This Bill is an enabling Bill to allow the Minister for Transport, Tourism and Sport to support the bid and the hosting of the Rugby World Cup in 2023.
The Rugby World Cup is one of the largest global sporting events after the Olympic Games and the FIFA World Cup. It is held every four years, with the next tournament to be played in Japan in 2019. It has grown substantially since its inauguration in 1987, and is expected to continue to grow in the future. The hosting of a Rugby World Cup by Ireland has the potential to be very beneficial to this country, for visitor numbers, sporting and international profile and for communities across the island. A successful bid for the Rugby World Cup would have the dual advantage of promoting sport and tourism. There would be very considerable tourism potential as it would take place during Ireland's shoulder season for overseas tourism, between mid-September and late October. It is estimated that the tournament would draw approximately 450,000 visitors who would spend approximately €760 million. Based on Fáilte Ireland estimates, this would provide a return to the Exchequer of €138 million.
There would be many other benefits to the country, not least the profile received through television coverage of the tournament across the world and the exposure that the country would get through the thousands of visiting media. This event has the potential to involve thousands of volunteers, building volunteering capacity for future events. A parallel programme of festivals and cultural events would make the most of the opportunity to extend visits and enhance the image of Ireland. There would also be extensive business networking and other business opportunities.
The tournament would be a great platform for the promotion of sport and physical activity, vital to the physical and mental health of the nation. There is also a fantastic opportunity to reach out to Ireland's diaspora. Given the global reach of this tournament, we are confident Ireland would see tangible support for a staging of the tournament by way of many of the diaspora travelling to Ireland for the tournament.
Of its nature, a successful joint tournament would depend on mutual co-operation between North and South as we co-operate to deliver this major project between now and 2023. Hosting the Rugby World Cup in 2023 has the potential to send a powerful message of co-operation across the island to a global audience. In addition, hosting a Rugby World Cup on the island of Ireland would provide a great cultural experience for communities all over Ireland with the opportunity to host teams from places as diverse as Tonga, Georgia, Japan, New Zealand and Argentina.
I regret that this legislation is coming to the Oireachtas so late. At an earlier stage of planning for Rugby World Cup 2023, the preliminary legal advice was that legislation was not likely to be required in respect of the State's contribution to a new company that might be established in relation to hosting Rugby World Cup 2023. However, after further examination, the Office of the Attorney General advised in early May that express statutory authority through the passing of primary legislation is necessary for a Minister to provide capital support to a tournament company and to provide the necessary guarantees and underwrites to Rugby World Cup Limited. This is based on the judgment of the Office of the Attorney General that there is no specific statutory power for the Minister for Transport, Tourism and Sport to expend money or give guarantees directly on a unique major sporting event such as the Rugby World Cup 2023. Therefore, for the avoidance of doubt, the advice is that express statutory authority is required. This statutory authority must be in place before the Minister signs the guarantees. This means the Bill has to become law before 31 July.
Based on this advice, the Bill before the House was drafted. The purpose of the Bill is to enable the Minister for Transport, Tourism and Sport to provide the guarantees and undertakings as part of the bid and, if the bid is successful, enable the Minister for Transport, Tourism and Sport to support the staging of the tournament. I will now outline the provisions of the Bill.
Section 1 defines the terms used in the Bill. If the bid is successful, a tournament company must be formed with the Irish Government, the Northern Ireland Executive and the IRFU as shareholders and section 2 empowers the Minister to play a full part as a shareholder in that company. An agreement on a comprehensive governance structure for the envisaged company that would protect the State's interests is currently being finalised between all three parties.
As part of the bid, the Government would provide an underwrite for the tournament budget and the provision to enable the Minister to give this underwrite is set out in section 3. The underwrite is to give Rugby World Cup Limited the assurance that the tournament would still proceed even if ticket revenues were not sufficient. As with all previous Rugby World Cups, the hosting of the tournament would be funded by ticket revenue. It is planned that the tournament company would source the cashflow requirements in those years prior to receipt of ticket income from commercial loans. In the event that unexpected cashflow needs arise, section 3 enables the Minister to advance funding, including loans, to a tournament company. A number of rights held by Rugby World Cup Limited, such as selected sponsorship categories, hospitality and licensing, are on offer for potential hosts to bid. This matter is still under negotiation and Rugby World Cup Limited may decide not to sell any of these rights. The provisions in sections 3 and 4 grant the Minister all potential options to support any purchase of these rights and to structure that purchase in such a way that would be of best advantage to the State and the tournament.
Section 5 enables the Minister to pay the tournament fee for the territory of the island of Ireland to be the host territory for Rugby World Cup 2023. The bid proposes that, after receipt of the projected surplus from the operation of the tournament company, the Government will pay the tournament fee directly to Rugby World Cup Limited. As with the tournament underwrite, this support would be shared with Northern Ireland along an agreed ratio. These provisions in sections 2 to 5, inclusive, would be exercised with the consent of the Ministers for Public Expenditure and Reform and Finance.
A number of other assurances are sought from Government by Rugby World Cup Limited that the broader environment will be suitable to stage the tournament. These include protection for their trademarks and intellectual property and the support of An Garda Síochána in the provision of a secure environment to host the tournament. Section 6 empowers the Minister to provide such undertakings on foot of a decision of Government. In response to amendments proposed by members of the Dáil relating to oversight and scrutiny, and in addition to the usual oversight and scrutiny by Houses of the Oireachtas, an amendment was made to the Bill to address this matter.
