David Pocock of the Western Force faces his opponent, Gerhard Mostert of the Lions in their Super 14s match at Subiaco Oval, Perth, Australia, Friday April 24, 2009. (AP Photo)
The South African threat to set up their own alternative Super Rugby tournament to replace the Super 14 is a big bluff. There are no provincial teams available in the rest of the rugby world to replace the Australian and New Zealand provinces.
Any tournament put together by South African rugby would not be worth a fraction of what Super Rugby is to South Africa.
The problem with this bluff, though, is that the South Africans might believe their own bullishness on their ‘go it alone’ policy and the best provincial tournament in world rugby, the Super 14, could go under.
On 15 March, the Afrikaans Sunday newspaper ‘Sondag’ reported that a special meeting of the five SA Super 14 franchises, SA Rugby, the SA Rugby Players Association and the broadcaster Supersport (which has signed lucrative rights from 2011 to 2015 for the Currie Cup tournament) had agreed not to accept any Super Rugby proposal that waters down the Currie Cup in any manner.
Also agreed was that South Africa would ‘aggressively’ try to ensure that the East Cape franchise is the 15th Super Rugby team, if the Super 14 is expanded to a Super 15 in 2011.
The response of South African Rugby to the ARU’s and NZRU’s fall-back Pacific Competition involving Australia, New Zealand, Japan and the Pacific Islands, Sondag reported, would be a South African sponsored tournament involving teams from South African, Argentina, the USA, Scotland and Ireland.
The newspaper also claimed that 65 per cent of the broadcasting fees for Super Rugby were generated in South Africa and that any withdrawal by South Africa would be ‘catastrophic’ for Australia and New Zealand.
On May 1, the ARU and the NZRU issued a joint statement saying that it wanted the new Super 15 Rugby tournament to continue through June with Tests between the SANZAR nations and European teams to be played mid-week, an approach that is used in European rugby.
The ARU and the NZRU stated that they opposed the South African preference to start the new, enlarged Super 15 in mid-February. The two unions wanted a March kick-off.
They rejected a SA Rugby proposal to put the two preferred versions of the Super 15 before the broadcasters to decide.
They reaffirmed that ‘talks would continue’ on their alternative plan if Australia and New Zealand separated from South Africa. This alternative might be described as the Asia-Pacific solution.
It was emphasised that the Tri-Nations, with the possible inclusion of Argentina, would not be affected by the impasse.
The CEO of the NZRU Steve Tew acknowledged to journalists that South African rugby, at this time, won’t budge. That replacing South Africa’s economic advantage was ‘massive’, but replacing those dollars was ‘possibly not as scary as initially thought.’
The CEO of the ARU John O’Neill confirmed that the Pacific-Asia solution was a ‘functional option’ that broadcasters ‘find quite attractive.’
It is clear from all of this that the NZRU and ARU are confronting South Africa Rugby’s bluff . And they are undoubtedly correct to do this.
Why do I call the proposals put forward by South Africa Rugby a bluff? Let me count the ways.
First, the money issue is furphy. The South African portion of the broadcasting payments from Super Rugby are already significantly higher than the payments made to Australia or New Zealand. This is right because the market is bigger in South Africa.
But, with no Australian and New Zealand teams there is no world class tournament to generate the television interest and sponsorship interest in Super Rugby that fills the coffers of South African rugby.
If you generate a 65 per cent profit of nothing, you actually generate no profit. This simple arithmetical equation must surely be obvious even to the South African rugby administrators.
Similarly, the drive to have the East Cape franchise as the sixth South African Super Rugby side is ludicrous. This franchise is essentially a black and coloured franchise. The team is extremely weak. It is being promoted on PC ‘rainbow nation’ grounds. It has been given the first match of the tour against the British and Irish Lions which promises to be the only easy match of the tour for the visitors. It will be years, if ever, before this franchise is ready for Super Rugby.
Anyway, the way to get the team into Super Rugby is for it to win its way up through a promotion and relegation system applied to the South African provinces.
There is the additional fact, too, about the claim for a sixth South African side that South Africa hardly warrants having five Super Rugby sides, let alone six. One South African side has won only one Super Rugby tournament. Every year some South African sides clog up the bottom of the table. This season, for instance, three of the five bottom teams are certain to be South African sides.
But the most important ingredient of the bluff is that unlike Australia and New Zealand, there is no alternative set of provinces across several countries to form a tournament that broadcasters would want to pay money for and spectators would want to watch.
