The World Rugby Market

Rugby playing countries are interdependent and it is important we understand our relative position within the global rugby community and whether trends we experience in England are the same as elsewhere. Through an appreciation and understanding of developments in other countries, we can learn and develop ourselves.

1 England is the largest rugby-playing nation in the world. In terms of participants, it has some 627,000 accounting for 32.8% of the participants in the top ten countries within the game. The nearest country to England in terms of size is South Africa accounting for 30.3% of all participants. Table 1 sets out the number of participants in each major country divided into Adult, Youth and Junior/Mini categories as recorded by the IRB.

Click here to View Table 1

2 There are significant differences between the largest five countries in the breakdown of participants between the different age categories. In England 50.5% of its participants fall in the Junior/Mini category, well above that of any of the other major countries. On the other hand England has the lowest percentage in the youth category of any of the countries at 15.9%. The data can be interpreted in two ways. Either the success of the RFU Mini/Junior programmes is generating a large pool of future players that will solve the declining adult game issue given time. Alternatively, England suffers a heavy fall off after the Mini/Junior stage and, as a result, are very weak at the Youth stage compared to other major countries. On the former basis, England, South Africa and New Zealand have a strong base for future growth in their games whilst France and Australia may have relative problems. The figures are presented in Table 2 below.

Click here to View Table 2

3 In terms of the number of coaches England also has a clear lead with 32,000 or some 31.7% of all coaches in the top ten countries. In terms of the key players per coach ratio England has 19.6 players per coach which is worse than the average across the top countries of 19.0. It is interesting to note that both South Africa at 39.1 players/coach and Ireland at 32.5 have poor ratios while Scotland has the best with 3.1 players per coach. Overall the coach statistics recorded by the IRB, set out in Table 3 below, put England in eighth position out of the top ten countries.

Click here to View Table 3

4 As regards referees the position is not as bright for England. In terms of absolute referee numbers at 4,000, we come third to Australia 7,000 and South Africa at 6,000 and our share of the number of referees in the top countries is 16.2% against Australia 28.3% and South Africa’s 24.2%. However the picture for England looks worse when the key ratio of players per referee is examined. At 156.7 players per referee, England has the worst ratio of all the top countries and some 52% worse than the average ratio of 81.5 players per referee for the top ten countries. The figures are set out in Table 4 below:

Click here to View Table 4

5 In terms of the number of clubs, England is comfortably the largest rugby playing nation with some 1,880 member clubs accounting for 23.9% of all clubs amongst the top 10 countries. France is second and South Africa third. Whilst these numbers give15 the correct relativities between countries, they should not be taken necessarily as promoting reliable figures in absolute terms due to different data collection methods. The figures are presented in Table 5 below:

Click here to View Table 5

6 The above statistics for world rugby, whilst the best available, need to be treated with some caution. They are probably reasonable indicators of the relative position between countries but are likely to be less reliable as absolute indicators of numbers. Overall they show that England’s position in world rugby overall looks sound when compared to the other nations but there are certain trends which are of concern, as set out below, and which this Plan seeks to address:

i) The fall off in players post the Mini/Junior stage;

ii) The need to improve our players/coach ratio through further investment in coaching;

iii) The need to improve significantly our players/referee ratio through further investment in referee development;

iv) To reverse the declining trend in terms of numbers of teams and numbers of clubs.

UK Government Sports Policy

The RFU, as a UK based organisation, operates in an environment influenced by UK Government Sports Policy. It is therefore essential as background to our Strategic Plan that we understand current Government policy and funding levels. Working in partnership with other Sports we must seek to raise the profile and importance of sport within Government to start to address the underfunding of sport by Government across the board.

The Development of UK Government Sport Policy

7 Since its election in 1997, the Government has published a series of documents containing the development of its sport policy. These documents also outline an evolving delivery strategy for that policy in England and include details of the roles that Government would like the National Governing Bodies (‘NGBs’) of the major sports to play. These policy documents have recognised the pivotal role that NGBs play in their sports and have outlined the steps that need to be taken by NGBs to access devolved funding from Government. Five principal documents have been released, as detailed in Table 6 below.

