By Paul Panckhurst
Saturday 1st June 2002
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Don't call us, we won't call you
Once upon a time, there was a company with a couple of corporate boxes. The company was Fletcher Building; the boxes were at Eden Park. It was early March 2002.
This stuff about clean stadiums for the Rugby World Cup - clearing out the advertising and, especially, freeing up the corporate boxes - had been in the news for a while.
There had been rumblings as far back as July 2001 about problems with Australia and New Zealand's joint hosting arrangements for the mega-event and the possibility of France taking over. Fletcher Building executives wondered why there had been no call from either Eden Park or the New Zealand Rugby Football Union to discuss how they would feel about giving up their boxes for the World Cup cause. They presumed it was all under control, then suddenly it was crunch time. The story washed across front pages, and news reports highlighted the importance of the clean stadium requirements and New Zealand's problems meeting them. Still that call to Fletcher Building didn't come.
The saga intensified. The rugby union talked publicly of cajoling the owners of the country's main stadiums to try to meet the International Rugby Board's (IRB) requirements. A wide-eyed public learned that the Australians could come up with 100% clean stadiums but New Zealand couldn't. New Zealand was stripped of its co-host status.
Rugby union chairman Murray McCaw and chief executive David Rutherford lashed out at the chairman of the IRB, Vernon Pugh. ("I'm not prepared to say it's an abuse of power, but it does open up the question"; "You can't have someone who's a town planning QC running a global sport, let alone trying to run what is commonly referred to as the third or fourth biggest sporting event in the world".) Sports Minister Trevor Mallard weighed in, attacking the Australians and trying to play peacemaker with Pugh.
Had anyone contacted Fletcher Building about its corporate boxes? Nope.
Finally, on March 19 - 11 days after New Zealand lost its co-host status - the company got what it says was the only call it ever received on the issue, from the marketing manager of Eden Park, Janne Rowe. "She's only ever phoned once, which I find quite intriguing," says Jan Burrows of Fletcher Building. The company said it was willing to look at any proposal. Nothing turned up.
Now, the NZRFU was in emergency mode, focused on a last-ditch effort to convince the IRB to let this country back into the game. On April 15 - almost a month after the IRB's first ruling and just three days before the crucial IRB council meeting in Dublin, where the international body was to make a final decision - a fax from Eden Park asked Fletcher Building to urgently fax back confirmation that it would give up its boxes. The request came with guarantees of premium tickets and corporate hosting and hospitality. Fletcher Building did as required.
On April 18 the IRB council, made up of representatives of the world's key rugby-playing nations, sent the New Zealand union packing by an overwhelming vote (something like 15 to six, with Wales and Italy almost the only countries prepared to back New Zealand's bid). On April 19 Fletcher Building got a thank you letter for its help - not quite the outcome that the company was looking for.
Checking with other corporate box-holders, one gets the same impression of lengthy inertia and last-minute panicked action. Brian Blake, chief executive of DB, says it was approached late March with a request to relinquish its corporate boxes in Auckland, Wellington and Christchurch. "In view of how serious the issue was, I signed the request and sent it back immediately." Blake found the lateness of the request bizarre. His puzzlement turned to outrage when the union lost the cup. DB is owned by Heineken, the exclusive beer sponsors of the Rugby World Cup, and will take a major hit in lost sales (more on that later).
Another large corporate with boxes at stadiums on both sides of the Tasman had a prime vantage point for watching how the two rugby unions tackled the issue. Contacted by Unlimited, it confirms it did hear from the NZRFU. The only difference? The Australians moved "much earlier".
We can't tell you how the NZRFU explains this, because that organisation has rolled up into a little ball and is refusing to say anything. Nada. Zilch.
At Eden Park, marketing manager Rowe says the venue did "an awful lot" of work talking to box-holders in late March and April and found a remarkable willingness to help, with 78 out of 79 willing to play ball. (Other reports suggest a larger number of dissenters, but no one doubts that the majority wanted to help.) Asked why the approaches to box-holders came so late, she says the NZRFU set the timetable.
