There was evidence post-World Cup to believe that Japan, more so than America which is always touted as the game’s sleeping giant but has proven to hard to waken, could become rugby’s most lucrative market.
And on the surface, it almost looks like it is. Since the 2019 World Cup, Japan has become the market of choice for New Zealanders looking to play offshore.
The big names have flooded in – Richie Mo’unga, Brodie Retallick, Beauden Barrett, Ardie Savea – and they have been paid extraordinarily well for their commitment.
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South Africans, Australians, and now European-based players are starting to arrive in numbers, as well as a golden array of coaching talent, and there are now 170 foreign players in Japan. The critical mass of rugby IP contained within Japan’s League One gives it all sorts of marketing and commercial opportunities.
But while the Western view is to think about how much money could be made selling sponsorships, broadcast revenues, and tickets, this isn’t a pathway the Japanese have in mind.
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The mindset to commercialise rugby just isn’t there in the same way it is in other territories, and this is largely because of the game’s history in Japan.
Initially, rugby was introduced through the universities. It became so popular that by the early 1980s, crowds for big games could be 70,000.
The attraction of rugby was its value system – its undeniable link between unity and success and this overwhelming sense that individual players had to be loyal to the team ahead of themselves.
It appealed to the Japanese psyche, and for rugby there was a natural progression from universities into the corporations where the graduates would end up.
Hajime Shoji, chief operating of Japan’s professional club competition, League One, says: “In Japanese culture sport is regarded as a tool for education.
“How to develop people through sport is a very important aspect of Japanese culture. At all school levels, sport is very active at extra-curricular activities.
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“Students and graduates were so excited to look at the teamwork. But then many grads went on to work for corporations and they saw what rugby is trying to achieve through teamwork and they started to develop internal corporate sports and rugby became one of them.“
Many big traditional Japanese companies such as Nippon Steel, Panasonic, and Toshiba were very happy to support those teams at corporate sports. This is a symbol of their teamwork-orientated organisation.
And this philosophy, and indeed ownership structure, is all-important. Japan’s club teams were set up to enable the workers to showcase the values of the company, and with a broader remit still to interact with the wider communities around which the major factories were based.
But when rugby turned professional in 1995, the Japanese club model became to be seen as restrictive.
The clubs were effectively still amateur. The players got paid, but they were being paid to do jobs for the company and then play rugby after their shift finished.
The likes of baseball and football, other sports that companies had also funded, started to become more popular and there was a shift away from being so dependent on the parent company owner for money.
Rugby was being left behind in terms of audience growth, and it came to a head after the 2019 World Cup when a decision had to be made about what future pathway to follow in terms of an ownership structure.
“We had the discussion about how to change top corporate teams and the league,” says Shoji.
“Some clubs had professional players, but mostly they kept an amateur culture and the commercial rights belonged to the Japanese union. The profit from the games all went to the union.”
Robbie Deans, who has been with Panasonic since 2014, recalls his early days in Japan, saying that a cheque would come from headquarters with no real guidance on how to spend it.
But he found out soon enough that the corporate masters very much did have expectations, when he was flown, with all the other Panasonic sports team coaches, to meet the big boss at HQ.
He says each coach had a few minutes with the CEO, and when he got his turn, having not heard the boss speak a word of English to anyone, he leant into Deans and quietly said: “I expect big things from you”.
In those pre-World Cup days, that’s how things rolled – the budgets were set primarily on the strength of the pitch each code could make to the parent company and the personal preferences of those assigning the money.
Win a title and the cheque may be a little bigger the next year or disappoint the big boss in some way and it would be smaller and, in some cases, withdrawn entirely.
“On that kind of model we thought that further growth of Japanese rugby would be limited,” says Shoji. “So we had to ask how do we change?
“We decided to make League One an independent competition where the teams and the league have the right to run the league and the profits from the games go to the teams instead of the union.
“But from ticketing and broadcasting revenue there is not enough so the companies decided to keep supporting the teams.”
What Japan has now is arguably a business model that is the envy of the rugby world.
Across the global game, the commercial model has shown itself to be ineffective. In the last few years, three English clubs have gone under, and in Australia, the Rebels collapsed this year.
The system of selling media rights, naming space and tickets to pay the players has been held hostage to the true forces of capitalism where success drives the successful and crushes the rest.
What’s evolved in Japan is a three-way ownership structure where most teams are partly funded by commercial rights sales and partly funded by a parent corporation, with their local communities in some cases pitching in be it through the provision of facilities that are for communal use.
Toyota Verblitz, for example, will soon have access to a new training facility that will be available to all the sports the car manufacturer supports, as well as local teams and community groups.
“Corporations are eager to support sport to create social inclusion,” says Shoji. “The meaning of the financial support is not to lead to monetisation, it is to create social inclusion.
“Because rugby is seen as a good way to develop people and given rugby’s big squad size and relatively small number of games – probably where most clubs will land is that about 50% of revenue will be coming from commercially generated revenue, and 50% coming from corporate support.
“Since the inception of League One’s unique characteristics it is integration of team, community and partner corporation and its value to society.
“Fans don’t know this business model however they are knowing that with support from the corporate parent company, many good players are coming.”
Japan appears to have struck some kind of happy middle ground where the corporate backers can retain their need to promote the values they believe in, the clubs have balance sheets that are strong enough to attract quality players and yet not get sucked into the sort of wage inflation that has damaged other leagues, and the combination of the two has enabled the commercial value of broadcast rights and sponsorships to grow.
“Previously it was totally corporate, no interest in sponsorship,” says Deans. “There is no profit motive and we have moved more to a franchise model. It is still 50:50 professional amateur. We have people who have a day job.
“They get the recovery which is what the professionals get. It’s not that we can train six days a week because we are professional. It is the same amount of training, it is the ability to recover.”
For the moment, the model appears sustainable, because the parent companies feel they have a social responsibility to invest in sport and therefore they are unlikely to ever want to withdraw from rugby even if League One should become independently commercially sustainable.
If there is a concern, it is that the influx of foreign coaches and star players will ignite a nuclear arms war as clubs compete for talent. There’s also a growing realisation among League One clubs that they need to invest in some kind of emerging competition.
“They don’t have a second competition which they need,” says Sir Steve Hansen, who coaches at Toyota Verblitz.
“Through our own desire we are trying to develop a second group. We have organised 10 games but when I first came here, they didn’t play and we have 55 to 60 players in our squad so a lot of people not playing any games.”
But building a second-tier competition requires investment and the danger is that if clubs have vastly different budgets at their disposal and different ambitions about what they want to achieve and why, the league could become divided.
“They created a new company to see if we could pay our own way but we just can’t,” says Toshiba Brave Lupus coach Todd Blackadder.
“Toshiba will have to keep pumping cash in. I think there will always be a connection but if they are not careful the rich will get richer and the poor will decide whether they can compere or not.
“Rugby is a massive loss leader there is no doubt about that. Toyota will be investing in that team to win because they can afford to pay it.
“But for Toshiba if the rich keep getting richer and there are no salary caps – you can pay what you like to anyone – they won’t have 12 clubs in the top league.
“I just hope that at some stage there is something that creates equality because you still want teams to compete.“
Gregor Paul travelled to Japan with the assistance of a grant provided by the Asia NZ Foundation
Gregor Paul is one of New Zealand’s most respected rugby writers and columnists. He has won multiple awards for journalism and written several books about sport.
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