New Zealand Rugby’s financial results, not normally an enlightening read, threw up a handful of intriguing questions when they were unveiled last week.
Hidden in the numbers and the optimistic spin trying to make light of the fact that another $20m was lost ($9m was lost last year and $47m the year before that), was a significant hike in the amount of money that was spent on Teams in Black from $75m in 2023 to $84m in 2024.
That’s a nine per cent jump in investment, and while it is most likely – the figures aren’t broken down – the bulk of that increase was spent on the All Blacks, there was no doubt, too, uplifted expenditure on the full portfolio of teams which includes the All Blacks XV, Maori All Blacks, Black Ferns, All Blacks Sevens (male and female) and New Zealand Under-20s.
This expenditure fits with NZR’s financial strategy of using the All Blacks’ brand to generate more revenue that can then be re-invested in the grassroots and community games.
And there is an argument to say it is working – or at least partially working – as nine per cent additional investment in teams in black led to a 13 per cent increase in revenue from $268m to $285m.
The increase came mostly from higher sponsorship revenue – the All Blacks signed up with Bupa and Mitsui Fudosan to increase total revenue from commercial partners to $125m from $120m – while playing Tests in Tokyo and London saw matchday revenue increase by almost $3m.
As further evidence that the All Blacks remain a commercial heavyweight, they were able to secure a replacement sponsor for Ineos – the British firm unilaterally terminated its kit sponsorship deal in January this year – significantly ahead of their forecast timeline.
Investing heavily in teams in black is the model NZR believes will ultimately prove to be successful in the long run in ensuring that the game remains sustainable and vibrant. The All Blacks – the family of teams in black – have significant earning power, a fact that no-one disputes.
What we do know is that where we have good plans and strategies, we do get good return on investment.
But chief executive Mark Robinson accepts that for this plan to work, there needs to be a reduction in overall spending. Costs need to be cut elsewhere (not investment in teams in black) so that that the total amount of money going out does not continue to exceed the total amount of money coming in.
“The big focus this year is the opportunity to reshape the overall model of the game,” says Robinson. “We believe we have enough revenue coming into the game overall; it is north of $350m (including Super Rugby and provincial competitions) but we have some things in place which make it challenging to be sustainable overall.
“We are in the process of redeveloping the strategy. Once we are aligned on that, it is a case of sitting down and creating a model for the game that is aligned with strategy that allows investment of resource into all the areas of the game combined and to get really clear on the role and purpose of ourselves and each of the stakeholders across the game.
“What we do know is that where we have good plans and strategies, we do get good return on investment.”
The proof is there that teams in black deliver commercial returns, but is the strategy of investing more enabling teams to win more?
This is the key question because the Black Ferns Sevens are the only team in black to have consistently delivered against expectation in the last five years – but it’s not clear to what extent their funding may have changed over the same period.
What is easier to accurately speculate is that the bulk of the extra money being invested in teams in black is being pumped specifically into the All Blacks.
The All Blacks are spending big on their coaching teams, spending big on their high-performance personnel and spending big on their players, too.
They play the most Tests, are building more offshore games into their itinerary and have been able to hire the most resource in terms of coaching and management personnel.
There has certainly been personnel inflation over the last decade as Steve Hansen began his tenure in 2012 with a coaching and management team of 14 people.
When Ian Foster took the All Blacks to the 2023 World Cup, they had a staff of 21 and last year, new coach Scott Robertson’s permanent team had 23 people, while he was also able to use Corey Flynn as a part-time throwing consultant and David Hill as a part-time kicking consultant.
The All Blacks are spending big on their coaching teams, spending big on their high-performance personnel and spending big on their players, too.
The UK media tend to overlook New Zealand when they estimate who the best paid players in the world are, but the top All Blacks are paid in line with their European counterparts.
The top five or six players in New Zealand earn around $1m to $1.2m (£443,000 to £532,000) a year, but when they take sabbaticals, they get paid twice – by the foreign club and by NZR (minus the Super Rugby component of their salaries which is $200,000 – or £89,000).
Beauden Barrett and Ardie Savea, who last year both played a club season in Japan before coming home to play for the All Blacks, would have earned in the vicinity of $3m (£1.3m).
Money is not buying on-field success for the All Blacks, but that is not necessarily dissuading potential commercial partners from investing.
There is money pouring into the All Blacks, and yet the more they spend, the less return they get for it.
In 2016, when the spend on teams in black was $48m, the All Blacks won 13 of their 14 Tests. When it jumped to $53m in 2018, they won 12 from 14.
In 2022, when they were spending $78m on their teams in black, the All Blacks won nine, lost four and drew one. And last year, the record spend of $84m netted 10 wins from 14 Tests.
Money is not buying on-field success for the All Blacks, but that is not necessarily dissuading potential commercial partners from investing.
But the accounts show that NZR is taking a risk in its strategy as some of the additional money being pumped into the teams in black is being taken out of the pockets of the provincial unions.
They collectively saw a $3m drop in their distributions from NZR last year and have been told they will suffer another similar drop in investment again this year.
The question obviously arises as to how the cycle will sustain itself if the community game is not well funded to supply the pipeline of future All Blacks.
This is the nub of the risk NZR is taking – shifting its balance of investment – presumably short-term – so there is more going into the top than the bottom of the pyramid.
If the money keeps rolling in and there are ways in which overall costs can be cut without taking yet more from the community game, then the investment plan will work.
Kirk felt the biggest issue the game faces in New Zealand is not finding ways to balance the books, but finding ways to drive higher participation and keep juniors playing through their school years and into clubs.
