Tuesday 20 October 2009

Oh the many ways I pay for rugby [updated]

I tried watching a rugby game once. On a friend's TV. A Christchurch night game between the All Blacks and some other team. It was so foggy none of us could make out anything so we gave up.

I'm not much of a rugby fan. But I'm paying a lot for rugby.

The Rugby World Cup is coming to New Zealand in 2011. As is usual when countries have to bid for events, we promised all kinds of inefficient investments in stadiums from Dunedin to Auckland. These investments never ever ever pay off. They're always a massive waste. The economic literature is overwhelming. Folks here will say "Oh, but here it'll be different". They're wrong. The stadium investments will not pay off. Most of this funding comes from local councils (we're expanding the stadium here in Christchurch), but the national government is kicking in some money for some of the stadiums as well. So I'm paying for Rugby through income tax contributions to stadium development.

But it doesn't end there. Read on and weep.

Two weeks ago, it emerged that the government-owned and heavily subsidized Maori Television station had put forward the largest bid for Rugby World Cup broadcasting rights. Somewhere around three million dollars. So I was to be paying for rugby at stadiums where I wouldn't attend games and for television broadcasts I wouldn't be watching. But at least it was going to be on a station I don't currently get, so it wouldn't be displacing any shows that I do watch.

Then last week the government encouraged a bidding war for broadcasting rights between the different state owned broadcasters where they'd each get a big government subsidy to bid against each other. This is fifty different kinds of stupid.

Since then, the government has knocked it back to twelve different kinds of stupid by encouraging a consolidated bid by Maori TV and TV One (both state owned) and TV Three (Private) rather than having different arms of the government bidding against each other. But of course, all the different bidders had revealed private valuations early on so the International Rugby Board can extract more. And so the bid is large, though as yet secret. From today's Herald
It is understood the bid is for about $5 million, with TVNZ and TV3 putting up $1 million each. The rest will be met by Maori TV and the Government.

Maori TV's share will still include some money from the Ministry of Maori Development, Te Puni Kokiri, but Mr Key said this would be substantially less than the $3 million it offered when the bid was for exclusive rights.

TV3 is the big winner in the bid, getting to screen the crucial All Blacks v France pool game and the finals. Asked why the private broadcaster was able to piggy-back on a Government-funded bid, Mr Key said it was putting in its own money and wasn't "getting a free ride".

He noted the promotion both TVNZ and TV3 could offer the tournament, an important factor given it is forecast to make a $39.3 million loss that could balloon further if ticket sales flop. The bid will go to the IRB immediately, with a response hoped for this week or next.

The bid will see blanket coverage, with some games screened on up to six channels at once: TVNZ, TV3, Maori TV, Te Reo, on free-to-air, and Sky and the Rugby channel on pay TV.

Mr Key said $300 million of Government money was being invested in the Rugby World Cup, and taxpayers deserved free-to-air coverage. "You can never get too much rugby," he said.
You can never get too much rugby. I try to avoid cursing on the blog, but it's getting pretty tough. Here are some of the remaining twelve kinds of stupid (listing too many of them makes me too angry, so I truncate the list):
  • Most American sports have figured out that if you put games free to air on TV, you kill attendance at the venue. That's why they have local blackouts. By massively subsidising free to air broadcasts, they're helping to ensure even greater losses on the stadium events - losses which the government is going to have to pay because they're residual claimant on all the losses.

  • Some games screening on six channels at once?!?!?! It's as though Key reckons rugby a merit good: left to our own devices, we won't watch enough of it, so we need to have it crammed down our throats by getting rid of all possible alternatives. I ain't playing: I haven't watched The Wire yet and can hold off 'till the RWC hits. I've always figured buying DVD sets gives far more utils per dollar than Sky subscriptions where half the channels are rugby and the remaining ones are cricket. But rugby taking out two of the four channels I currently get (yes, it is that depressing)...perhaps I'll finally have to get Freeview.

  • Why the heck does the Prime Minister get to insist that we all get to see ANYTHING on television? What, is he Broadcasting Minister as well?
    Prime Minister John Key had originally demanded that all New Zealanders be able to see the games free-to-air, but yesterday said there was a choice and it decided to give these minor games to Maori TV and keep the more interesting clashes for the big broadcasters.
    How on earth does this become the government's remit over and above the existence of state-owned broadcasters? Now, I could understand if Key had said "Hey, International Rugby Board, we're already throwing stupid amounts of money at your damned game, so you'd better let us broadcast it for free on one of our several television channels (in colour, mind you)." But that wasn't what he was arguing. Rather it was "Our demand curve is perfectly vertical at the maximum amount of rugby! Now let's work out a price!" Skillful negotiation tactic, that.
I would have been happy with my share of the tax bill to ensure that the Rugby World Cup aired only on Maori Television: a small price to pay to ensure that none of the shows I do watch would be crowded out. Instead, it's the worst of all possible worlds.

Update: Key now says the total broadcast bid is less than $5 million, but he won't say what the bid is.


  1. Good if you are a rugby commentator/sports journalist/assorted other hangers on.

    Because there are so many channels broadcasting at the same time and competing for viewers, presumably the broadcasters will be willing to pay more for commentators/"celebrities"/production companies/etc to try and make their broadcast stand out with some sort of X factor..

    I seriously cannot understand the point in showing it on more than 2 channels (one free to air and one pay) at once! The IRB must be laughing all the way to the bank.

  2. Rugby is dead. Not even the old fans like it anymore.

    When we look at the state of our health system, education system or any of the important state funded things, we just can't justify spending that kind of money on pure frivolity.