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May 21, 2012 | by  | in Opinion | [ssba]

C.R.E.A.M. – Money And Mauls

A humble giant is on his knees. A staunch but modest beast, the 21st Century is proving too tough. The Otago Rugby Football Union is on the bench, and recovery isn’t looking good.

Rugby has always been at the heart of the South. But the sport’s governing body is deep in debt and, despite a stellar season from the Highlanders, its situation isn’t looking great.

The problem is overwhelming–the best number-boys in the game can’t get the maul rolling, and those running the show are stuck on the five metre line. The issue: nobody’s asked an economist. Of course if they did, she might well tell us to harden up, and just front the cash. But then she’d pause, and change her mind. The problem, she’d realise, is that the joy from rugby isn’t ‘excludable’. There’s no market for cultural pride; that spirit of shared victory comes for free.

She’d insist that the ORFU isn’t to blame. We follow the game for the banter, for the thrill and, most of all, for the pride we get in our success. We’ve never had to pay for that. The union brings in some funds through ticket sales and sponsorship. For the most, though, the joy that it gives to us, it gives to us for free.

For economists, public goods have two properties: you can’t stop people using them, and one bloke using them doesn’t stop others using them. The classic example is a lighthouse: you can hardly stop boats from seeing, and one boat’s sight doesn’t infringe on others’ sight. Similarly, the pride we get in our rugby is a public good.

Public goods are a bugger: people don’t pay for things if they don’t have to. Even if a lot of folks want something, it might not happen. I’d be happy to pitch in with the thousands of other Otago fans to support the club, but there’s no way I can foot the bill on my own, and I’ve got no reason to pay if I think that the thing will survive. Coordination is a nightmare.

What’s the fix? Sometimes, there’s a small group who can support the club on their own–this happened with the Tasman Makos–and coordinating them is easier. Other times, advertising can provide the revenue necessary. When those tactics fail, the only option is for government to step in and front the cash.

The blokes at the union are doing a thankless job, and it’s about bloody time that we thanked them. If we want the game to survive, then we need to come together and make it happen. That’ll only happen when the Government steps in and fronts the cash. It’s time we backed our boys.


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  1. Nick Cross says:

    If rugby is such a public good that private provision is not sustainable then why is the Otago Rugby Union the only one that has fallen over? Seems like they really just made some terrible financial decisions: Wasteful investment in the new stadium which could never justify the cost being the obvious one.

    Rugby unions have many ways to charge individuals for consuming their goods: TV deals and corporate sponsorship are probably the biggest forms. But there is also gate sales, merchandise and subscription fees to participate in local competitions. It’s nothing like the lighthouse example.

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