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In just a few days the 2014 Super Rugby season kicks off as the South African conference gets underway, with last season’s surprise packets the Cheetahs facing this season’s newcomers, the Lions.
Meanwhile, the Australian conference kicks off on February 22 with a crunch clash between the Reds and Brumbies in Canberra, with the New Zealand conference also starting that day.
But with the arrival of a new season in the Southern Hemisphere there is worry within Australian club rugby about the state of the game – most notably when it comes to finances.
In terms of 2013 the Australian Rugby Union gained $100 million in revenue for the year but merely received a turnover of $10 million.
That is despite the Lions tour which, although ending in defeat for the Wallabies, was a success financially with travelling Lions fans generating an estimated $150 million for the Australian economy.
Current chief executive of the ARU Bill Pulver does not hide the fact that their financial situation “would have been very precarious” were it not for the Lions tour.
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 the 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 left 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 leaving up to a $1 million hole in their budget.
The Waratahs’ poor attendances are hurting them financially, as is losing HSBC as their main sponsor. Waratahs chief executive Jason Allen said the impact of losing HSBC’s sponsorship has led them to be “50 percent worse off” than they were this time last year.
Adding to the gloom Bill Pulver has admitted 2014 could be tough and this season’s Super Rugby season will run at a financial loss.
So just why are the ARU in such financial strife?
“Poor results plus poor rugby by both the Wallabies and Australian Super Rugby teams hasn’t helped,” journalist John Davidson explains. “The Force and Rebels have been poor for years while the Waratahs have under performed. The only teams to have done well in recent years are the Reds and Brumbies.
“But sport is a very competitive market in Australia with rugby union struggling, particularly with the rise of the A-League. Player salaries are high with many Wallabies overpaid. Rugby needs to grow its fan-base, better engage with them and better market its game.”
Davidson is certainly right when it comes to the salaries of players. Quade Cooper’s deal with the ARU, which reportedly runs out at the end of this year, is worth $800,000 per season.
The ARU noted 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 is 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 game has found it difficult to fend off other competitions like the NRL, A-League and AFL.
Davidson lays the reasons why that is the case in a social but also geographical context.
“Rugby remains a private school, middle to upper class game, mainly restricted to New South Wales and Queensland,” he says. “Both the NRL and AFL have grown massively in the past few years, gaining bumper TV deals.
“Regarding the A-League it is starting to grow, heading towards an upward curve, backed by soccer being the biggest participation of sport in the country. Worryingly from the four codes mentioned above it is rugby union that is smallest of those codes.”
The TV deals for the three codes battling rugby union are extensive. The NRL in August 2012 announced a five-year TV deal with free-to-air broadcaster Channel Nine and pay subscription channel Fox Sports worth $1.025 billion dollars.
For the AFL, their five-year TV deal announced in 2011 goes even higher – worth $1.253 billion and lasts until the 2016 season– and represents a 24 percent increase from its previous deal. The broadcasters are a mix of subscription-based channels (Foxtel) and free-to-air networks (Seven) along with digital content provider Telstra.
The A-League pales in comparison with the AFL and NRL television rights deal, but its four-year deal lasting until 2016 is worth $160 million and includes games broadcast primarily on Foxtel but also shown on free-to-air television (SBS) for the first time.
Super Rugby’s five-year TV deal lasts until 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.
Super Rugby in Australia is exclusively shown on Fox Sports – more of a hindrance than a positive. When the new TV rights are up for negotiation come 2015, the outcome is vital for Australian rugby.
“The ARU needs an increase from what it currently receives and also has to find a way to get Super Rugby on free-to-air television,” Davidson says. “That is a must, even if it is just one game per week. Being just on pay TV restricts the audience massively.”
When comparing with the AFL, NRL and A-League it is likelier for the average sports fan to watch a sport 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 that 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 possible expansion of Super Rugby in 2016 to Argentina, opening up the market to the Americas.
Asia has been mooted as a possible route of expansion but it is more likely an Argentine team will be admitted, plus a seventh South African franchise – probably the Southern Kings.
Though an Argentine team in Super Rugby could prove to be a logistical challenge 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 two years. It’s an impressive result 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.
UAR board member and legendary scrum half Agustin Pichot has indicated that an Argentine Super Rugby franchise would be 51 percent 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, including junior clubs, in a bid to stop the game going broke.
This 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: “If you compromise the development of your juniors at some point you will pay for it.”
In its attempt to improve the country’s depth of players and unearth young talent, the ARU 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.
Pulver has pointed to the fact it is Fox Sports and 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.
But will it work? Davidson highlights one problem and that is where the NRC is being broadcast.
“I hope it will be a success but doubt it will be,” he says. “Its predecessor, the ARC in 2007, was a huge failure.”
Davidson’s assessment of the ARC being a huge failure is an understatement. The Australian Rugby Championship was scrapped after one year after the ARU made a $5 million loss on it.
It did not help that they had to pay the ABC just to broadcast the event, which is never a good sign of a competition’s prospects.
But if the NRC doesn’t work and just deepens the financial woes of the ARU, could the ARU be forced to bin one of its Super Rugby teams in the future to cut costs?
“I wouldn’t be surprised if they do,” comes Davidson’s telling response.
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 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.
Join The Roar rugby editor Christy Doran, former Wallaby Matt Toomua and a cast of regular and special guests as they look at the biggest issues in the game on The Roar Rugby Podcast. If you’re looking for great odds on the next game check out Aussie bookmaker PlayUp. Chances are you’re about to lose. Set a deposit limit.