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Bank On The Six Nations

Aberdeen Press and Journal, February 04, 2009

By Alex Martin

Rugby is not alone in experiencing mixed economic fortunes. Were it an industry under a cross-sectional microscope, it could balance a modicum of success with tales of financial woe.

Over the next six weeks, the game will be looking for the type of commercial boost so many industries desperately seek when its biggest players come together in international jerseys for their annual bash.

They do so against an uncertain economic backdrop. In England, Premiership champions Wasps declared a loss of £2.8million in their most recent accounts, while Bath reported a deficit of £375,000. Last week, Wasps lost their long-time shirt sponsor, Magners, while sponsors at troubled Newcastle Falcons are understood to have threatened to withdraw their support next seasonunless changes are made to the management of the club.

Average attendances at Newcastle matches have plummeted by 30% this season, the impact on income is obvious, but the with-drawal of sponsors could cost the club a further six-figure sum.

With debt levels estimated at around £10million, a reduction in ticket sales, hospitality and match-day revenue is having an adverse affect on the club. According to one report, Carl Hayman the club's New Zealand prop, believed to be the Premiership's highest-paid player, drawing an annual salary of £350,000, is said to be owed money from image rights sales.

Recession has even hit Australia's best. The Wallabies' squad had signed a collective agreement to receive £5,771 per Test this year, but have agreed to a 7% pay cut.

The Australian Players Association expected salary levels to return to normal in 2010, but the players had agreed to this year's cut because all other staff at the Australian Rugby Union were doing the same.

It is becoming increasingly evident few sports can escape its debilitating impact.

Earlier this week, the respected IEG Sponsorship Report concluded sponsorship spending on sport will experience its slowest growth in seven years as companies cut back.

Companies have committed to spending £8.1billion on sports marketing agreements this year, a 1.8% increase from 2008. That's the slowest level of growth since the industry expanded at a rate of 1.25% in 2002. While even a 1.8% increase may appear encouraging during what are increasingly gloomy times, it's worth remembering most of this year's deals were agreed by mid-2007, since when economic conditions have deteriorated at an alarming rate.

The Olympics and high-profile professional sports have continued to attract corporate partners even during economic slowdowns because the deals were viewed as safe, according to Jim Andrews, IEG's editorial director. Nonetheless, many corporations are eliminating marketing agreements they consider most costly.

Many companies are hesi-tant about signing new agreements because they're unable to predict how long the recession will last. Virtually all major stadium naming rights deals have been put on hold as companies endeavour to avoid a backlash for adding their brand to a stadium while they're sacking or laying off employees.

Andrews said banking giant Citigroup had come in for sustained criticism for paying £14million a year to the New York Mets baseball team to name its new ballpark Citi Field while accepting billions from the US government to help save its business.

Closer to home, eyebrows were raised when it was revealed the six nations championship has secured a £20million sponsorship deal with RBS as the ailing bank wrestled with the burgeoning economic crisis. The bank, which kicked off its relationship with rugby union in 2003, has extended its sponsorship for another four years to 2013. It is widely believed the contract's value is 25% greater than the previous arrangement.

However, the balance of the bank's sports sponsorship portfolio may not be so lucky. "It is no surprise we are reviewing what we do, given the current financial environment," said an RBS spokes-man. "We are clearly looking to make what economies we can within our restraints."

One wonders how the sight of banking executives entertaining clients (or politicians) in corporate hospitality suites at Murrayfield over the next few weeks will be received, particularly if, as seems likely, taxpayers are called on to pump additional cash into the banks to keep them afloat.

Yet as the six nations Championship draws near, there is some encouraging news.

Figures issued by the Scottish Rugby Union have confirmed the number of people involved in the sport continues to grow. There has been a 10% increase in the number of adults playing the game, while an additional 12% of youngsters have been attracted to rugby over the past 12 months.

Following a change to the game's development structure in 2006, the number of junior and adult players has risen by 21%.

In total, the SRU report more than 30,000 juniors and adults are now playing on a regular basis. For a decade between Scotland's Grand Slam of 1990 and the five nations championship of 1999, there were an average of 35,000 players, although the figure had slumped to 24,000 by 2004. The SRU's strategic plan aims to expand the number of regular players to 38,000 within three years.

Spectator numbers at Scottish rugby matches have also been encouraging.

For example, Edinburgh established their Heineken Cup attendance record in December when 7,711 saw them play Wasps and they surpassed that figure when 12,534 attended the first of two derby matches against Glasgow - more than went to both matches combined lastseason.

Attendance figures are indicative of a surge in rugby playing across the country: the SRU report 244 of Scotland's 381 secondary schools now enter a team into the Bell Lawrie Scottish Schools Cup.

Elsewhere, the sport is proving its pulling power. Tickets for this year's Hong Kong Rugby Sevens, in March, sold out in just two hours. Meanwhile, the Rugby World Cup Sevens, scheduled to be played in Dubai between March 5 to 7 are expected to attract more than 100,000.

International rugby, especially the six nations, has always been synonymous with corporate success and economic well-being. As participation levels in Scotland and ticket sales in Hong Kong and Dubai show, demand for the game remains high.

However, over the next six weeks, many observers will be keeping a close eye for empty seats in the great rugby stadiums and interpret it as evidence of yet another industry experiencing a sharp economic downturn.