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Welsh rugby would receive a multi-million pound windfall if Ireland is successful in its bid to host the 2023 Rugby World Cup.

It comes from a reciprocal agreement the Welsh Rugby Union struck with the French, England, Irish and Scottish rugby unions that enabled Wales to be the main host of the 1999 Rugby World Cup.

In return for backing the WRU the other nations, including Ireland whose union is the Irish Rugby Football Union (IRFU), hosted some of the games during that tournament and shared in profits generated.

Video: Ireland launches its RWC bid with help of Liam Neeson

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The IRFU is understood to have benefited by around £4m from its reciprocal deal with the WRU.

Subsequently, the WRU benefited financially from the 2007 RWC in France and last year’s tournament hosted by England, by staging games at the Principality Stadium.

The reciprocal deal

The agreement between the WRU and IRFU in 1998 has a clause stipulating that if Ireland ever hosted the tournament it would effectively be bound to pay a fee to the WRU of at least 20% of the net financial benefits generated - effectively the profit after accounting for costs and a fee paid to the game’s world governing body World Rugby.

A copy of that agreement seen by WalesOnline and relating to future RWCs states: “IRFU represents, warrants and undertakes that, in relation to the relevant tournament (regardless of who its hosting partners may be), it will pay to the WRU (or procure the payment to the WRU of) a sum by way of a fee equal to at least 20% of the net financial benefits in relation to such relevant tournament.

“Such sum shall be paid to the WRU within 120 days of the conclusion of the final match of such relevant tournament.”

Video: The Welsh team that could play in the 2023 RWC

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So how much could the WRU receive if Ireland hosts the 2023 Rugby World Cup?

Well, that will depend on the commercial success of the tournament after taking into account associated running costs and a £120m pre-paid fee (financed by the Irish Government and the Northern Ireland Executive) to Rugby World Cup Ltd - the wholly-owned subsidiary of World Rugby.

And the Irish could legitimately reduce the profit margin through investment in infrastructure needed to host the tournament - for example improving broadband speeds in and around stadiums for spectators.

However, whatever the eventual profit margin, the WRU would anticipate securing a significant seven figure sum - thanks to the canny commercial deal struck by its then chief executive Glanmor Griffiths with the other unions back in 1998.

Discussions around the reciprocal deal and its impact on Ireland’s 2023 bid are continuing between the WRU and IRFU.

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In launching its bid last month the IRFU identified a list of 12 potential venues, both in the Republic of Ireland and Northern Ireland - including Croke Park and the Aviva Stadium in Dublin, the Kingspan Stadium in Belfast and Celtic Park in Derry.

Huge economic impact

It is estimated that hosting the entire tournament in the island of Ireland would generate an economic benefit of more than £650m, with the tournament reaching a global television audience of four billion.

And a RWC in Ireland in 2023 is expected to attract nearly 500,000 visitors. The number of tickets sold would be two million.

Irish viewpoint

In a statement the IRFU said: “As is widely known, ahead of the 1999 Rugby World Cup various agreements were entered into between each of the home unions and the FFR (French union) with the WRU around the costs and revenues of the 1999 tournament.

“The IRFU and the WRU will discuss the 1999 agreement, given the dramatic increase in the profile, scale and costs associated with the staging of a Rugby World Cup - which includes a substantial tournament fee of £120m.

“Both unions will continue to work together in a spirit of cooperation, to ensure the support of their mutual interests, but without affecting Ireland’s bid to host RWC 2023.

"World Rugby has already stipulated that it wishes unions bidding to host RWC 2023 to only include venues within its territory, and this is also in keeping with the objective of the IRFU and both governments [of the Republic of Ireland and Northern Ireland).”

The WRU declined to comment.

Ireland is up against South Africa and France to host the 2023 tournament.

World Rugby will announce the winning bidder next November.