How to run a World Cup: Snedden tells all

The Rugby World Cup 2011 chief talks about the IRB's harsh commercial model, how we managed to pull the event off anyway, and NZ's future in event hosting.

Martin Snedden was in a better position than most to document how New Zealand pulled off hosting one of the world's biggest sporting events.

As CEO of Rugby World Cup 2011, he oversaw the entire process for four years, but didn't always plan on writing a book about it.

He told NBR ONLINE "unless the tournament itself was a success, I probably wouldn't do it".

"So I just waited until the thing was done and about Christmas time I thought, 'I think this is something I want to do'."

A Stadium of 4 Million is not a book about rugby as such. Rather, it outlines the incredible complexities of putting together an event of this size.

It is a well-written, engaging account of everything that needs to happen to pull it off.

It demonstrates why good governance is so vital to any organisation, and why planning, strategy and having a really good accountant makes all the difference.

Mr Snedden, a former lawyer and CEO of NZ Cricket, took a few months out of work to write the book, starting with a rough outline in January and finishing it in April.

"I'd been keeping media clippings and there was an enormous amount of information already in the public domain.

"I didn't need to do enormous research to recall what has happened. A lot of what I've written about came straight out of my head."

The book covers everything from the NZRU's bid process – which happened before Mr Snedden got involved – through to figuring out what to do with stadiums, dealing with the IRB's "onerous" demands, and coming up with the draw.

An 'unfair' commercial model
Mr Snedden makes it clear just how difficult it was for a country the size of New Zealand to make the Rugby World Cup happen.

"The world cup commercial model works from the point of view of the IRB, which owns the event, because it gets an enormous rights fee out of it.

"They also keep all the sponsorship, broadcast and merchandise revenue."

It puts a lot of risk on the host country, however.

The IRB required a $150 million rights fee, which left the NZRU with ticket sales revenue only.

The event lost about $32 million, almost exactly what NZRU chief financial officer Therese Walsh predicted it would when the union bid for the rights in 2005.

Mr Snedden says considering everything that happened since 2005 – the Christchurch earthquakes and a global economic recession no one saw coming – the final result demonstrates just how good an accountant Ms Walsh is, and how vital that was to the financial success of the tournament.

But while Rugby New Zealand may have been delighted with a $32 million loss it was the first time a world cup had lost money.

It was a long way from the €30million profit the French generated in 2007, and the $A48 million profit made by the Australians in 2003.

However, while making a direct profit was never a reasonable prospect, Mr Snedden believes there were still economic benefits to New Zealand from hosting the world cup.

"The only reason the model has any fairness is because of the benefits leveraged off hosting the event.

"If it was just hosting the event and nothing else, the model wouldn't be fair.

"The event now is so large that it does have a very significant international following, and it gave New Zealand a platform to profile itself and derive some immediate and long-term economic benefits that we just can't get anywhere else."

What needs to change
The IRB gets 95% of its revenue from the World Cup event. That means the governing body is too exposed, Mr Snedden says.

"If, for instance, you got a revolution of four or five major countries which got together and said, 'well, we're not going to go down this model any more', that would entirely wipe out the IRB's revenue stream.

"There were murmurings of that during the world cup, with Steve Tew and John O'Neill from Australia both being very critical of the structure of the event and making noises about whether they could keep supporting it."

Developments such as this are entirely possible, Mr Snedden says, as seen in the late 1970s with Kerry Packer's World Series Cricket, which broke away from, and competed with, established international cricket.

The IRB's model of requiring huge fees from hosts will become increasingly onerous for host nations.

New Zealand paid £50 million for last year's tournament, the English union will pay £80 million in 2015 and Japan will pay £96 million when it hosts in 2019.

Without some changes to the commercial model, those fees are going to be way out of reach of smaller nations such as New Zealand, Mr Snedden says.

"Rugby has a real challenge. The IRB needs to look for additional events to supplement the income it gets from RWC.

"It has to review the whole of its commercial structure, and see whether it can come up with something that better meets the needs of its members.

"The only way it's going to do that is find ways of generating extra revenue."

New Zealand's event-hosting future
While he is happy with how New Zealand hosted the Rugby World Cup, Mr Snedden says there is little to be gained from hosting worldwide events.

"The problem with major global events is you don't own them. You pay huge rights fees, don't share in any of the broadcast revenues, and you take all the risk.

"Whereas if you develop the events yourself from the start, you own all the rights and it's more manageable to run at a profit."

An example is the Queenstown Winter Games, which next year will see 1000 of the world's top skiers and snowboarders competing for spots at the Winter Olympics.

"This coming year it's the third time it has been run in Queenstown. It has some World Cup status this time around, which is a big step forward."

New Zealand needs to be "clever" when it comes to developing event series, Mr Snedden says.

"If we do it all on emotion, we will make a lot of mistakes.

"There is a tendency sometimes to let emotion override common sense when it comes to these things, and we can't afford to do that.

"We've got to be very business-like. We've got to be very strategic and know what we're doing so when we make our choices the chances of those being right are much higher."

A Stadium of 4 Million by Martin Snedden, published by Hodder Moa, is released on Monday.