Australian Rugby Banks on Lions Tour Windfall to Reverse Losses

Photographer: David Rogers/Getty Images

Owen Farrell kicks during the British and Irish Lions practice session at the Hong Kong Stadium on May 31, 2013. The Lions arrive in Perth on June 3 after stopping off in Hong Kong for a match against the Barbarians tomorrow. Close

Owen Farrell kicks during the British and Irish Lions practice session at the Hong Kong... Read More

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Photographer: David Rogers/Getty Images

Owen Farrell kicks during the British and Irish Lions practice session at the Hong Kong Stadium on May 31, 2013. The Lions arrive in Perth on June 3 after stopping off in Hong Kong for a match against the Barbarians tomorrow.

Australian rugby officials will be rolling out the welcome mat for the British and Irish Lions and their 40,000 fans next week as they bank on the team’s first visit since 2001 to reverse two years of losses.

The Australian Rugby Union said it expects the Lions’ nine-match trip, which is set to attract total attendance of about 400,000, to help boost revenue in 2013 by about 46 percent to A$140 million ($135 million) and enable it to post a profit.

“It is a phenomenal tour that is going to help us enormously,” ARU Chief Executive Officer Bill Pulver said in a telephone interview. “I’m hoping we’ll get to at least a A$10 million cash balance within the ARU, which is not a particularly positive one given the size of the business, but it’s a very strong result on the back of basically A$20 million of losses in the last two years.”

Rugby in Australia operates in what Pulver says is the “most-competitive winter sports market in the world,” where it vies with Australian Rules football, rugby league and soccer for fans, sponsorship and broadcasting dollars. A Lions tour gives the sport its biggest exposure outside of the four-yearly Rugby World Cup.

After taking over as CEO on Feb. 1, Pulver identified six measures to assess the game’s health including its finances, elite-level performance, attendances and fan engagement, which tracks how supporters are feeling about rugby.

“When I looked across in more detail at some of those metrics, some of them were a little more problematic than I had expected,” Pulver said. “There’s room for improvement on every one of them. They are all addressable.”

Cashed-Up Rivals

That challenge comes with the Australian Football League and National Rugby League in a position of strength after both secured broadcasting agreements worth more than $1 billion in the past 25 months, while soccer’s A-League attracted a record number of people to regular-season games in 2012-13, according to Football Federation Australia.

“AFL and NRL have massive TV deals and so they’re particularly well cashed-up in comparison to the Australian Rugby Union,” Pulver said.

The windfall generated by hosting the Lions only comes around every 12 years as the combined team of players from the U.K. and Ireland convenes on a quadrennial basis to play matches in either Australia, New Zealand or South Africa.

The Lions arrive in Perth on June 3 after stopping off in Hong Kong for a match against the Barbarians tomorrow. They face the Western Force on June 5 in their Australia opener, one of five games against local Super Rugby franchises on a tour that culminates in a best-of-three Test series. When the teams last met, the Wallabies came back to win 2-1 and secure their first series triumph against the combined team.

‘Expensive Place’

This trip marks 125 years since a rugby team representing the U.K. and Ireland first toured the Southern Hemisphere. Costing about 14 million pounds ($21 million), it will also be the most expensive, according to Lions CEO John Feehan.

“If I had the same amount of revenue now as I did when we came down 12 years ago, I wouldn’t even cover 25 or 30 percent of the cost,” Feehan said in a phone interview. “Unfortunately Australia’s quite an expensive place now.”

Logistics of the tour included narrowing 87 hotels down to 12 in 11 cities, locating 12 available training pitches and organizing 13 flights, Feehan said.

In addition to the 37 players in the squad, there are a further 24 members of the tour party and another dozen or so who “just dip in and out,” he added. By the time the team gets back home, 20 tons of equipment will have been transported 7,800 miles, Feehan said.

Covering Costs

With the ARU retaining gate receipts -- top-price tickets cost A$295 -- the Lions rely on sponsorships from companies including HSBC Holdings Plc (HSBA), Adidas AG (ADS) and Microsoft Corp. to help put on the tour. The rest comes from a contribution from the host union and the sale of packages to touring fans that range from a basic seat at matches to accommodation and flights.

“Between those two together we might cover about 30 percent of the costs if we’re lucky,” Feehan said. “The balance is sponsorship basically.”

About 13,000 Lions fans signed up for official packages, with the same number making their own way. The remainder will be made up of what Feehan described as “local fans” -- British and Irish expats in Australia, New Zealand and southeast Asia.

“Almost 400,000 tickets and nearly all of them have been sold,” Feehan said. “Nothing else does that. It is the biggest sporting event in the world this year, that’s the bottom line. This is a huge bonus for the ARU.”

To contact the reporter on this story: Dan Baynes in Sydney at dbaynes@bloomberg.net

To contact the editor responsible for this story: Christopher Elser at celser@bloomberg.net

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