Section 7 provides that the Minister will, during each period of six months until the conclusion of the tournament, report on preparation for and the staging of the tournament to the relevant joint committee. Sections 8 and 9 cover expenditure under the bill and the commencement provisions. As the Members of this House know, we are in an international bidding competition with France and South Africa. All bids submitted are confidential, including the budgets proposed. Since we are in this position, I am not in a position to share every detail of the bid with the House. However, in relation to provisions contained within the Bill before this House, I want to outline the key asks of Government. The first is the payment of the tournament fee, which is £120 million, 5% on award and the remainder after the tournament. This would be shared with Northern Ireland and the total cost would be net of receipt of the projected surplus from the tournament company. The governments of the bidding countries have been asked to underwrite the proposed tournament budget. This underwrite would only be called on if the ticket revenue did not cover the tournament costs and then only for that element not covered by the ticket revenue. The entire cost would only be become liable if the tournament went ahead with zero revenue. The current projection is that the tournament will make a substantial surplus. The exact budget figure Ireland has submitted is commercially sensitive, but I can tell the House that Rugby World Cup Limited has provided bidders with an indicative budget of £200 million and the Irish bid is in the region of that figure. This budget includes the cost of operating the tournament and stadium upgrades. The Government's proposed underwrite would also be supported by Northern Ireland and is capped at the level of the bid budget. The House may also be interested to know that cancellation insurance is also taken out by the tournament company.
The operation of the tournament, including the projected investment in stadiums, would be funded by ticket revenue. This would start to come on stream in 2022 and in the years preceding the tournament company would be funded by commercial loan. In the event that there are cashflow challenges that cannot be met from this arrangement, then the Minister could loan funds to the company. As I said, this is for cashflow purposes and does not change the financial outcome of the company. These funds would be repaid to Government.
Rugby World Cup Limited, like all international sporting bodies, also needs to know that the wider environment, such as infrastructure, legal context and security provision will be sufficient to host the tournament on the island of Ireland. Accordingly, it has sought undertakings from the Governments that the island has the necessary requirements in place.
Separately, Rugby World Cup Limited has made a number of tournament commercial rights on offer to bidders which are travel and hospitality, licensing and selected sponsorship categories. Broadcasting rights are not on offer. It is open to the bidders to submit a bid to acquire the rights that they believe would provide the best return. A bidding process is currently taking place and Ireland may acquire some of these rights. This Bill allows the Minister to support a bid for these rights and, if a bid is successful, provides a range of options for ownership of these rights to get the best return.
I very much welcome the interest of Members and I have no desire to withhold details of the bid, but I trust the House will understand the constraints of the bidding process. Obviously, if one is involved in a bidding situation, one would not reveal one’s top bid to anybody any more than one would at a house auction. Information such as the bid budget, the proposed investment in stadiums or training bases or the bid for commercial rights would of significant value to our competitors. In that light, I would rather err on the side of caution and not risk putting our bid at a potential competitive disadvantage.
It is important that Senators know that the Government is confident of the case for supporting the bid because we have been examining the feasibility for hosting the tournament, including likely costs and benefits, for more than four years. The initial feasibility study was carried out by Deloitte in 2013 and was examined by Departments and agencies, North and South. A cross-Border working group spent six months in 2014 considering that study and the experience of recent world cups in France and New Zealand, identifying additional costs and risks, and conducting sensitivity analyses. That report produced a revised, more conservative and prudent estimate of the impact of hosting but taking all factors into account, it found it would still be a positive experience for the island. Following consideration of that report, the Government decided to support the bid in December 2014.
An oversight board, chaired by former Tánaiste Dick Spring, with key sporting and business figures as well as Government representatives was set up in 2015 to guide the compilation of the bid. This was supported by interdepartmental groups in both jurisdictions, chaired respectively by the head of the Northern Ireland civil service and the Secretary General of the Department of the Taoiseach. My Department led the co-ordination of the public sector input and managed relations with the IRFU and the Department of the Economy in Northern Ireland. Following work by the IRFU, external expertise and Departments and agencies, the Government again reviewed the project and approved the submission of the applicant phase bid in August 2016. All figures had been re-examined and updated, including a re-assessment of stadia investment requirements, and also took into account the evaluation of the impact of the Rugby World Cup in England in 2015. Since November of last year, the candidate phase bid has been put together. The formal bid to host the Rugby World Cup was submitted on 1 June 2017. The candidate file ran to approximately 1,000 pages setting out responses on a range of topics including finance and governance, transport, match venues, security, ticketing strategy, accommodation provision, and intellectual property rights protection.
In response to the templates issued by Rugby World Cup Limited, RWCL, on 7 April, the bid also contained draft guarantees and undertakings outlining the support of governments to stage the tournament in 2023; for the payment of the tournament fee; the underwrite of the tournament budget; and the provision of public sector supports for the staging of the tournament. The State, with the support of NewERA, is discussing these drafts with RWCL and final versions are due to be agreed and signed by 31 July. The candidate phase was intensive and again all aspects of the bid were re-examined and the financial model updated. These figures were submitted to and considered by Government in May and they approved the bid. It is because the bid has been examined now for this extended period, involving internal and external expertise, taking into account the impact of Rugby World Cups in other countries, and has been considered by Government on three separate occasions that I am confident of the case for hosting.
Hosting the Rugby World Cup in 2023 would be a unique opportunity for Ireland. It would be of great benefit to the country from sporting, economic, cultural and profile perspectives and the Bill enables the Government to fully support it. Working closely with our colleagues in the Northern Ireland Executive, the Government has been examining the case for hosting for more than four years, and we are confident of the case for hosting and of the strength of the bid. I commend this Bill to all sides of the House.