According to one of the country's top sports journalists, Joseph Romanos, the then-chief executive of the NZRFU David Moffett talked of how important clean stadiums would be for the World Cup as far back as May 1999. That timing fits with the IRB's account of events, as well. Phil Gifford, another top sports reporter, says New Zealand IRB representative Rob Fisher warned McCaw and Rutherford about 12 months ago that they were "dragging the chain, not being proactive and not getting their committees together".
What's been lost
What have we lost? Well, losing New Zealand's share of the cup meant losing revenue for travel companies, hotels, restaurants, retailers, tourism operators, sports reporters and photographers, and stadiums. Christchurch mayor Garry Moore talked of the $37 million spent on a new stand at Jade Stadium at the insistence of the rugby union for games that will now never happen. The Australian union talks of the 48-game event next October and November as having an expected "economic impact" of $960 million. The union itself says it expects to make in the vicinity of $36 million.
DB boss Brian Blake won't reveal the size of lost Heineken sales, but he is "bitterly disappointed".
"We had exclusive beer rights to all stadiums and were planning a whole series of events to lift the profile of the brand. It's a large, one-off opportunity that's been lost."
Restrained over the phone, insiders say Blake and the DB executive team are furious at the cavalier treatment of Heineken and DB. You can get a sense of the lost opportunity by taking a guesstimate on the numbers. Industry insiders say DB would hope to sell about one litre of Heineken per head at a game. With 24 games and an average of (we're guessing ) 25,000 punters per game, that's 1.8 million bottles with a retail value of about $7.2 million.
But the real value for Heineken, says a beer industry commentator, is not in the sales but the opportunity to "shaft" Steinlager, Heineken's main rival in the rugby field. "Steinlager has invested an enormous amount of effort into championing Team New Zealand in yachting and the All Blacks in rugby," says the beer expert. "The All Blacks have worn the Steinlager logo on their jumpers for many years now. For many people Steinlager is the All Blacks." But the World Cup rules state the All Blacks can't wear any logos on their gear, nor can the logos have a presence at any games. So, not only would DB have been able to ensure Steinlager was nowhere to be seen, the only beer brand to appear at New Zealand grounds would have been Heineken. A beautiful coup - if only the NZRFU hadn't stuffed it up. Blake confirms that Heineken's Dutch headquarters were lobbying hard for the NZRFU's case behind the scenes, to no avail. Australia offers no such coup for Heineken, since rugby is such a minority sport.
It's a fair guess that sports minister Trevor Mallard is not the only one wanting to do rude things with the sponsor's product.
Besides what New Zealand's missed out on in money, there is also what the public relations people call, with some delicacy, the "reputational fall-out".
"It makes us look like idiots," said Sir Gil Simpson, the man who put the "Jade" in Jade Stadium, to Christchurch newspaper The Press. In the UK, The Guardian put it this way: "A New Zealander's definition of hell is being out-manoeuvered by an Australian."
Why the problem was predictable
The impression that sometimes came across in the New Zealand media coverage of the World Cup ruckus was that there is something novel or unusual about requirements for these things called clean stadiums. Not so.
In the world of international sport, the term "clean" refers to stadiums free of commercial arrangements, from advertising to catering, with the sponsors' drinks on tap, the sponsors' advertisements on show and the VIPs sitting in the best seats in the house. It can also extend to the area around a stadium, to prevent "ambush marketing" by companies that are not official sponsors.
At this year's Salt Lake City Olympic Winter Games, Wellington sports lawyer David Howman noted touches including street closures and the renaming of a venue called the Delta Center to get rid of the connection with Delta Airlines. Most international stadiums are available for major events free of obligations to box-holders, he says.
Clean stadiums are "a common requirement for an international event," says Bill MacGowan, chief executive of New Zealand Soccer. Take the under-17 world championships that were staged in New Zealand in 1999 under the rules of FIFA, the Zurich-based body that rules over world soccer. North Harbour Stadium in Albany was "a Pepsi stadium" but for this tournament it served Coke, says MacGowan. A specially contracted "cover-up" team flew in from overseas to obliterate unwanted signs at the stadium.
