Australian Rugby Union announced today that they will explore the potential for private investment in domestic Super Rugby teams.
Is this a wise decision?
The report from the ARU, where they announced a number of major strategic initiatives is provided below. The initiatives include supporting a dramatic transformation of Super Rugby and additional competition opportunities for Australian teams.
The ARU is also determined to tackle development challenges facing the code, with participation figures falling last year for the first time in a decade.
An injection of capital from the private sector at Super Rugby level – under tightly controlled conditions – is viewed as an essential next step in the game’s evolution.
The ARU “Strategic Imperatives”, endorsed by the Board on March 26, were detailed at the Annual General Meeting where a loss of $8.4 million was reported for the year ending 31 December 2007.
A reduced Tri-Nations series and a match program not as strong as the previous year contributed to a $4.8m downturn in gate takings, corporate hospitality and licensing.
Net broadcasting revenue was also down by $2.5m on 2006 due to a contracted schedule forced by the 2007 Rugby World Cup.
The major increase in expenditure was $5.5 million on the Australian Rugby Championships.
ARU chairman Peter McGrath said the Board was now committed to looking forward and growing the game at all levels.
“If we want Rugby to have a greater footprint in Australia, if we want to have a stronger competitive position against the other major football codes, then we need to advance,” he said.
“We need to push for an expansion of Super Rugby and explore the introduction of private equity, which has not previously been permissible under ARU policy.
“Private equity is not a dirty word. When managed correctly, it has been a major contributor to the success of various sports around the world.
“We are now a mature professional sport. It is time to look at embracing it.”
ARU Managing Director and CEO John O’Neill said the strategies to improve Australian Rugby’s standing both nationally and internationally had been extensively researched and discussed – starting with an internal three-day planning conference in January.
“Doing a bit better than we are at present is not enough,” he said.
“We have to do more than tinker. The challenges we face as a game have been outlined previously and with Rugby in a position to control its own destiny, doing nothing is not an option.
“We need transformation at the professional level, and that can be achieved through the injection of capital from alternative sources that have an affinity and affection for the game.
“Private equity, however, will need to be tightly controlled and controlled nationally to ensure enduring benefit for the code while also recognising the interests of equity partners.
“The ARU Board has unanimously endorsed these principles. ARU will now set up collaborative working parties with key stakeholders within the game to progress the process.
“There will be clarity as we move forward about the rules and the potential opportunities for Australian Rugby and its partners.
“ARU also has a Management working party considering possibilities for future competitions.
“Clearly, any changes to Super 14 require the agreement of our SANZAR partners and inevitably they will have their own ideas for change.
“We look forward to sharing an exchange of views.”
Mr O’Neill said an introduction of private equity, and the ensuing boost to the Australian Rugby economy, would assist all levels of the game not only the professional arm.
“We view this as an exciting opportunity for Rugby,” he said.
“Meaningful gains in youth participation and development right across Community Rugby can be achieved if the game overall has a broader financial base.”
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