Provincial rugby in the USA (with virtually no professional players) and Argentina (which has about 30 part-professional players in Argentina) is so weak that the East Cape team would easily win matches against sides from Argentina and the USA.
What about a tournament with Scottish and Irish teams, then? The time zone is fine, with South Africa being just two hours ahead of Greenwich Mean Time. What is not fine is the availability of teams from Scotland and Ireland to play in a South Africa-Celtic (without Wales apparently) tournament.
To understand all of this, we need to look at the structure of the South African rugby year.
At present, the SA rugby year starts in late February going through to late May with the Super 14 tournament.
On 10 July through to 31 October there is the Currie Cup, with 55 matches in all.
There are the June-July Tests against mainly European nations.
This is followed by the July-August-September Tri-Nations
And the season ends with the November – December European tour by the Springboks.
It will be obvious from this that the Currie Cup is already significantly ‘watered down’ with the home Tests schedule.
It is equally obvious that the present Super Rugby slot can’t be filled with a tournament involving South African, Irish and Scottish sides. Why?
Because the major Celtic rugby tournament, the Magners League, which consists of four Irish provinces (Leinster, Munster, Connacht and Ulster): four Welsh regions (Cardiff Blues, Newport Gwent Dragons, Ospreys and Scarlets: and two Scottish sides (Glasgow and Edinburgh) has a season that starts in September and ends at the end of May.
The Magners League season, therefore, starts when the Currie Cup is reaching its finals crescendo and ends around about the same time as the present Super 14 season when the South African replacement of Super Rugby should end.
Another problem is that recently the Magners League announced that it was considering expanding to include two Italian sides.
Where would five South African provincial sides fit into all of this? Or perhaps an even better question: Where are the Scottish and Irish sides that would be prepared to go into a tournament with the South African provinces?
One final point: the Magners League is used by Ireland to confirm their two teams to take part in the lucrative Heineken Cup tournament. Would teams like Leinster (a finalist this year after their splendid win over Ulster over the weekend) give up their chance to compete in the Heineken Cup for what is likely to be an inferior tournament with six South African sides?
The plain fact is that there are no spare provincial sides in Europe that would want to play in a South African tournament in the Super Rugby space.
My guess is that if the ARU and the NZRU present a Super 15 schedule (with Melbourne as the fifth Australian province) that ends before the Currie Cup tournament begins, South Africa Rugby really has no option but to accept that its bluff has been called, and beaten.
This presumes, of course, that the administrators running South African rugby are competent officials.
Some would say, including a number of South African journalists, that this is – unfortunately – an heroic presumption.
ohtani's jacket
Guest
I don't know how much the new deal will be worth, but it's pretty obvious that New Zealand and Australia can't afford any drop in revenue. They'd like more than 100 million, not less. Even if you take into account the travel costs, etc., 77.5% of the total revenue isn't enough for Australia to start up another franchise. The current deal wasn't enough for them to run the Force. And if I'm News Ltd., reduced travel and accomodation costs are just an excuse for me to pay you less. These costs are bugeted for out of the News deal and you'd have to think they're part of the negotiations. Last time, the unions got an annual increase of 16%, which I'm sure was in part to cover rising costs, but I doubt very much that the broadcasters got an annual increase of 16% in terms of viewership and more importantly subscriptions. Remember, Murdoch was extremely testy about how much they were paying for SANZAR product prior to the 2004 negotiations and he wasn't happy with events in 2007 either. SANZAR aren't in a position like the EPL or the NFL where they can go to the broadcasters and demand whatever they like. They rely entirely on broadcast revenue and that's why they have to keep scraping to find ways to get it. The other thing that I think is important is that News Ltd. aren't only paying for a package, they're paying for a brand. However people feel about the Super 14, it's a brand that involves three countries and the South African and UK markets are important to News. The trans-tasman comp is an unknown, untested brand and I'm assuming that they felt it had less international appeal than the current set-up, which makes sense to me.