New Zealand Soccer is now bidding for the 2005 world youth championships on the basis of a FIFA document that says: "All stadiums and official training grounds for the championship shall be made available to FIFA free of and clear from any and all advertising, promotional activities or product display and free of any contractual obligations whatsoever (including advertising contracts, leases, utilisation contracts, supplier contracts etc), 10 days before the start of the championship."
Remember these rules have already been set, three years before the event. This is the way the world works.
How the Australians and the Kiwis fell out
There was one big difference between the clean stadiums requirements for the 2003 World Cup and those for the event in Wales four years earlier: the IRB wanted 100% of corporate boxes to be available, instead of the previous 50%. That emerged late in the piece, around October last year, when the relationship between the New Zealand and Australian unions was melting down amid tough negotiations with the IRB's subsidiary Rugby World Cup (RWC) over the terms for hosting the event.
It's pertinent to the problem to look at the financial side of the Rugby World Cup event. First up, the really big money is in the broadcasting rights - a reported $132 million in the case of the 1999 World Cup. That money goes to the IRB. The hosts make their money from selling tickets to games.
Early last year, the New Zealand union did its sums, looked at some of the unexpected extra costs that RWC was delegating to the co-hosts - a reported $24.5 million to cover expenses including teams' travel and accommodation - and saw it was staring at a multimillion-dollar loss. Australia offered to sort out that problem by writing the New Zealand union a cheque for $21.6 million, in exchange for Australia holding the second semi-final, the one set down for this side of the Tasman. The NZRFU turned that down, wanting to host at least one of the glamour games. After all, the Aussies were already getting the final.
A replacement deal, developed by Vernon Pugh as chair of RWC, saw Australia agree to pay $12.2 million to take over the play-off for third and fourth place. With this arrangement, the NZRFU expected to make a profit that's been described variously as "up to $3 million" or "from $3 million to $5 million". According to one report, the Australians expected a profit of $30 million. The reasons for the difference included the bigger stadiums and higher ticket prices in Australia, as well as the fact that the Aussies were hosting the final. Then there was New Zealand's wish to share out games around the provinces - that costs money, too.
Already, a bad case of financial sour grapes was seeping into the New Zealand-Australia relationship. It seems that the New Zealand union had always had problems with the fact that its Australian counterpart was going to be making much more money from the event than it was. In a later, much-talked-about column in the magazine NZ Rugby World in September, chief executive David Rutherford wrote that the financial structure of the World Cup was "unsatisfactory": "It has the effect of further enriching the 'rich' big economy unions at the expense of smaller rugby economy unions like Canada, the US, Argentina, Samoa, Fiji, Tonga and New Zealand."
According to Australian Rugby Union spokesman Strath Gordon, one of the New Zealand union's proposals last year was for the revenue from games on both sides of the Tasman to be treated as a single pool of money and split 50/50 between the two unions. That wasn't a goer. The next proposal was 40:60, but that didn't fly either.
Gordon's account is that the big falling out between the two unions was in the context of negotiations, where the IRB - which depends pretty much solely on the World Cup for its funding - was screwing down concessions. "We had been going through a very tough negotiation. Make no mistake about that fact: the Australian Rugby Union and the IRB had a very long and acrimonious negotiation over the host union agreement." The IRB's negotiating arm, RWC, held all the cards.
"At the end of the day, the host union has no leverage," Gordon says. According to him, the Australian union asked itself two questions: Do we want this event? Would we host it if we were only going to make one cent out of it? In answering "yes" to both questions, it accepted that it would have to roll over and take the tournament on the IRB's terms. New Zealand, he says, spat the dummy when it saw Australia "shaping up to agree to terms and conditions that they [New Zealand] were going to find very difficult". Thus, he says, in October last year the New Zealanders asked Vernon Pugh for help in resolving a breakdown in negotiations with the ARU, complaining of the Australian union's "paternalism", "greed" and "mischief-making".
This also explains the New Zealanders' later suspicion of being asked to provide 100% clean stadiums. One theory is that the New Zealand union feared the Australians could exploit any failure to meet that standard by claiming a breach of the two parties' agreements - and clawing back its $12.2 million. The Australians deny any link between the two issues, saying failing to meet the requirement would have exposed New Zealand to legal consequences but not a clawback of that type.