Click here to View Table 6

8 The most recent policy document was produced in December 2002 by the Government’s Strategy Unit, based in the Cabinet Office. This document, entitled‘Game Plan: A Strategy for delivering Government’s Sport and Physical Activity Objectives’, defines the current position on Government sports policy. The document sets a challenging long-term vision for sport and physical activity in the UK in the timeframe from the present day to 2020 with the overall objective stated as: “To increase significantly levels of sport and physical activity, particularly amongst disadvantaged groups; and achieve sustained levels of success in international competition.”

9 Game Plan proposes a target of 70% of people to be ‘reasonably’ active (doing 30 minutes’ meaningful exercise or sport five times a week) by 2020. The report noted the difference between sport and physical activity, the definition of the latter being taken to include less strenuous activities such as digging the garden or washing a car. Nevertheless, this is an exceptionally demanding and ambitious progression from current participation trends, requiring a huge increase in resources to deliver it.

10 Game Plan also commented further on the benefits of sporting activity to the individual. Following a thorough analysis of available academic research, Game Plan concluded that the linkage between sport and health is strong and well founded. There were also powerful anecdotal reasons to suggest that sport could have an impact in other areas, notably the social exclusion issues of crime, education and employment. As objective evidence of the impact in these areas was scarce, Game Plan recommended that more work be undertaken to investigate the linkages.

Government Expenditure on Sport

11 It is difficult to ascertain exact levels of Government spending on sport but Table 7 below shows Deloitte’s estimate of central Government and Lottery actual and projected funding for sport between 2001/02 and 2005/06.

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12 However, only a small proportion of this funding is channelled directly into the grassroots of sport through NGBs or their member clubs. Many Government funds, notably the PE and Sport, School Sport Co-ordinators and Specialist Sports colleges funding, are channelled through the existing public sector network. Much funding is restricted  to Local Authority or Local Education Authority facilities and programmes, and only a relatively small amount of the overall funding is invested directly in sports organisations or sports clubs themselves.

13 In terms of Lottery funding, Table 8 shows recent levels of Lottery funding from Sport England on a sport by sport basis. The table reveals that the four major spectator sports combined received only 17% of Sport England Lottery funds. Considering that these are the four major sports in England, based on a number of different criteria, it is perhaps surprising – and inconsistent with an agenda of cost effectively driving increased participation – that such a low percentage of the total has been allocated to the major sports. 

Click here to View Table 8

Sport is under-funded in England compared with other major European countries

14 As Game Plan again makes clear, the funding arrangements for sports in European countries are all different. Moreover, Governments also classify and hold data on funding in different ways. This makes comparison of funding levels across Europe difficult. However, the CCPR has released some figures comparing Exchequer funding on a per head of population basis for selected European countries. These figures are presented in table 9 and show the low funding position of England compared to other European countries.

Click here to View Table 9

15 The  analysis in table 9 of the underfunding of sport in England has recently been born out by the Lord Carter report commissioned by the UK Government and published on 5 April 2005. This report revealed that the public investment in sport per head of the population at £36 was some 37% less than the average of our peer group of countries. This implies that the underfunding of sport in England amounts to some £1.2 bn per annum.

Funding for sport is Fragmented and Inefficient

16 In addition to the scale of funding , a further problem with UK Government sports funding is its fragmented nature. The investment is largely uncoordinatd across many different Governemt departments and agencies.  The Bulk of the funds is delivered regionally and locally via various funding agencies, such as the New Opportunities Fund (NOF), the Single egeneration Budget (SRB), the Health Action Zones (HAZ) and the Education Action Zones (EAZ).  Each Funding initiative has its own regulations and monitoring frameworks, and many of the funds are directed towards specific disadvantaged areas or groups.  The various funding streams and implementation strategies need ot be coordinated, and ideally rationalised, if delivery of funding into sport is to have maximum benefit.

17 This fragmentation leads to a number of problems at grass roots level, including multiple agencies all working in different areas or sports. This inevitably leads to some confusion due to a lack of communication between local bodies. There is often an absence of ‘joined up’ thinking at local level, which may lead to over-investment (in terms of facilities, coaches or development workers) in some areas and underinvestment in others.

18 There is also a clear case that it is more effective for funding to be planned in conjunction with and/or channelled through the major NGBs to ensure that there is coordinated development at all levels within each sport. The major NGBs are clearly best placed to achieve this, as they each have comprehensive Strategic Plans, have developed networks within sports and have the local structures to ensure that delivery of increased participation rates would occur.