Mark
Guest
OJ -thanks for that. So the split is not 3N/S14 & NZ now gets USD100m but only $30m of that is for S14. So if teh trans tasman only earned them 25% of the S14 they'd still have 77.5% of total revenue with less costs (travel & accom in SA must add up) & less wear & tear on the players. Still sounds like a feasible alternative to me. You might lose a few more players to Europe, but the up & comers will stick around. Cheers Mark
ohtani's jacket
Guest
Mark, From what I can gather, the SARFU get about 38% of the News Ltd. money, with New Zealand and Australia splitting the rest. New Zealand receive a slightly bigger share than Australia. There were rumours that SA wanted their share to increase to 45%, but the revenue shares aren't publically disclosed to my knowledge. In the last deal, they merely commented that "rhe three unions have also agreed on equitable revenue share arrangements for the new agreement." .New Zealand and Australia both got 100 million US out of the deal. As far as I understand, there was no split between the Tri-Nations and Super 14 money. The News Ltd. money also included the June Tests. South Africah have sold those off to Super Sport, so that's another interesting crinkle. The interesting thing about the Super 14 is that it's only worth 30% of the deal. It's far more important to SANZAR than it is to News Ltd. That's why I was suspicious about this trans-tasman comp.
Mark
Guest
OJ/Sam, - I thought teh major $ were in the Tr-Nations which wasn't up for review ? Also that SA already got the major portion of the S14 $. Therefore the logical conclusion was that while NZ & Oz would get less money it wouldn't be dramatically less. Anybody know that actual splits of Tri-Nations/S14, & NZ/Oz/SA splits for the S14 ?
Sam Taulelei
Guest
OJ that would be because most people don't try to work through or discover the details when administrators make PR statements through the media. All parties were bluffing at the negotiating table and JON is in his element in using the media to advocate his particular point of view although I agree with Marinos that the public posturings in the media didn't help matters and it would have been better to keep discussions private and for all parties to then make a joint statement.
Derm
Roar Guru
Interesting article, OJ. Well spotted. Had been reading another story on Rugby Heaven and someplace else written with the standard provisos that nobody would be saying anything until they've spoken to their respective unions. The article was supported by two quotes - one from John O'Neill , and the other from Steve Tew, who couldn't help himself saying that the South Africans were the ones who probably had to compromise the most. It's always hilarious to watch the outcome of negotiations by contending parties, and their flimsy attempts at packaging up the outcome to make it look like something else. Sounds like O'Neill and Tew were double-bluffed, and in the end, as in most of these kind of negotiations, it was compromise all round. And the continuing leaked word says the 15th team will be based in Melbourne.
ohtani's jacket
Guest
Interesting rumours in the NZ Herald -- http://www.nzherald.co.nz/rugby/news/article.cfm?c_id=80&objectid=10572789 "Sources have said the alternative transtasman competition being worked up as a fall-back option lacked detail. They also said it was unlikely to capture the imagination of TV executives or sponsors and that New Zealand and Australia would have been facing a significant drop in income had they gone down that route." I'm honestly surprised that more people didn't see through the trans-tasman bluff.
Jim Lamb
Roar Rookie
Now that the bluff has been exposed - let us hope that common sense prevails and the new team will be a fifth Australian team based in Melbourne. There is already a strong rugby union culture in Melbourne with a great support organisation with corporate and public support assured. The new football [i.e. soccer, union and league] stadium will be a perfect size for Super15 rugby. Also, the ARU must amend their rules to allow each Australian franchise to have up to six (6) or seven (7) players not eligible to play for the Wallabies on their roster - these players should come from the Pacific Island nations and Argentina - this would provide opportunities for 30 to 35 players to gain Super Rugby experience and employment in sync with their own nation's rugby season and they would have to be available for their national team if required. This would provide better support than having an artificle "Pacific Island" team located in Australia. When it becomes financially viable expansion of Super Rugby into the Pacific Island nations and/or Argentina would be much more easily achieved.
Binga
Guest
If you do look at the situation from a financial situation i think that for Australian rugby a Melbournian team has to be established. to those you say the Melbourne market is overcrowded i would say that the last Australia Newzealand game had over 90000 people attend. super 14 wont get this amount but it shows that support is there. i think that they just love sport. I come from perth and knowing grassroots rugby before and after the Force came to Perth changed condiderably and many clubs get more than 2 teams in the Juniours whilst before they would be luky to get 1. Ofcorse the eastern state teams would perform beter if they had the forces players back (which is actually happening) but i think there will be alot more western autralian players in the future which will strengthen Austalian rugby. I dont know what melbournes grass roots rugby is like but id expect to see a great improvement in at least numbers. This increased market in melborne would have to be tested if strong enough by more international games. If the RSA were to not compete in the current super 14 competition i think a Japanese and Hong Kong franchises would bring in large TV audiences if marketed properly once it becomes more than just expats watching which would make up 4 the loss of SA revenue and to add to the timezones actually allowing people to watch there team while touring asia instead of SA without staying up till about 3 AM.
