On the pitch it seems as if the Wallabies have overcome their horror period during the summer of 2013 when Robbie Deans was sacked after the infamous Lions series & Ewen McKenzie struggled during most of the Rugby Championship. Only during the end of year Tests did Australians see shoots of recovery with Quade Cooper rediscovering his form of old and his mischievous playmaking that so delighted fans.
But off the pitch Australian club rugby is in uncertain times when it comes to the state of the game – notably when it comes to finances. In terms of 2013 the Australian Rugby Union gained $100 million (AUD) in revenue for the year but merely received a turnover of $10 million. Despite the Lions tour ending in defeat for the Wallabies it was a success financially with travelling Lions fans generating an estimated $150 million to the Australian economy. Current chief executive of the ARU Bill Pulver does not hide the fact were it not for the Lions tour their financial situation “would have been very precarious.”
Moreover, at the provincial level the five franchises that make up Australia’s contingent within Super Rugby, aren’t doing well financially. Of the five franchises only one (the Queensland Reds) posted a profit last year. The other four Australian teams are haemorrhaging money though the Brumbies’ surprise and heroic run to the final has led them better off than the other three Australian franchises.
Melbourne Rebels have struggled despite funding from the ARU since their founding in 2010 while the Western Force have lost their main sponsor Emirates and at the start of the season left up to a $1m hole in their budget. The Waratahs’ poor attendances is hurting them financially coupled with losing HSBC as their main sponsor – Waratahs chief executive Jason Allen stating the impact of losing HSBC’s sponsorship has led them to be “50% worse off” than they were this time last year. Attendances for the Waratahs haven’t been great especially for local derbies. Adding to the gloom Bill Pulver has admitted 2014 could be tough and this Super Rugby’s season will run at a financial loss. So just why are the ARU in such financial strife?
Poor results by both the Wallabies and Australian Super Rugby teams haven’t helped. The Force and Rebels have under performed for years while the Waratahs have not been able to utilize the resources they have at their disposal. Only the Reds and Brumbies have done well in recent years. But sport in Australia is very competitive in Australia. Rugby union has struggled notably with the rise of soccer’s A-League. Rugby needs to grow its fan base, better engage with them and better market its game.
The missed opportunity when America’s Major League Baseball came to Sydney where the Waratahs were unable to get Israel Folau to represent rugby union at a photo opportunity at the SCG where Sydney’s teams in the AFL, A-League & NRL were in attendance – the organisers at the photo event wanted Folau only and not the Waratahs skipper Dave Dennis – was a missed chance to get good PR for the sport.
In addition, the salaries of certain Wallaby players are quite high, money the ARU could better spend elsewhere. Quade Cooper’s deal with the ARU, which reportedly runs out in the end of this year, is worth a reported $800,000 per season. Credit to the ARU though seeing they realized just how high the salaries are and acted upon it in October. As part of the Collective Bargaining Agreement (to last 10 years) between the ARU, the Rugby Union Players’ Association and the five Australian Super Rugby franchises the Wallabies Test match payments given to centrally contracted players was cut for the next two years from $13,100 to $10,000 per Test match.
But in a difficult environment where rugby union is competing with a multitude of sports in Australia the code has found it difficult to fend off other sports like the NRL, A-League and AFL. Super Rugby’s TV deal when compared to the other sports in Australia it is quite sobering to look at.
For the NRL in August 2012 they announced a five-year TV deal with free to air broadcaster Channel Nine and pay subscription channel Fox Sports worth $1.025 billion dollars. The AFL on the other hand announced a five year TV deal in 2011 that was worth $1.253bn – a 24% per increase from it’s previous deal. The broadcasters are mix of subscription-based channels (FoxTel) and free to air networks (Seven) along with digital content provider Telstra. The A-League pales little in comparison with the AFL & NRL television rights deal. But its four year deal lasting till 2016 is worth $160 million and the is primarily broadcasted by FoxTel but games will also shown on SBS, free to air television, for the first time.