But it is apparent that there is some nervousness in the game about the risk NZR is taking, with newly appointed chairman, 1987 World Cup-winning captain David Kirk, saying he is concerned about overall playing numbers – which continue to show that there is a big drop-off in the number of boys who play once they become teenagers.
Speaking on the day the results were announced, Kirk felt the biggest issue the game faces in New Zealand is not finding ways to balance the books, but finding ways to drive higher participation and keep juniors playing through their school years and into clubs.
“The biggest challenge for all sporting organisations is engagement and participation,” he said. “Our mission, our purpose, is to involve people in rugby. And to do that in partnership with the provincial rugby unions, and the Maori rugby board and so on.
“And it’s harder and harder to do that. You have got lots more options, through high school in particular. Fewer teenagers are playing when they leave school.
“So participation and engagement is our biggest challenge. And the organisation is very aware of that. There’s a whole range of activities going on, and we intend to continue those activities to get people to engage and loving the game.”
Win ratios are not a ‘return’. A return is something like making the RWC final, or as you pointed out at the beginning of your article, increasing revenue.
I’d imagine it’s not too much different to risk in any business, but at least it’s working now and they’re a year smarter too. One thing Robinson needs to absolutely get clear though, he needs to keep increasing revenue, it almost needs to double before he can take his foot off the pedal. The is soo much opportunity out the drive brand and market share in new areas, particular the booming popularity of rugby that will soon come.
I think this is a strange conclusion to jump to:
I would argue underspending on talent retention from 2016-2019 contributed to the underperformance of the 2019-2022 all blacks.
The period between 2016-2019 saw many low cap and fringe all blacks leave, the main issue is when guys that were still under 30 left, Piutau, Fekitoa, Cruden, Boshier come to mind not to mention some solid super rugby players that left too.
This exodus weakened super rugby and ultimately the all blacks. We went into the 2019 WC with inexperienced wingers, a young 10 in Mounga and an untested midfield combo. It’s not surprising we got knocked out by a quality england side. The spending increase in years that followed were papering over the cracks of a broken team, until NZR finally realized the All Blacks success had limits and took action. Now we have higher spending but at least in the form of a strategy for retaining talent in super rugby, the Ab’s XV and the All Blacks themselves.
Yes it costs money but lets face it, the All Blacks brand is the golden goose for NZR. That brand is built on the “aura” of mythical team, an attacking style, executed by the best players in the world, and an unmatchable record of performance. In 2022 we nearly saw the whole thing unravel and the brand took a massive dent because of it.
Yes NZR needs to look after the lower levels of the game, but to do that, they need money, in amounts that only the All blacks generate. Spending on All blacks performance is an investment. However I agree ultimately, like any investment, returns should be expected and we need to see these in 2025…
If they spending more and more on their national team, at the expense of grassroots rugby then it’s quite obvious that participation numbers will drop. They have an unqualified CEO who does not understand economics, he has the same reasoning as Howard Nutlick, who is destroying the bond market as we speak.
I would agree with your sentiment but advise that you have to find another cause, as the 2016-2019 period had been the best for retention of players. It’s when a jump in influx of money came and they retained more players than ever.
You can find a Herald article on it towards the end of that period.
Very short sighted.
Rugby needs to get back the cultural space it used to hold in New Zealand so player numbers increase and we can keep the talent conveyor belt cranking along.
They will not achieve this by focusing on high performance to the detriment of everything else.
The 7 day working week was the pivital moment for the decline in post school participation.
Who works 7 days a week?
NZR is caught between a rock and a hard place. The All Blacks may be consuming more money but the reality is they are the brand and they need to be propped up now more than ever. They cannot cut the spending because the brand needs to succeed. The provinces dont make any money but the investment in them creates a steady stream of players of high quality for higher honours. Cutting the provinces out would not be good for NZ rugby especially at a time when the game needs to grow and not shrink. NZR must find new revenue streams. That is where Super Rugby and an expansion needs to be considered. Perhaps an expansion to the US or an expansion which includes a Champions Cup for the Pacific which includes the Japanese clubs is something NZR should consider? Also private ownership of SR teams may also attract outside investors. NZR needs to decide how and when to pull the trigger on these ideas soon. What is clear is that its current path is not sustainable.
There’s so much potential as, quite frankly, I don’t think anyone in these parts really cares too much what happens with SR. Just like at how SA leaving didn’t change anything, there is already an apathy to SR and always has been. COVID was a great opportunity to change the landscape and they decided to go into their shell.
Engage the country in domestic rugby again and watch the explosion in interest levels.
Hard to feel confident in NZR strategy when the stumbles are so frequent. The slow strangling of the provincial game will inevitably flow through to the elite SR and AB levels. There does not yet appear to be a sustainable strategy for selection freedom with contracted players (regardless of form). Razor’s overloading of support staff for the ABs also seems to have resulted in mixed messages, over-spending, and lack of clarity at the top level. The mediocre results bear witness.
Eww what does that mean, “selection freedom”?
I’ve been saying for ages they need to engineer a way to get New Zealands 2nd team v(the official one, of which there is none atm) humming, a All Black Gladiators teams or something that they can bring together a couple of times a year from all the overseas All Blacks, and match them up with the best home talent as well.
That would give them the freedom bring players through in the ABs, mix the young with the vetgs, and get a good read on everybody to ensure the best players make it into the All Blacks. I just can’t see where you’re “freedom” is going to come from currently when the ABs only play 12 matches a year and the competition is so tight that they’re all ‘must-win’ games, the best aval players.