Ruggernomics: Why the RWC isn’t worth a damn thing to the NZ economy

Don’t believe the hype: Win or lose this Sunday, it will still be business as usual come Monday morning.

If rugby is the national religion – and it surely is – then this Sunday is Easter, Diwali and Ramadan all rolled into one. The long awaited Rugby World Cup final is almost here and with it comes the energy, optimism and soaring national spirit that always accompanies the expectation of the All Blacks smashing their way to victory.

And as a Kiwi, it’s hard not to be have at least some personal investment in our national Very Good Thing. What’s not to love? A win on Sunday would be good for the national ego and good for our global brand. But could a win also be good for the economy? Inversely, could a loss – God forbid – be bad for business?

Lots of people seem to think so. Good sport and a healthy country go hand in hand here, right?

It certainly seemed so back in 2011, when the talking heads couldn’t stop jabbering about the amazing economic windfalls that hosting the Rugby World Cup here would provide. The tourists! The exposure! A euphoric, spend-thrift population! The general opinion was that hosting the RWC equalled economic boom times and anyone who said different was either stupid, ignorant or some kind of traitor.

And it all looked so great on paper. Research from Mastercard, the tournament’s main sponsor, forecasted that visitors could spend up to 782 million rugby-related dollars, resulting in a projected economic win of $411 million. At the time, it seemed to make a lot of sense. After all, there’s something about the game that can’t help but invigorate the market, like a bracing wind that stimulates the national blood. We know this on a gut level.

It’s all hogwash, of course. Participating in, and even hosting these sorts of events, rarely offers much of an economic benefit, even a modest one. Usually, they run at a loss.

Sadly, the ruggernomics just doesn’t add up.

“The projected figures are always totally overblown,” says economist Shamubeel Eaqub. “The forecast numbers released just before an event like the Rugby World Cup are usually only done to justify what we’ve already decided we’re going to do.”

Eaqub says that the heady numbers floated before a major sporting event, like Mastercard’s $782m figure above, almost never match up the economic reality. 

“The statistics we hear are not really independent,” he says. “They’re bits of documents used for lobbying. There’s an industry that exists to create these kinds of numbers, but big events are not the key to economic prosperity.”

“There is also a very consistent pattern. The studies that predict the economic impact estimates always centre around 1.0% of GDP. Post-event studies shows that it’s more like 0.01% of GDP. It’s very consistent over a long period of time. And that’s not because it’s difficult to measure, it’s because the predictions have been made for lobbying purposes.”

“There’s not a magic money tree that responds to the Rugby World Cup. We haven’t created new money in the economy. The money has to come from somewhere, and there’s always winners and losers.”

“New Zealand Rugby are the winners here”.

But while hosting international sporting events here may not deliver on those exaggerated economic promises, surely there’s emotional capital to be gained with an All Black win this weekend, right? National pride and all that? Won’t our expected national euphoria translate into ringing tills?

Not according to Associate Professor and sport sociologist Toni Bruce, from the Faculty of Education and Social Work at Auckland University, who says that the country’s love affair with the game may in fact be waning.

Dr Bruce found that only 37 percent of respondents to a survey she’s conducting indicate that they are personally invested in the outcome of the Rugby World Cup. The vast majority on the other hand do not see winning the Cup as personally important to them

“These are people who are uninterested in rugby or the Rugby World Cup, including some who are actively resistant to what they see as rugby’s dominance of New Zealand’s cultural life,” she says.

“They don’t like what they see as the link to violence, the increasing commercialisation of the All Blacks, or the way that New Zealanders invest so much of their identity into sport.”

Dr Bruce says 63% of respondents report making little or no effort to follow the Cup.

But maybe that will all change come Sunday. Parliament has passed new legislation to allow bars to open, and for patrons to drink in those bars during the game, so at least the hospitality industry can look forward to their best Sunday morning ever, right?

With some estimating 90 percent of fans will be watching the game from home, and just over a third watching the game alone, probably not.

So don’t believe the hype. If we win on Sunday, and I sure hope we do, the economic impact will be this: precious little. At best a half day bump enjoyed by liquor stores and fast food outlets. And if we lose? Probably the same.

And come Monday morning, in spite of the hangovers, things will be back to business as usual.