Government Taxation of Sport

19 It is not easy to access information on the tax revenue raised by the Government from sport compared to its expenditure on sport. A study produced and published by Cambridge Econometrics, ‘The Value of the Sports Economy in England in 2000’, examined the role of public funding for sport. The report noted that central Government takes far more out of sport than it invests in it. Total income tax and VAT revenue to central Government from sport-related activities exceeded £5.5bn in 2000compared to direct investment in sport of £661m providing central Government with a net surplus of £4.9bn from sport. Local Authorities, on the other hand, broadly speaking spend on sport what they raise in revenue from sport.

Click here to View Table 10

Taxation of NGBs

20 Sport in the UK has historically enjoyed no special tax privileges compared to ‘mainstream’ business. This is in stark contrast to their counterparts in many countries where sports’ NGBs, as special not-for-profit organisations, are tax exempt. Surprisingly, in certain aspects, sport in the UK is even in a worse position than commercial organisations for the following reasons:

• Their grass roots development costs are often not tax deductible, which acts as an effective tax on NGBs investment in grassroots sport; and
• Tax relief for the capital cost of new facilities is very limited, being restricted to the plant and machinery element contained in the project. This can be contrasted with hotels (also part of the leisure sector), which obtain tax relief for the entire cost of new facilities.

21 The taxation position of the NGBs of sport is inequitable and contrary to Government Policy. Under current tax law, governing bodies of sport, despite existing to promote their respective sports, support their member clubs and providing significant public benefit, enjoy no corporation tax exemptions and suffer significant tax costs. The effective tax rates payable on their profits are thus often significantly in excess of the statutory rate of 30% and higher than their commercial counterparts. At the extreme,a sports governing body which breaks even and makes no profit will find itself payingtax because of the disallowance of development costs.

22 It is essential that the major four sports maintain their lobbying campaign with Government to secure corporation tax exemption or a different treatment of allowable expenses. This would enable more funds to be invested in grass roots sport, remove the distraction of management time and effort spent on corporation tax mitigation and compliance and create a more stable financial framework for running sport at the national level.

Strategies and Plans

The RFU and 4 Sports to maintain a long term Government lobbying campaign

23 It is essential that the RFU continues to work in collaboration with other NGBs, in particular the 4 Sports, to lobby Government on developing their policies in a way that will assist them in achieving the Game Plan objectives and will also motivate NGBs to be active and supportive partners with Government. This lobbying activity should, it is proposed, be focussed on five major areas as follows:

i) An increase in the absolute level on expenditure on sport so that the public investment in sport per head of population in the UK reaches the levels in France, Germany and Italy over a period of time;

ii) Securing a significant increase in the share of Government sports funding that is routed through NGBs rather than through the plethora of agencies currently used;

iii) A significant reduction in the bureaucracy surrounding the provision of public funding to sport;

iv) An increase in the share of Sport England funding allocated to the 4 Sports from the historic level of 17% to at least 50% over the period of the Plan;

v) Secure a change in the Government policy on the taxation of NGBs so that NGBs become, effectively, tax exempt.

24 To ensure effective implementation of the above lobbying programme, the RFU will need to invest some funds in a continual programme of activity over a sustained period with a lobbying agency. We will seek to work in partnership on a shared cost basis with other NGBs, in particular the 4 Sports, to maximise the impact of the programme on Government. 

Global Rugby Policy Issues

It is a key IRB objective to grow the game globally and to develop Tier 2 nations to be effective competitors in future World Cup tournaments. The RFU fully supports the IRB in these objectives. In striving to achieve these objectives, there are a number of important issues affecting the development of the global game that the RFU needs to have an agreed policy position on. These issues are set out in this section together with our proposed policy position on them.

The Financing and Development of World Rugby

25 Key to the success of professional rugby is the creation of a vibrant, growing global game at all levels, one where there is genuine competition at RWC level from a growing number of countries through systematic long term development plans put in place by the IRB. These development plans need to be fully supported by the Foundation Unions and adequately resourced in terms of both finance and qualified manpower. The IRB policy is to encourage the development of rugby union into a truly global sport, but changes are needed, we believe, if this objective is to be achieved.

26 The funds to deliver this objective are provided by the profits generated from the Rugby World Cup where TV, sponsorship and a range of other central rights are reserved by the IRB. The World Cup in 2003 generated a surplus of around £65m providing the capital for the IRB Development Fund and the running costs of the IRB. A concern remains the IRB policy on reserves in the Fund which some countries believe to be too conservative.

