Rugby Australia's impending financial crunch won't be the death of rugby in Australia
Rugby Australia has finally come to the undesirable position where the long-term debts to the game are finally coming due and it will cost dearly, it seems.
The current TV revenue sourced from a bumper $275m five-year deal signed in 2014 averages around $60m a year in income for the administrative body, by far its largest source, making up around 50 percent of total revenue.
This is a mountain of cash compared to the reported paltry offer from Fox Sports of around $20m a year for the next rights deal, one that has been recently withdrawn from the table.
Continue reading below…
It does not bode well that the value of their premium product has just caved by over 50 percent in the eyes of the current broadcaster.
Optus, an Australian telco with cash to burn, has stepped in to reportedly offer $30m a year. This is still a disaster for Rugby Australia with a 50 percent broadcast revenue reduction that would force the administration into cost-cutting measures like never before to avoid reaching into debt to maintain the status quo.
There will be no onus on Optus to make the venture into rugby a success either as it will be used as a side-show marketing ploy to push subscriptions in their core business.
With annual cash operating outflows of around $130m and inflows barely breaking above that, a $30m hit is going to be significant for Rugby Australia. Any way you look at it the numbers don’t add up.
Around $31m of Rugby Australia money is funnelled back to state unions to fund Super Rugby teams, $18m to pay Wallabies players, $10m to fund a high-performance unit.
And then there is the wastage, with states spending ‘unbudgeted expenses of $28m over five years’ in order to fund their Super Rugby teams, with the bill fitted by Rugby Australia.
You can imagine there will be haircuts in these areas and every other corner of Rugby Australia’s tightening budget.
It will be a painful cash crunch. However, this is still unlikely to be the death knell for Australian rugby.
Australia’s rugby production line – the GPS private school systems – is still largely in place, which doesn’t cost Rugby Australia a cent, and there is enough coming out of it to make something with.
In 2019, the U20 side beat New Zealand at home 20-0 in the most comprehensive win they’ve ever had over their trans-Tasman rivals before making the final of the World Rugby U20 Championship.
A few months later, the Australian Schoolboys side pulled off their first win over New Zealand since 2012 on opposition soil in Hamilton.
The talent is there in the schoolboy system to be developed into Wallabies, but Rugby Australia is going to have to prove it can do it with less financial resources than before.
Luckily this emerging talent often comes cheap. Older stars on higher-value contracts have mostly moved on in their careers. Quade Cooper, David Pocock, Will Genia, Sekope Kepu, Bernard Foley are all now overseas and Israel Folau’s contract has been terminated, easing the high-profile player cash-burden for the national body.
A move towards fee-based compensation for the Wallabies similar to the Rugby Football Union would also reduce the risk of poor contracting by Rugby Australia. This might be a necessity if the Giteau’s Lule is scrapped and more and more players are contracted to clubs outside Australia.
Over the long-term Rugby Australia will need to find a way to have this talent playing at home again, fixing the broken model they have in place now.
Cost savings can be made immediately by scrapping the unnecessary operating cost that is the National Rugby Championship, a made-up third tier to satisfy SANZAAR requirements.
It is quasi-amateur with the pro’s forced to play for no extra compensation and amateurs also playing for free. There is next to no viewership market for it and is destined to join the Australian Rugby Championship collecting dust in the closet.
Australia’s third tier has always been club rugby and that is where the opportunity is. It has survived with little to no help, with the costs often lumped on the players. Some would say the national administrators have already done everything in their power to kill it, unsuccessfully.
The Shute Shield has bucked the trend of stagnation within Australian rugby and become a viable TV-product in its own right with independent management, resulting in a turnaround of sorts with a thriving turnout for the final making a lasting impression.
There is a way, over the long-term, to build club rugby towards a professional set-up by opening up the possibility for outside investment in local clubs from private hands and openly embracing small player payments that would grow over time and expand towards professionalism, funded by those willing and able to take on the risk as club owners.
It must be remembered that this is what the NRL – a largely domestic competition with club owners – has become, a billion-dollar TV product within Australia and New Zealand.
