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The growing value drain on Super Rugby is teetering on starting a death spiral

By Ben Smith
Samu Kerevi, Malakai Fekitoa and Faf de Klerk are three stars from the Southern Hemisphere to end their Super Rugby careers in their mid-20's. (Photos/Gettys Images)

The Pro14 has become the latest domestic club competition acquired in part by private equity firm CVC, agreeing in principle to sell a 27 percent stake in a similar deal to the one struck with Premiership Rugby.

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The flush of private money into the club game will no doubt exacerbate the growing value disparity between the domestic game in the Northern Hemisphere and the domestic game in the Southern Hemisphere.

The player drain on the Southern Hemisphere’s Super Rugby competition is already the youngest it has ever been as nationally-controlled contracting fails to match offers flowing from the North for fringe internationals or even mid-level talent.

In South Africa, the rules have been completely changed in order to keep the Springboks strong in the face of growing European power.

While it is in the South African Rugby Union’s best financial interests to let European and Japanese clubs pay top dollar for Faf de Klerk, Handre Pollard, Willie le Roux, Jesse Kriel and Damian De Allende, it undoubtedly negatively impacts the value of Super Rugby for all nations involved with these players missing.

South Africa’s Super Rugby sides will feel the first impact of the strategic change in 2020. Of the World Cup squad that won in Japan, less than half will play Super Rugby next year with most of the major stars promoting overseas leagues.

International capped players in New Zealand that weren’t in favour but still holding considerable star power are being picked off earlier and earlier.

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Seta Tamanivalu, Malakai Fekitoa, Lima Sopoaga, Victor Vito, Charles Piutau, Steven Luatua, Matt Proctor, Charlie Ngatai, George Moala and Julian Savea all are young enough to potentially still be adding pulling power to not just Super Rugby, but also the All Blacks.

Even the highest-profile stars like Brodie Retallick and Beauden Barrett are pushing for New Zealand Rugby-approved sabbaticals that will see them play offshore in 2020, leaving Super Rugby wanting for big names across all the competing countries in 2020.

Even emerging talent at the other end is being picked off, leaving a smaller margin for error in getting selections right. Tasman winger Tima Faingaanuku took a deal with French club Perpignan last year when Super Rugby clubs seemingly weren’t interested. The same has happened again this year for Hawke’s Bay first-five Lincoln McClutchie, now heading to the Japan Top League after his name wasn’t called by a Super Rugby team.

The Japanese Top League has also secured a host of older, high-profile overseas stars and the timing of that competition will leave the Sunwolves Super Rugby franchise bare of any Japanese players. With SANZAAR already confirming their fate post-2020, their last season will be a painful and awful watch full of ring-ins from God knows where.

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Rugby Australia’s financial pressures and problems fielding strong Super Rugby teams consistently have already been well-documented.

What happens with the next broadcasting rights cycle will be closely watched as a drop in value will signal that a spiral is already underway in Australia.

A decline in the number one revenue source – broadcasting – will create wage deflation across the code, which will escalate a player exodus at the top end and force Rugby Australia to scrap Giteau’s Law to keep the Wallabies competitive.

If Super Rugby continues to stagnate, the value of the SANZAAR broadcasting rights package will too.

The CVC-led push into rugby up North will surely result in the growth of theirs. If that value gap grows wider, you will see more and more offers that can’t be refused.

The Northern Hemisphere could become even more competitive on the international stage by allowing their domestic leagues to wage a full-scale financial war on the already cash-strapped Southern Hemisphere unions to eliminate their depth and remove top players. The French Rugby Federation’s move to limit foreign players in the Top 14 is actually a helping hand to SANZAAR offering some relief.

The SARU has already wisely bowed to that growing pressure, Rugby Australia half-heartedly with Giteau’s Law, but as long as the NZR insists on not selecting overseas-based players, this remains a risk for them.

With CVC’s investments, how long is it before offers to top All Blacks become three times, four times what the NZR can pay? When those offers get too hard to turn down, then the white flag will have to be raised.

We are undeniably on a trajectory towards that becoming a reality with little to no strategic action to close the growing ‘value gap’ imbalance at the club level.

