pursuit of reaping the rewards of their investment.

The 2003 RWC in Australia generated AUD$494 million in additional industry sales in the Australian economy, created an additional 4,476 full and part-time jobs and provided the Australian Government with an additional AUD$55 million in revenue. Although the New Zealand economy is smaller than their Australian counterparts, the country seems determined to leverage the long term benefits of hosting the RWC by improving on the investment model that Australia created.

While hosting the RWC may make a headline loss, with an expected 85,000 international visitors and anticipated worldwide viewing figures of four billion, it is a marketing opportunity which New Zealand’s businesses and the economy as a whole could not afford to miss out on in the long term.

This Guest Blog was written exclusively for SportsPro by the editor of Rugby Spectator, Gareth Evans. For more opinion and insight from Gareth, follow him on Twitter.

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