Twenty-point-four million dollars in cash. That’s what the New Zealand Rugby banked the last time the British and Irish Lions toured here.
It is best known for Dan Carter’s coming-of-age party and Brian O’Driscoll’s controversial shoulder injury, however it’s arguable the most dramatic thing the tour produced was the boost to New Zealand Rugby’s bank balance.
Crunching the numbers from 2005, it’s no wonder New Zealand Rugby have prioritised the 2017 Lions tour ahead of, well, everything. It’s not every year – or even every decade – that rugby’s version of Santa Claus drops by with a swag bag of cash that will more than treble the governing body’s income and increase its asset base by over 20 per cent almost overnight.
That is exactly what happened in 2005.
Of the 360,000 available tickets for the 11 matches, 355,000 were sold, with a good chunk claimed by 29,000 tourists from the United Kingdom.
Figures from New Zealand Rugby’s 2005 annual report show those visitors generated estimated foreign exchange gains for the country of $120M, and a total economic benefit of $250M. While the methodology used in economic impact reporting can be malleable, the $20.4m banked by the NZRU is a rock-solid figure.
The effect on the organisation’s balance sheet was dramatic.
In the previous financial year, when the All Blacks played in the Tri-Nations, hosted two June tests against England and one against Argentina before undertaking a four-match Northern Hemisphere tour, revenue from fixtures and tours was $9.24m, and total income from all sources $104.904m.
In 2005, revenue from fixtures and tours climbed to $33.904m (an increase of $24.649m) and total income was up nearly $42m to $146.675m.
The value of assets held by NZR increased from $84.458M to $108.839M – the increase almost entirely made up of the near 25 million extra dollars banked thanks to the Lions Tour (NZR’s financial reports show $34.181M cash in the bank – up from $9.028M).
The Lions practically defecate money.
“It was a year to treasure,” then NZRU chairman the late Jock Hobbs in a press release accompanying the 2005 annual report. “A year which proved that, by working closely and cohesively, New Zealand rugby is capable of making – and keeping – big promises.”
And cashing in when the opportunity presents itself.
With the storm clouds of the GFC gathering, the money banked in 2005 would be needed. A year later, New Zealand Rugby’s financial outlook was significantly less rosy. The game’s revenue declined a whopping 36 percent in 2006. Of the $53.4m drop, $34m was directly attributable to not having a Lions series to host. Another $19m was due to exchange rate fluctuations and $10m due to a back-ended broadcasting agreement coming to a close.
“The 2006 financial result highlights the fact that, with approximately two-thirds of our revenue generated in foreign currency, we are very vulnerable to exchange rate movements,” then chief executive Chris Moller noted.
By 2008, another key pressure was coming to bear. Spectator interest in the game – particularly the once mighty NPC – had begun to wane, and even All Blacks test matches were no longer selling out.
“Significant pressure remains on the sustainability of rugby at the provincial and franchise level, and this pressure is intensified by the economic, competitive and preference factors which have seen some rugby fans choose to watch or attend less rugby than they have in the past,” Hobbs noted.
“We must address this issue. We must also do this in the context of the most severe economic downturn since the Great Depression.”
Had it not been for the 2005 Lions cash, the situation would have been vastly more grim. The windfall helped insulate the game financially at a difficult time, but the money would not last forever. Revenues needed to increase. With income from major sponsorship contracts and broadcast rights locked in, there was only one obvious option – to play more matches.
In 2008, for the first time, an extra Bledisloe Cup match was played in Hong Kong, creating much of the additional $7.8m in revenue generated that year. Additional matches – such as the now semi-regular trip to Chicago have become an accepted part of the All Blacks schedule. While they are lucrative, the returns pale in comparison to the goldrush of a Lions tour.
It remains to be seen, though, whether the 2017 tour will deliver similar returns as 2005.
Newsroom requested interviews with New Zealand Rugby officials and submitted questions relating to financial projections for the forthcoming tour but did not receive a response in time to be included in this version of this story.
We asked New Zealand Rugby how many tickets were available for sale during the tour and how many they hoped to sell.
Our calculations – based on ground capacities published on the official Lions website suggest the total number of tickets available will be similar to 2005 – approximately 357,548 (compared to 360,000).
While the 2017 tour will comprise one less match (10 instead of 11), New Zealand’s largest stadium, Eden Park, will host two of the three test matches. In a switch from the traditional tour structure, the Lions will play warm-up and mid-week matches largely against the Super Rugby franchises at major metropolitan stadiums rather than visit provinces such as Southland, Taranaki and Manawatu, as they did in 2005. The upshot is that the total number of available tickets remains similar to that of the 2005 tour.
Twelve years on from the last Lions tour, New Zealand Rugby is in a remarkably similar financial position. Its total assets are valued at $153,095m. In 2005, that figure was $108.839m which, adjusted for inflation, is $137.5m. In real terms, then, NZR has increased its asset base by just 11 per cent over 12 years.
In 2005, it took a little over six weeks to boost the game’s assets by more than double that – 22.5 per cent. That’s the reality of the Lion$ effect.
2005 Lions Tour
4 June v Bay of Plenty, Rotorua International Stadium W 34-20
8 June v Taranaki, Yarrow Stadium, W 36-14
11 June v New Zealand Māori, Waikato Stadium, Hamilton L 13-19
15 June v Wellington, Westpac Stadium W 23-6
18 June v Otago, Carisbrook W 30-19
21 June Southland, Rugby Park Stadium, Invercargill W 26-16
25 June New Zealand, Jade Stadium, Christchurch L 3-21
28 June Manawatu, Arena Manawatu, Palmerston North W 109-6
2 July New ZealandWestpac Stadium, Wellington L 18-48
5 July Auckland, Eden Park, Auckland W 17-13
9 July New Zealand , Eden Park, Auckland 9-38
TOTAL TICKET SALES: 355,000
2017 Lions of Tour of New Zealand with regular ground capacities
Game 1 – Saturday 3rd June 2017 Provincial Union Team, Toll Stadium, Whangarei 30,000
Game 2 – Wednesday 7th June 2017 Blues, Eden Park, Auckland 50,000
Game 3 – Saturday 10th June 2017 Crusaders, AMI Stadium Christchurch 18,000
Game 4 – Tuesday 13th June 2017 Highlanders, Forsyth Barr Stadium, Dunedin 30,748
Game 5 – Saturday 17th June 2017 Maori All Blacks, Rotorua International Stadium 34,000
Game 6 – Tuesday 20th June 2017 Chiefs, FMG Stadium Waikato, Hamilton 25,800
Game 7 – Saturday 24th June 2017 All Blacks, Eden Park Auckland 50,000
Game 8 – Tuesday 27th June 2017 Hurricanes, Westpac Stadium Wellington 34,500
Game 9 – Saturday 1st July 2017 All Blacks, Westpac Stadium Wellington 34,500
Game 10 – Saturday 8th July 2017 All Blacks, Eden Park Auckland 50,000
MAXIMUM POSSIBLE TICKET SALES: 357,548