The biggest power play that SANZAAR could use to turn the tide against the inevitable is to privatise the club game whilst retaining control of the crown jewel and biggest revenue-generating asset, the international game.

Selling off the Super Rugby franchises while keeping a minority stake will allow for wage inflation to improve at a greater clip driven by private investment. Moving to fee-based match compensation like the Rugby Football Union in England for international matches will take out all the risk with long-term contracts that continually go wrong.

When the NZR inked a four-year deal with star winger Julian Savea after the 2015 Rugby World Cup, they did not envisage that his declining form would result in getting benched by the Hurricanes as early as 2016, with Toulon bailing them out of the deal by the end of 2017.

After committing to a four-year deal with his successor Rieko Ioane, NZR are seeing a de ja vu of sorts as Ioane fell out of favour before even making it to the World Cup in Japan despite being on a reported million-dollar salary.

When Rugby Australia topped up a deal for Quade Cooper to return home to the Queensland Reds, they did not envisage they would be paying him to play club rugby at local parks around Brisbane.

By taking control of contracting, a centralised national union holds all the risk that the player will deliver on his contract value and some cannot afford to take the dead money hit anymore.

Transferring the risk to someone who can afford it is not a bad idea, which is what the SARU has done. Even better would be to transfer the risk but have the players still build value for you by playing for a franchise in which you have a minority stake in.

A sale of the Super franchises would need to cede control and the running of Super Rugby, but other terms such as favourable windows to access the players can be made with the hindsight offered by the RFU’s lack of foresight 20 years ago.

The national unions would need to lobby World Rugby for even tighter eligibility rules so that Super Rugby can become an open-border competition across the Asia-Pacific region with minimal risk of national unions poaching each other’s talent.

The competition could then modernise with a proper free agency market that irons out the differences in the playing pools of each country to keep the league as a whole strong at all times.

There would be limited crossover between South African players and franchises in the Asia-Pacific region and vice versa, but across the Tasman you would assume the flows would increase dramatically to aid and strengthen the Australian and potential Japanese franchises.

Only then can Super Rugby develop into the premier club competition in the world, keeping talent on this side of the world and grow in value in its own right.

At the moment it is on a path to becoming a ticking time bomb while remaining an extensive operating cost that national unions cannot afford and continue to lose value on by running it the way they do.

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Jon 2 hours ago
Jake White: Are modern rugby players actually better?

This is the problem with conservative mindsets and phycology, and homogenous sports, everybody wants to be the same, use the i-win template. Athlete wise everyone has to have muscles and work at the gym to make themselves more likely to hold on that one tackle. Do those players even wonder if they are now more likely to be tackled by that player as a result of there “work”? Really though, too many questions, Jake. Is it better Jake? Yes, because you still have that rugby of ole that you talk about. Is it at the highest International level anymore? No, but you go to your club or checkout your representative side and still engage with that ‘beautiful game’. Could you also have a bit of that at the top if coaches encouraged there team to play and incentivized players like Damian McKenzie and Ange Capuozzo? Of course we could. Sadly Rugby doesn’t, or didn’t, really know what direction to go when professionalism came. Things like the state of northern pitches didn’t help. Over the last two or three decades I feel like I’ve been fortunate to have all that Jake wants. There was International quality Super Rugby to adore, then the next level below I could watch club mates, pulling 9 to 5s, take on the countries best in representative rugby. Rugby played with flair and not too much riding on the consequences. It was beautiful. That largely still exists today, but with the world of rugby not quite getting things right, the picture is now being painted in NZ that that level of rugby is not required in the “pathway” to Super Rugby or All Black rugby. You might wonder if NZR is right and the pathway shouldn’t include the ‘amateur’, but let me tell you, even though the NPC might be made up of people still having to pull 9-5s, we know these people still have dreams to get out of that, and aren’t likely to give them. They will be lost. That will put a real strain on the concept of whether “visceral thrill, derring-do and joyful abandon” type rugby will remain under the professional level here in NZ. I think at some point that can be eroded as well. If only wanting the best athlete’s at the top level wasn’t enough to lose that, shutting off the next group, or level, or rugby players from easy access to express and showcase themselves certainly will. That all comes back around to the same question of professionalism in rugby and whether it got things right, and rugby is better now. Maybe the answer is turning into a “no”?