Super Rugby’s five year TV deal lasts till the end of the 2015 season and when it was negotiated with the SANZAR nations of South Africa, New Zealand and Australia is worth $437 million overall. However, Super Rugby in Australia is exclusively shown on Fox Sports – more of a hindrance than something positive. When the new TV rights are up for negotiation come 2015 what happens is vital for Australian rugby.
The ARU will no doubt need a increase from what it receives and trying to get the sport on free to air television is a must. Being on pay TV merely restricts the audience. When comparing with the AFL, NRL and A-League it is likelier for the average sports fan to watch a sport that is being broadcast live on free to air TV than a sport solely exclusive to pay TV. At least Bill Pulver has recognised this leading him to harbour hopes one day Super Rugby games involving at least the Australian franchises will be on free to air television.
One small respite for the ARU is the expansion of Super Rugby in 2016 to Argentina that could open up the market to the Americas. Asia has been mooted as a possible route of expansion but an Argentine team will be admitted plus a 6th South African franchise likely the Southern Kings. Though Argentina being invited into Super Rugby could prove to be a logistical challenge (as South Africa will find out as they travel to Salta to play the Pumas, which is 900km north of Buenos Aires in the Rugby Championship) in itself, the value of the new Super Rugby TV deal when up for negotiation in 2015 can increase when factoring in Argentina.
Ever since Argentina entered the Rugby Championship in 2012 their revenue has skyrocketed making profits of 100 million pesos ($14.1 million) in 2 years – impressive for a country whose game is amateur, only now trying to move to professionalism, while using the amateur game as a means to finding and developing young talent. Added to that several sponsors such as Renault, Nike, Samsung, Dove, Deloitte and Visa (the latter being their shirt sponsor) have signed deals with the Pumas merely increasing their revenue. In an article with UAR board member and legendary scrum half Agustin Pichot he indicated an Argentine Super Rugby franchise would be 51% funded by the UAR and the rest by private investors. That means income will be generated via sponsorship deals at an increasing rate boosting the coffers of the UAR.
It is a far cry from Australia where Bill Pulver has recently implemented a levy of $200 on every club team in Australia, which includes junior clubs in a bid to stop the game going broke in Australia. Such a move by Pulver has been lambasted leading to many rugby clubs in New South Wales refusing to pay the levy. Former Wallaby coach John Connolly aired his disapproval for the levy explaining:
“If you compromise the development of your juniors at some point you will pay for it,”
However, the ARU in its attempt to improve the country’s depth of players, along with unearthing young talent has launched the National Rugby Championship. Kicking off in August it is Australia’s version of New Zealand’s ITM Cup and South Africa’s Currie Cup. Bill Pulver has pointed to the fact it is Fox Sports & FoxTel that will cover the costs of the competition (via a two year sponsorship deal) shielding it from any potential losses.
The ARU hope to generate some sort of profit from this (or at the very least no financial losses) but also improve the level of depth within Australian rugby by producing young talent like the ITM Cup & Currie Cup have done for New Zealand and South Africa in previous years. But will it work? The NRC being broadcasted on pay TV with FoxTel is a problem.
Its predecessor, the Australian Rugby Championship while a valiant idea in 2007 was a huge failure. The ARC was scrapped after one year seeing the ARU made a $5 million loss on it. It did not help they had to pay ABC just to broadcast the event, which is never a good sign of a competition’s prospects. But if the NRC doesn’t work it would just deepens the financial woes of the ARU.
Cutting costs in an attempt to ease the financial problems plaguing Australian rugby at the moment seems a short-term measure. To solve the financial malaise in the game an inquiry needs to be called on how to set out permanent measures to improve the financial situation in Australia for good. That way the game in Australia can take steps forward to safeguard the future of the game.
Only time will tell if this will happen. If not there will be genuine fears for the code.
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