- World Rugby bundled some media rights to 2015 and 2023 events together with 2019
- Japanese media rights increased more than tenfold in value
- Dentsu bought out 2019 official sponsor and supplier categories for £18m
When World Rugby, or the International Rugby Board as it was known at the time, voted to award the 2019 World Cup to Japan, it was perceived to be taking a commercial gamble. The unfavourable time zone threatened to undermine media rights sales for the competition in the lucrative French and British markets, while the comparative weakness of the host team had the potential to limit domestic interest and the local commercial programme.
The governing body chose to ignore the obstacles, believing that it would be neglecting its global mission if it continued to overlook the country’s hosting aspirations. Japan had also bid for the event in 2011, losing out to New Zealand, another host in a less than favourable time-zone but with a greater rugby pedigree.
“You can’t keep going around the usual suspects if you’re truly interested in developing the sport,” World Rugby, chief commercial officer, Tom Hill tells SportBusiness. “Japan was a departure from traditional rugby markets, but given it’s got the third, if not the fourth, biggest playing base in the world, and Asia’s got more fans as a territory than any other part of the world, with over 112m, it really was just a question of time before we came.”
To increase the challenge, the preceding Rugby World Cup in England provided the governing body with a sizeable yardstick. SportBusiness data indicates the 2015 tournament generated roughly £265m in commercial revenues for World Rugby, some £120m more than New Zealand in 2011. The record-breaking figure was comprised of £140m in media rights income, around £65m in sponsorship revenue, £10m in licensing and merchandise revenues, with the remaining £50m coming from hospitality sales.
Contrary to expectations, Hill says Japan 2019 is on track to surpass the 2015 figure, with more revenues due to come from its hospitality and licensing programmes.
“Originally we were cautious about how well we thought it would go with regards to commercial and broadcasting, but it’s been more positive in terms of growth than we’d ever anticipated,” he says.
“Commercial revenues are up. Broadcast revenues are up…Ticket sales are better than 2015. Sponsorship revenues are up. We were thinking potentially it wouldn’t be as attractive for sponsors as 2015, given the time zone, but that certainly hasn’t been the case.”
Hill credits the decision to announce the hosts for the 2015 and 2019 tournaments at the same time, and in some cases package the media rights to the 2019 event with either the 2015 or 2023 tournaments, for helping to overcome broadcaster misgivings about the first Rugby World Cup in Asia.
“I think partners would prefer to have much greater visibility of the long-term, so a number of our broadcast deals were dual deals, including 2019 and 2023,” he says.
The bundling strategy looks to have paid particular dividends in France, where broadcaster TF1 is thought to have overpaid in acquiring the rights to Japan 2019 for £41.9m (€45m / $49.95m) in order to secure an option for the rights to the tournament in France in 2023. In the UK, ITV paid a combined £100m for the rights to the 2019 and 2023 tournaments, allocating roughly £40m to the Japanese event.
“People appreciate that once they’re in and they’ve secured the rights, they don’t want to let them go, because they know they’re so popular that someone else will take them. You can’t sort of flit in and out of being a partner or a broadcaster because you’re going to struggle to secure rights again in the future,” says Hill.
The 80/20 rule
Global Rugby World Cup television rights are sold by Rugby World Cup Limited, the tournament organisers. RWCL is a wholly owned subsidiary of World Rugby and is advised on its media rights sales by the IMG Events & Media agency. After RWCL and IMG agree on a sales strategy for a respective market, IMG negotiates with local broadcasters and drafts licensed media agreements. RWCL remains the signatory to all deals.
“It all ends up being about relationships,” says Hill. “They [IMG] have better relationships with some broadcasters and we have better relationships with others, but together we get it done.”
Eighty per cent of the Rugby World Cup’s media revenues come from just 20 per cent of the 207 territories in which it is shown. The biggest deals are those with TF1 in France and ITV in the UK.
The decision to host the event in Japan – combined with the country’s surprise victory over South Africa in the 2015 tournament – has helped deliver a more than tenfold increase in the value of the Japanese domestic rights. Japanese agency Dentsu paid roughly £1.3m (€1.6m / $2m at the time) for the 2015 tournament but this increased to £16.1m (€18.1m/ $20m) for 2019, making Japan the third most valuable broadcast market for this year’s event.
“That infamous game against South Africa in Brighton was effectively the most valuable game in rugby’s history because the broadcast rights jumped significantly from 2015 to 2019,” says Hill. “The Japanese realised they were capable and able, and they knew the tournament was coming to Japan, and therefore the broadcasters wanted to secure those rights.”
Hill says he would like to reduce World Rugby’s overreliance on a small number of media markets. He says he was disappointed by the performance of the rights in Australia which served to offset some of the gains made in Japan. SportBusiness Media data indicates Fox Sports and Network Ten paid just £10.8m for the 2019 rights, compared with the £37.3m Fox Sports and Nine paid for the combined rights to the 2011 and 2015 tournaments, sold when the market was more competitive and the Australian team was performing better.