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j
john 5 hours ago
Will the Crusaders' decline spark a slow death for New Zealand rugby?

But here in Australia we were told Penney was another gun kiwi coach, for the Tahs…….and yet again it turned out the kiwi coach was completely useless. Another con job on Australian rugby. As was Robbie Deans, as was Dave Rennie. Both coaches dumped from NZ and promoted to Australia as our saviour. And the Tahs lap them up knowing they are second rate and knowing that under pressure when their short comings are exposed in Australia as well, that they will fall in below the largest most powerful province and choose second rate Tah players to save their jobs. As they do and exactly as Joe Schmidt will do. Gauranteed. Schmidt was dumped by NZ too. That’s why he went overseas. That why kiwi coaches take jobs in Australia, to try and prove they are not as bad as NZ thought they were. Then when they get found out they try and ingratiate themselves to NZ again by dragging Australian teams down with ridiculous selections and game plans. NZ rugby’s biggest problem is that it can’t yet transition from MCaw Cheatism. They just don’t know how to try and win on your merits. It is still always a contest to see how much cheating you can get away with. Without a cheating genius like McCaw, they are struggling. This I think is why my wise old mate in NZ thinks Robertson will struggle. The Crusaders are the nursery of McCaw Cheatism. Sean Fitzpatrick was probably the father of it. Robertson doesn’t know anything else but other countries have worked it out.

15 Go to comments
A
Adrian 7 hours ago
Will the Crusaders' decline spark a slow death for New Zealand rugby?

Thanks Nick The loss of players to OS, injury and retirement is certainly not helping the Crusaders. Ditto the coach. IMO Penny is there to hold the fort and cop the flak until new players and a new coach come through,…and that's understood and accepted by Penny and the Crusaders hierarchy. I think though that what is happening with the Crusaders is an indicator of what is happening with the other NZ SRP teams…..and the other SRP teams for that matter. Not enough money. The money has come via the SR competition and it’s not there anymore. It's in France, Japan and England. Unless or until something is done to make SR more SELLABLE to the NZ/Australia Rugby market AND the world rugby market the $s to keep both the very best players and the next rung down won't be there. They will play away from NZ more and more. I think though that NZ will continue to produce the players and the coaches of sufficient strength for NZ to have the capacity to stay at the top. Whether they do stay at the top as an international team will depend upon whether the money flowing to SRP is somehow restored, or NZ teams play in the Japan comp, or NZ opts to pick from anywhere. As a follower of many sports I’d have to say that the organisation and promotion of Super Rugby has been for the last 20 years closest to the worst I’ve ever seen. This hasn't necessarily been caused by NZ, but it’s happened. Perhaps it can be fixed, perhaps not. The Crusaders are I think a symptom of this, not the cause

15 Go to comments
T
Trevor 9 hours ago
Will forgotten Wallabies fit the Joe Schmidt model?

Thanks Brett.. At last a positive article on the potential of Wallaby candidates, great to read. Schmidt’s record as an international rugby coach speaks for itself, I’m somewhat confident he will turn the Wallaby’s fortunes around …. on the field. It will be up to others to steady the ship off the paddock. But is there a flaw in my optimism? We have known all along that Australia has the players to be very competitive with their international rivals. We know that because everyone keeps telling us. So why the poor results? A question that requires a definitive answer before the turn around can occur. Joe Schmidt signed on for 2 years, time to encompass the Lions tour of 2025. By all accounts he puts family first and that’s fair enough, but I would wager that his 2 year contract will be extended if the next 18 months or so shows the statement “Australia has the players” proves to be correct. The new coach does not have a lot of time to meld together an outfit that will be competitive in the Rugby Championship - it will be interesting to see what happens. It will be interesting to see what happens with Giteau law, the new Wallaby coach has already verbalised that he would to prefer to select from those who play their rugby in Australia. His first test in charge is in July just over 3 months away .. not a long time. I for one wish him well .. heaven knows Australia needs some positive vibes.

21 Go to comments
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