27 The RFU has tabled a proposal paper for the IRB’s consideration setting out suggested changes to the IRB’s development policy if the IRB’s global growth objectives are to be achieved. The paper contained three main policy proposals as follows:

i) IRB development funds should be focussed on a limited number of developing countries that have a realistic chance of breaking through into the professional ranks within an eight year time period, in the paper we called these the ‘Priority Unions’

ii) Each of the Foundation Unions should enter into five year Strategic Development Agreements with at least one Priority Union to provide nonfinancial resource and expertise to that Union and to provide competitive matches, at the right level, to that Union;

iii) To divide the International Tours schedule into two tiers. Tier 1 would be for the top ten Unions and ensure that they have a maximum number of commercially & financially attractive games. Tier 2 would be for the Priority Unions to provide for their development at the right level. The IRB has started to make encouraging moves in this direction and it is clear that a number of Unions support these policy initiatives. The above proposals, therefore, remain RFU policy in this area.

Strategic Development Agreements: The Churchill Cup

28 In line with the above policy proposals, the RFU has entered into a five year Strategic Development Agreement with Rugby Canada and USA Rugby to provide a resource support package for the development of rugby in North America. This Agreement has also received IRB endorsement. The principle elements of the Strategic Development Agreement are as follows:

i) The provision of coaching development support, tuition and materials to assist in coaching clinics to be operated in the USA and Canada between June and August;

ii) The provision of referee development support, tuition and materials at referee clinics to be operated in the USA and Canada between June and August each year;

iii) The provision of a small number of places at RFU Academies on a scholarship basis to assist Rugby Canada and USA Rugby in the development of talented young players;

iv) The establishment of the Churchill Cup as an annual tri-angular tournament between England, USA and Canada to take place in June each year;

v) Support for the Can/Am Cup as an international tournament for North American and touring European non-professional club sides.

29 We are now entering the third year of this agreement and real progress has been made in a number of areas. A steady flow of advice, resource and support is being provided by the RFU to both the USA and Canada and RFU staff have been seconded to assist in the process. The Churchill Cup has now been established and is approaching commercial viability. The RFU will therefore maintain its level of support for the whole Plan period to the USA and Canada to assist in their continued development and to encourage other Foundation Unions to enter into similar arrangements with other Priority Unions.

The Rugby World Cup

30 The RWC is the pinnacle of the professional game and a tournament every country wants to win and their players want to participate in. It is also the principle source of revenue for the IRB to develop the global game. Since its inception in 1987, it has grown strongly, both as a commercial property and in terms of its spectator appeal. It is now believed to be the third largest global sporting event after the Olympics and the FIFA World Cup. However issues have emerged which need to be addressed if the RWC is going to continue to grow and prosper in the professional era. These issues are:

a) The Tournament Playing Window;

b) Compensation for affected Unions and their Elite Competitions;

c) The involvement of developing countries;

d) The bidding process and the need to plan at least four RWC’s ahead.

31 The scheduling of any RWC event is a critical issue for the IRB. There is no perfect solution that eliminates all problems for both Hemispheres. In the professional era we believe it is important that disruption to the global rugby calendar is minimised but also that both hemispheres share the ‘pain’ in a fair manner over time. It is therefore important that the IRB conducts some in depth analysis of this issue – maybe as part of the ‘Global Season’ project.

32 It is highly unlikely that there is a solution to the Playing Window issue that eliminates all the problems for both hemispheres. It is therefore essential that those countries that are financially affected by the choice of the Playing Window should receive compensation. The current IRB position of paying ‘compensation’ of £3m to all Foundation Unions irrespective of whether they suffer financial loss or not is clearly inequitable and the RFU policy should remain as seeking to secure compensation only for those Unions that suffer financial loss.

33 A further unresolved issue is how best to assist the developing countries in terms of RWC participation. After RWC 2003, concern remains that the gap in standards between the major countries and most of the developing countries who qualify under the current arrangements is too large and could endanger the integrity and commercial value of the RWC without any compensating development value to the countries concerned. The RFU proposal of a parallel development tournament – the Rugby World Nations Cup – was not supported by the IRB when proposed. It remains the view of the RFU that this tournament would both add value to the RWC and provide a significant boost to the development of the game worldwide. The establishment of this tournament remains RFU policy in this area and we will continue to lobby gently for a reconsideration of this concept on a long term basis.