Rugby union is still a niche code within the Australian competitive sporting landscape, but a scalable solution could still achieve growth and build a stronger foundation for the game than is currently in place. Club rugby in Australia still retains a sense of tribalism, attracts decent local crowds and is the heartbeat of rugby in the country. A Saturday afternoon at a packed-Premier game with cheaper beers at the local park is arguably a greater rugby experience than sitting in a mostly-empty Stadium at night.
Whilst it isn’t likely to be a massive commercial rights product anytime soon, with private funding it could get there naturally over time as rugby league has. Maybe, more importantly, it can drive the market for player retention in the game during that pivotal time between school and becoming ready to play professionally. One state union can only fund a handful of academy contracts.
It doesn’t need to become a national competition with ballooning operating costs from day one either, over time allowing natural market forces fuelled by outside money to drive growth at a state level first.
Those asking how would this potentially fit down the line side-by-side with Super Rugby are asking the wrong question. Wouldn’t it be more desirable for Rugby Australia to have a completely self-sufficient domestic professional landscape?
The hard part will be whether Rugby Australia and state administrative bodies will concede some of their power and control in many areas of the game to work towards solutions like this.
The mounting financial pressure may force that decision for them, the plummeting rights value in Australia is a flashing warning light.
Radical strategic action is required and no options should be left off the table. The game won’t die but the administrators will eventually if they don’t find a way to grow the value of the product.
England’s attack coach Scott Wisemantel leaves to join the Wallabies:
Comments on RugbyPass
Super rugby is struggling but that has little to do with sabbaticals. 1. Too many teams from Aust and NZ - should be 3 and 4 respectively, add in 2 from Japan, 1 possibly 2 from Argentina. 2. Inconsistent and poor refereeing, admittedly not restricted to Super rugby. Only one team was reffed at the breakdown in Reds v H’Landers match. Scrum penalty awarded in Canes v Drua when No 8 had the ball in the open with little defence nearby - ideal opportunity to play advantage. Coming back to Reds match - same scrum situation but ref played advantage - Landers made 10 yards and were penalised at the breakdown when the ref should have returned to scrum penalty. 3. Marketing is weak and losing ground to AFL and NRL. Playing 2 days compared with 4. 4. Scheduling is unattractive to family attendance. Have any franchises heard of Sundays 2pm?
8 Go to commentsAbsolutely..all they need is a chance in yhe playoffs and I bet all the other teams will be nervous…THEY KNOW HOW TO WIN IM THE PLAYOFFS..
2 Go to commentsI really hope he comes back and helps out with some coaching.
1 Go to commentsI think we are all just hoping that the Olympic 7s doesn’t suffer the same sad fate as the last RWC with the officials ruining the spectacle.
1 Go to commentsPersonally, I’ve lost the will to even be bothered about the RFU, the structure, the participants. It’s all a sham. I now simply enjoy getting a group of friends together to go and watch a few games a year in different locations (including Europe, the championship, etc). I feel extremely sorry for the real fans of these clubs who are constantly ignored by the RFU and other administrators. I feel especially sorry for the fans of clubs in the Championship who have had considerable central funding stripped away and are then expected to just take whatever the RFU put to them. Its all a sham, especially if the failed clubs are allowed to return.
9 Go to commentsI’m guessing Carl Hayman would have preferred to have stayed in NZ with benefit of hindsight. Up north there is the expectation to play twice as many games with far less ‘player management’ protocols that Paul is now criticising. Less playing through concussions means longer, healthier, careers. Carter used as the eg here by Paul, his sabbatical allowed him to play until age 37. OK its not an exact science but there is far more expectations on players who sign for Top 14 or Engl Prem clubs to get value for the huge salaries. NZR get alot wrong but keeping their best players in NZ rugby is not one of them. SA clubs are virtually devoid of their top players now, no thanks. They cant threaten the big teams in the Champions Cup, the squads have little depth. Cant see Canes/Chiefs struggling. Super has been great this year, fantastic high skill matches. Drua a fantastic addition and Jaguares will add another quality team eventually. Aus teams performing strongly and no doubt will benefit with the incentive of a Lions tour and a home RWC. Let Jordie enjoy his time with Leinster, it will allow the opportunity for another player to emerge at Canes in his absence.