Either way, RWC finally decided not to put up with what it described as New Zealand's "continued prevarication" over signing up. It said New Zealand's failure to do the deal on March 8 left the RWC and the ARU "no legal protection regarding pourage [drink sales] rights, signage, conformity of the terms of the agreements with sponsors, or the provision of facilities as set out in the HUA [Host Union Agreement]." It noted that New Zealand had been offered terms "no less favourable than those agreed by Australia". The IRB needed finality and certainty. It needed to move ahead. It did not need New Zealand.
What Australia did
The contrasts between the Australian and New Zealand unions in the World Cup saga are strongest in two areas: organisation and political nous.
Let's start with organisation. According to the ARU's Strath Gordon, the requirement to free up 100% of corporate boxes came as a shock to both the Australian and New Zealand unions last October. "We then had to ask 'how the hell do we comply?' And we set about answering that," he says. The Australians acknowledge that cleaning stadiums of commercial arrangements was easier in Australia than New Zealand, since such requirements were routine there and competition between stadiums was fierce, with the Melbourne Cricket Ground pitched against the Colonial, Sydney Football Stadium against Stadium Australia, and Subiaco against the WACA. Where necessary, the union bought out existing arrangements.
The task was always going to be harder in New Zealand, where some stadiums had signed deals with box-holders that "arguably, they shouldn't have", as one New Zealand rugby union staffer puts it. For example, an Eden Park Trust Board prospectus had specifically promised the World Cup games as part of the package for some box-holders. That said, the Australians got on with the task and we didn't. New Zealand initially maintained 100% was impossible, eventually came up with the rejected March offer of 50% to 80% and then finally, in April, told the IRB that 100% - or something close - was possible after all. Gordon maintains that New Zealand's late run at the issue was surprising. Even if the requirement had been only 50%, "you would expect to do that work earlier".
The question of resources is one that's been much discussed: proportionately, the NZRU threw far fewer staff into this exercise than the Australians. In terms of politicking, the New Zealanders were comprehensively outgunned by Australian rugby union chief executive and former banker John O'Neill. Some say O'Neill was advantaged by being a delegate on the IRB council, unlike our union chairman Murray McCaw and chief executive David Rutherford (New Zealand is represented by Rob Fisher and Tim Gresson). On the other hand, shouldn't New Zealand have had a political advantage with Fisher both deputy-chair of the IRB and a director of RWC?
Asked by journalist Phil Gifford why South Africa, a traditional enemy of Australian rugby, voted against New Zealand as co-host, a top South African source had two pertinent comments. First, New Zealand loused up. Second, South Africa's IRB representatives had no confidence in the two top NZRFU bosses. On the other side, O'Neill is media-savvy and proactive. In the wake of Australia's big win in Dublin, a Sydney Morning Herald report told of how, before the crucial IRB vote, O'Neill phoned the Sydney radio show of Alan Jones from his Dublin hotel to arrange an interview for the next day, certain he had secured the votes Australia needed. Incidentally, the same newspaper described New Zealand's final presentation to the IRB as "amateurish" compared with an Australian video presentation starring rugby legend John Eales, featuring endorsement messages from Prime Minister John Howard and New South Wales premier Bob Carr.
The most embarrassing side of New Zealand's political efforts came in the final weeks, with the vituperative attacks on Vernon Pugh, an intensive lobbying effort seen by other rugby nations as heavy-handed, and Mallard's embarrassing final comments about where he would like to stick sponsor Heineken's product. Whether or not Pugh had done "a double-cross", as the newspaper headlines put it, by making verbal assurances to New Zealand about the RWC requirements and later reneging, to attack him was madness. The public slapping down of the NZRFU by the IRB, in a statement issued in Dublin on April 18, talked of the "professionalism" and "logic" of the Australian proposal, in contrast to New Zealand's "consis-tent failures" and "wholly inappropriate behaviour", the latter an apparent reference to the mudslinging. Slagging off the IRB may have satisfied the domestic audience but it was acid in the face of the key decision--makers. In his one lengthy interview on the World Cup saga with the magazine Player, Vernon Pugh indicated that New Zealand's approach belonged to an earlier era of rugby, "the old-boy network with deals being struck in smoky corners".