Taking World Rugby’s allocations for the split of media revenues between 2015, 2019 and 2023 into account, SportBusiness estimates Japan 2019 will generate around £142m from its most significant media markets.
Like many a rights-holder, the organisation is looking to Asia and the US for the next wave of media rights growth, although Hill says Rugby Sevens or women’s rugby might prove more appealing to broadcasters in some markets. As it stands World Rugby earns around 85 per cent of its revenues from the fifteen-man World Cup and 15 per cent from the HSBC World Rugby Sevens Series. But this ratio might change with Rugby sevens part of the schedule for the 2020 Tokyo Olympics and the US team beginning to perform well in the shorter format.
The year will be the first time World Rugby provides a world feed to its broadcast partners through International Games Broadcast Services, IMG Media’s joint venture with Host Broadcast Services. The company has previously partnered with events like the Asian Games and the Winter Asian Games, helping them to provide more consistent broadcast coverage. Hill says the move will ensure control, continuity and quality. “You know exactly how it works and what it’s going to look like and you’re not cringing or wincing if shows you a different angle or an area of play that you wouldn’t want to be highlighted,” he says.
IMG’s relationship with World Rugby, which stretches back to the early 1990’s, also includes the sale and delivery of worldwide partner rights to the World Cup.
The agency has succeeded in filling World Rugby’s quota of six Worldwide Partners, having renewed deals with Emirates, Heineken, Land Rover, Mastercard, Société Générale and DHL after the 2015 event. Hill says the fact the majority were also renewals from 2011 demonstrates that the property is delivering on sponsor expectations.
SportBusiness understands the going rate for a Worldwide partner was between £7.5m and £9m for the 2015 World Cup in England. A 2017 report by SportBusiness Sponsorship indicated that Land Rover and Société Générale then paid between £10 and £11m to renew their Worldwide Partner rights for 2019. It was thought the brands were prepared to pay the 25 per cent uplift to ensure they protected their position for the next edition. Although the 2023 host had not been announced at the renewal stage, the tournament was guaranteed to return to a Europe-friendly time zone with France, South Africa and Ireland bidding.
Dentsu rights buy-out
World Rugby opted to sell all of its second and third tier Official Sponsor and Official Supplier sponsorship rights to the 2019 tournament to Japanese agency Dentsu and its partner the Japan Rugby Football Union (JRFU) for £18m to help the organiser with the running costs for the event. One well-placed source said the agency was likely to make a significant margin on its acquisition given that it was asking for substantial increases on the £2m to £3m World Rugby was charging for the Official Sponsor rights in the previous cycle. SportBusiness understands Canon, an official sponsor in 2015, was dismayed to learn Dentsu was asking for three times the amount commanded by the last event.
The governing body has given no indication it is dissatisfied with the rights buy-out model, having opted for a similar approach in 2023. It is thought one of the principle reasons France secured the tournament was its ability to guarantee certain revenue streams, including those for the Official Sponsor and Official Supplier rights.
Sources say the approach makes commercial sense given that these categories have tended to attract regional sponsorship budgets and local organising committees are better placed to sell to existing supporters of rugby in their respective markets. It also makes the event a more appealing commercial proposition to putative hosts who have previously complained about the difficulties in making money from the event. The Rugby Football Union (RFU) has argued that the only way for a local organising committee to monetise the World Cup was through cutting costs, while New Zealand Rugby threatened to boycott the 2015 World Cup after it made a £6.6m loss hosting it in 2011. One of its complaints at the time was that a union was not allowed to mention its sponsors during a World Cup because of conflicts with the tournament’s backers.
The Official Sponsor roster for 2019 is made up exclusively of Japanese companies. Communications company HITO filled the seventh slot out of eight in the category when it signed a deal in early August to sit alongside Canon, Toto, Secom, Taisho Pharmaceutical, Mitsubishi Estate and NEC.
The Official Supplier tier is filled by nine companies: Gilbert, Tudor, Toppan Printing, Canterbury, NTT Docomo, EY, a conglomerate of newspaper companies, Suntory Holdings Limited and Aggreko. These deals are a combination of cash and value in kind commitments. Rugby ball supplier Gilbert’s deal, for instance, has sponsorship, licensing and product supply elements. These deals were estimated to be worth between £500K and £2m in 2015 although the ratio between cash and value in kind varied significantly from one deal to the next. It is unknown how much Dentsu is asking for the packages this time.
All of the top tier Worldwide Partner rights expire at the end of this World Cup which leaves Hill to end with a sales pitch for the event in France.
“If there is a brand that wants to get involved for 2023, now is their time to say they’re interested,” he says. “Previously there have been dual or quad deals and the rights have been tied up. Obviously, France is a very attractive market for all of the current partners.”