Last Saturday saw England claim the 6 Nations championship, albeit in less grand fashion than expected with a convincing defeat in Dublin. Sports betting markets have reacted by downgrading England’s chances of winning the Rugby World Cup (RWC) in October from 12.5% to 10.5%. The campaign must still be seen as a success though as England were only an 8% chance of winning the RWC back in January.
The unexpected loss to Ireland had considerable financial consequences too. The England squad was due to receive £500,000 in bonuses for winning the Grand Slam but instead made just £250,000 for winning the championship.
Nike, England’s apparel supplier developed a Grand Slam celebration campaign, “6 onwards”. This included planned advertising on the Underground, 5000 T-shirts and a video. When England lost, the campaign was made redundant. Of course, the 6 onwards campaign had to be prepared in advance in order to achieve maximum exposure and “own the moment” if England won but there was always a 35% chance that they wouldn’t. Nike did also have bonus payments due to the RFU if a Grand Slam was won so the cost of the 6 onwards campaign was offset to some degree when those bonuses were no longer due.
The other Rugby Unions and their sponsors also had varying cash flows dependent on last Saturday’s results but England’s were the most significant. The Rugby World Cup in October will bring these risks into focus once more and the numbers will be much larger. It’s important that Unions and sponsors are at least aware of the likelihood revenues and liabilities being realised even if they choose not to be hedged against losses.
The unexpected loss to Ireland had considerable financial consequences too. The England squad was due to receive £500,000 in bonuses for winning the Grand Slam but instead made just £250,000 for winning the championship.
Nike, England’s apparel supplier developed a Grand Slam celebration campaign, “6 onwards”. This included planned advertising on the Underground, 5000 T-shirts and a video. When England lost, the campaign was made redundant. Of course, the 6 onwards campaign had to be prepared in advance in order to achieve maximum exposure and “own the moment” if England won but there was always a 35% chance that they wouldn’t. Nike did also have bonus payments due to the RFU if a Grand Slam was won so the cost of the 6 onwards campaign was offset to some degree when those bonuses were no longer due.
The other Rugby Unions and their sponsors also had varying cash flows dependent on last Saturday’s results but England’s were the most significant. The Rugby World Cup in October will bring these risks into focus once more and the numbers will be much larger. It’s important that Unions and sponsors are at least aware of the likelihood revenues and liabilities being realised even if they choose not to be hedged against losses.
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