"Money has won the day," said Murray McCaw after losing the cup. He said New Zealand was the place to showcase the game to the world, but the IRB's decision had come down solely to financial considerations. Earlier in April, David Rutherford had faced the television cameras, citing the oft-repeated New Zealand argument that we deserved the cup for the good of the game. "Do you want the game to spread, or do you want it only to be played in the big countries with the big stadiums?"
However, the evidence is that the IRB did try to get New Zealand involved. Why else accept the original 1997 bid, with New Zealand as sub-host? Why else arrange the trade-off of Australia handing over $12.2 million to cover potential losses on this side of the Tasman? A more compelling theory is that the New Zealand union, disenchanted with its likely share of the spoils, was never 100% committed to securing the event.
In a television appearance, John O'Neill claimed the New Zealand union never "philosophically" accepted "that they were a sub-host union" and would be playing second fiddle to Australia.
A wider issue is raised by the weird awkwardness of the rugby world's efforts to allocate the hosting for its showpiece event. Shouldn't the details that New Zealand ended up arguing over have been sorted out much earlier?
Top rugby writer Wynne Gray of The New Zealand Herald says the IRB is trying to lift its act as an administrator but has a long way to go. "They are charged with running a professional sport, and they only meet fully as a council twice a year. Until recently, they had no chief executive for 18 months. Before that, they had a chief executive who lasted only six months … From the outside, it looks as though they are really struggling."
Still, the NZRFU must have known what the IRB was like when they originally pitched for the sub-host job. Is it possible it was oblivious to the bigger picture? The NZRFU has appointed former Chief Justice Sir Thomas Eichelbaum to look into New Zealand's World Cup debacle. One of the crucial questions that he needs to ask is: did the rugby union really acknowledge that it was negotiating not just for itself, but also the economic benefits for the nation? The government was willing to come to the party. Finance Minister Michael Cullen said the event would have "significant economic benefits" for the country, when on March 26 he agreed to the government underwriting potential NZRFU losses. Under the deal, the government would have picked up the first $3 million of any loss under the sub-host arrangement and, after that, 50% of losses to a maximum government exposure of $5 million.
It's a cliché, but the taxpayer does have a right to know. For one thing, according to a government briefing paper, the Hillary Commission put up $300,000 over three years to help the NZRFU plan for the event. Another little question: when the Eden Park Trust Board issued a prospectus guaranteeing some box-holders World Cup access, was that with or without the knowledge of the NZRFU? It's all yours, Sir Tom. And best wishes from an entire nation left sitting on the reserves' bench.
The Australians are talking about an expected economic impact of $960 million.
New Zealand's Office of Tourism and Sport cites a report prepared by the Welsh Tourism Board after the 1999 Rugby World Cup as saying that:
Get ready for a host of demands
Unlimited checked out the list of requirements from the soccer body FIFA for hosting the 2005 world youth championships (New Zealand is in the running).
Get ready for requests for everything from government guarantees to suspended labour laws (like limited working hours) to the supply of meteorological statistics for the past decade.
Issued in March of this year, the document is a precursor to definitive bids in October.
It deals with requirements for clean stadiums.
It specifies the demarcation lines between FIFA and the host country for organising insurance cover.
It sets out requirements for "VIP tribunes", covered seats in the centre of the grandstand with private entrances and access to the players' dressing rooms.
It specifies a VIP lounge with a capacity of 2m2 per VIP.
It specifies a minimum of 80cm of legroom between spectator seats.
It specifies where the electric ball pump from Adidas must be located (the referees' dressing room). "A back-up manual pump should be accessible as well."
You only need to look at the range of issues covered in the 46 pages - travel arrangements, accommodation, office space, training grounds, pitch specifications, stadium organisation, media facilities, medical services, a doping control room, accreditation procedures, ticketing and official functions, to give a far from exhaustive list - to realise just what a wide and complex task it is.
According to Soccer New Zealand chief executive Bill MacGowan, it can be done - you just have to take a deep breath.
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