8 Go to commentsLove that man, his way to despise angry little men is so funny ! 😂
4 Go to comments“South African franchises would be powerhouses if we had all our overseas based players back in situ. We would have the same unbeatable aura the Toulouses, Leinsters or Saracens of this world have had over the last decade or so.” Proof that Jake white does not understand the economics of the game in SA. Players earning abroad are not going to simply come back and represent the bulls. But they might if they have a springbok contract.
22 Go to commentsA lot of fans just joined in for the fun of it! We all admire O'Gara and what he has done for La Rochelle
4 Go to commentsThe RFU will find a way to mess this up as usual. My bet is there will be no promotion into the the Premiership, only relegation into National League One. Hopefully they won’t parachute failed clubs into the league at the expense of clubs who have battled for promotion.
9 Go to commentsWell that’s the contracts for RG and Jordie bought and paid for. Now, what are the chances we can persuade Antoine to hop over with all the extra dosh we’ll have from living at the Aviva & Croke next season…??? 🤑🤑🤑
14 Go to commentsWow, that’s incredible. Great for rugby.
14 Go to commentsYou probably read that parling is going to coach the wallaby lineout but if not before now you have.
14 Go to commentsIf someone like Leo Cullen was in O’Gara’s place I don’t hear Boo-ing. It’s not just that La Rochelle has hurt Leinster and O’Gara is their Irish boss. It’s the needle that he brings and the pantomime activity before the game around pretending that Munster were supporting LaRochelle just because O’Gara is from Cork. That’s dividing Irish provinces just to get an advantage for his French Team. He can F*ck right off with that. BOOOOO! (but not while someone is lying injured)
4 Go to commentsDid the highlanders party too hard before the game? They were the pits.
1 Go to commentsWhat a player! Not long until he’s in the England side, surely?
5 Go to commentsHe seems to have the same aura as Marcus Smith - by which I mean he’s consistently judged as if he’s several years younger than he actually is. Mngomezulu has played 24 times for the Stormers. When Pollard was his age he had played 24 times for South Africa! He has more time to develop, but he has also had time to do some developing already, and he hasn’t demonstrated nearly as much talent in that time as one would expect. If he is a generational talent, then it must be a pretty poor generation.
6 Go to commentsThe greatest Springbok coach of all time is entirely on the money. Rassie and Jacques have given the south african public a great few years, but the success of the springbok selection policy will need to be judged in light of what comes next. The poor condition that the provincial system is currently in doesn’t bode well for the next few years of international rugby, and the insane 2026 schedule that the Boks have lined up could also really harm both provincial and international consistency.
22 Go to commentsJake White is a brilliant coach and a master in the press. This is another masterclass in media relations and PR but its also a very narrow view with arguments that dont always hold water. White wants his team to win, he wants the best players in SA and wants his team competitive. You however have to face up to the reality of a poor exchange rate and big clubs with big budgets. SA Rugby cant compete and unless it can find more money SA players will keep leaving regardless of Springbok eligibility and this happened in 2015 - 2017. Also rugby is not cricket. Cricket has 3 formats and T20 cricket is where the money is at. When it comes to club vs country the IPL is king but that wont happen because the international calendar does not clash with the club calendar in rugby. So the argument about rugby going down the same path as cricket is really a non-starter
22 Go to commentsNZ rugby seem not to have learnt anything from professional rugby. Super rugby was dying and SA left before they died with the competition. SA rugby did a u turn on their approach to international players playing overseas and such players are now selected for Bok teams. As much as each country would love to retain their players playing in local competitions, this is the way the world is evolving my friends. Move with it or stay 20 years behind the times. One more thing. NZ rugby hierarchy think they are the big cheese. Take a more humble approach guys. You do not seem to have your players best interests at heart.
8 Go to comments