34 The award of hosting a RWC tournament under the current bidding system is not necessarily based upon organisational capabilities or financial strength. It is strongly influenced by the emotional and political needs of the global game. It is therefore questionable whether a competitive bidding system is appropriate – particularly bearing in mind the costs incurred by the bidding Unions – or whether it would be better to adopt a rotation system between selected eligible countries for, say, five RWCs ahead.

35 We believe that by seeking a long term planned rotation of the RWC, the IRB and the world game would benefit in a number of ways as follows:

i) It would create a long term planning basis for the tournament hosting Unions and for the game generally;

ii) It would enable the IRB to balance the need to maximise RWC revenues for development purposes on the one hand with the need to occasionally hold the RWC in a developing country such as Japan or the USA;

iii) It would provide a framework for consideration of the introduction of Rugby World Nations Cup concept at an appropriate time. The RFU’s policy during the plan period will be to support the planned rotation of the RWC for up to five RWCs ahead.

The British & Irish Lions

36 The Lions brand is probably the most powerful brand in world rugby. Its strength lies in its history and pedigree going back to the earliest days of rugby union. The task in the professional era is to maintain its heritage and pedigree but to structure Lions tours so that they benefit all stakeholders from both a playing and commercial point of view. The stakeholders are seen to be the Host Union, the Home Unions, the players, the coaches and, of course, the spectators.

37 Although the Lions tours are agreed to be every four years, they do interfere with the Premiership season and with England’s single minded build up and preparation necessary for our attempt to win the RWC by removing one year from the three in which we have to prepare. In addition the financial arrangements for the Lions tours sit uneasily with the professional game. The Lions have not historically been run as a commercial property generating profit for its shareholders. The Lions tour to South Africa in 1997 lost money and there was no profit distribution to the four Home Unions from the Lions tour to Australia in 2001 although the tour was a great commercial success.

38 The Lions Board has secured a number of improvements for the 2005 tour which should ensure a financial return for all stakeholders. We need to support the Lions Board in building on these improvements going forward and seek to put the Lions arrangements on a sound business basis for the 2009 tour. Key to achieving this is securing an agreement with SANZAR on how the commercial rights should be dealt with. The RFU believe that a revenue sharing concept - similar to that used in the Six Nations and Tri Nations tournaments - should be adopted.

39 We believe that there should be three categories of rights: those that are exclusively reserved for the Host Union, those that are reserved for the Lions and those that are the Central rights to be shared between all stakeholders. Our policy will be to seek a split of these rights along the following lines:

Click here to view the RFU Proposed Lions Rights Split

The Barbarians

40 The Barbarians are an RFU affiliated club with a long and prestigious history of playing attractive fixtures against touring teams and Six Nations countries. A substantial portion of the revenues raised goes to charitable causes or ‘grass roots’ investment. The Barbarians wish to maintain a fixture against one of the SANZAR touring sides in the autumn window and their fixtures against Six Nations countries in May prior to the summer tours. RFU policy will be to continue to support the Barbarians, encourage them to reach agreement with PRL and seek to ensure that their requirements should be taken into account in the IRB’s Global Season study with a playing window identified for them.

The Future of Sevens: The Olympics and the Commonwealth Games

41 It is a key part of the IRB’s strategy for the development of rugby globally that rugby becomes an Olympic sport. Realistically this can only be in the Sevens format. The  rationale for securing Sevens rugby as an Olympic sport is the significant boost rugby’s  developing nations will secure through the availability of Government funding for rugby as an Olympic sport. Olympic inclusion, added to the Commonwealth Games, would mean that Sevens Rugby could become a valuable means of accessing greater public funding whilst also providing an effective vehicle for the development of the game world wide. The IOC has agreed that Sevens Rugby is on the short-list for inclusion in the Olympics for 2012. 

42 A key part of the strategy to secure Olympic status has been the creation of the IRB World Series Sevens (‘IRB WSS’). The IRB WSS started in the 1999/00 season and England became a full participant in the Series in 2000/01. Whilst the WSS has  improved and strengthened each year, it has required a significant investment to be made by the participating countries – particularly those hosting tournaments. There is some concern that the WSS may not continue to receive support from all the key Unions if the financial and commercial arrangements do not improve. The RFU’s policy will be to continue to support the WSS but a review will be undertaken of our position if the IOC do not include rugby as an Olympic sport for 2012.

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