Clarke
Guest
Australia needs more top class rugby to be played in Australia for rugby to survive. A team from Melbourne would be good. If Australian rugby is strong again, everyone will benefit, even South Africa. I hope the South Africans stop their silliness and go with O'Neill.
Mark
Guest
Rusty - it's an interesting one for sure. Given they'd be taking 6-12month views I'd trust the hedging of some crusty old kiwi farmers/busienssmen who've had to survive/hedge the exchange rates for the last 40yrs over "expert treasury services". There's two very opposing sides to this NZRU financial status story with the truth probably somewhere in the middle. Just an aside, there was a rumour at ANZ that when they shut down their London FX trading group due to the losses on their current plays, one of the guys canned offered to buy the 'near worthless' currency trades off ANZ for market value. As the bank'd chosen to bite the bullet & take the loss on the trades they sold them,. Well, what do you know, the FX guys were right & made a fortune on the trades that cost them their jobs, but were now 'their' trades. Never found out if it was more than just rumour but thought it was a great story.....
Rusty
Guest
Mark - given todays climate that is positively horrifying
Rusty
Guest
Hemjay - perhaps we both dont come across as well as we would like. Apologies on the incorrect naming. The profit generated is by the NZRU itself. The review was of the game as a whole, in other words including the including individual unions and other off balance sheet areas. The information can be found in the CEO Steve Tews report within the annual report for 2008 under the segment of Strategic Priorities, point 4. I might add its an insightful document and a whole lot easier to digest than the SARU and ARU ones. From what I understand SARU are fully onboard for the conference style of tournament..in fact I kind of struggle to remember who is opposing this format. Regarding the Currie Cup - the reasoning behind the smaller teams in the premier division is to expose the players from the promoted teams (we have a promotion/relegation with the 2nd tier) to play at the next level. Invariably some players from this will get drafted into a CC team and continue from there. Obvisously its not ideal having teams that are at best mediocre but it does offer a path from the lower echelons, valuable experience and something to aim for as a small union. As the S14 franchises are set in stone and incorporate all unions I fail to see how its a conference in itself.
Mark
Guest
Although reading thex next articel has me thinking of NAB & ANZ's FX woes of recent years. NZRU accounts show a business model that is not sustainable. The union has made a loss for the past two years and last year's would have been far worse but for some lucky currency punting. Profits in previous years came largely from foreign exchange hedging gains which experts have likened to gambling. The true situation came to light with this year's annual report, the first to be reported under new IFRS accounting standards. It appears the union has been relying on a haphazard foreign currency hedging policy to generate revenue, two-thirds of which is earned overseas. There is also the costly hosting of the 2011 Rugby World Cup to take into account, with multimillion-dollar bills to be paid after it's over. The union has committed to paying a $10m grant to the Eden Park Trust Board in Auckland as its contribution to the World Cup stadium upgrade. It has still to decide when it will pay. Whether the World Cup is profitable or not the union must also pay a £48 million pound ($120.5m) tournament fee on completion of the event. Even with lucrative Adidas sports apparel and heavy duty Italian vehicle company Iveco's sponsorship of the All Blacks, a smattering of other local sponsorship deals, and locked-in broadcasting rights revenue, the annual report warns much more money is needed for its professional game (now in its 15th year) and money-draining community rugby. And the union appears to have no formal policy. The majority of its income is earned in foreign currency and each year it looks to profit from currency movement based on ad hoc advice. The union said it does not employ expert treasury services, preferring to hedge millions based on advice from its board, market commentators, business contacts and its banks. Some $78.9m of the union's reserves are at risk and only $13. 5m of its 2008 income is hedged.
Mark
Guest
Rusty, I'm confused where your $10m comes from: MONEY TALKS: The NZRU recorded a $366,000 profit in 2008 (2007: $1.7m loss). This was recorded after a special assistance package was made for New Zealand's 26 Provincial Unions totaling $3.9 million in response to the worsening economic conditions, and after a re-valuation of the reserves held in British pounds for RWC 2011 payments with the value of the pound slumping in the final weeks of 2008. Revenue and expenses were $102m (2007: $101.7m) and $101.6m (2007: $103.4m) respectively. The modest profit meant the NZRU had available reserves at year-end of approximately $55m, after recognising the investment in Rugby World Cup 2011 ($10m) via Rugby New Zealand 2011 Ltd and the contribution made to the re-development of Eden Park ($10m). The New Zealand Rugby Union (NZRU) achieved a Scoreboard rating of 78 per cent in 2008, compared to 52 per cent in 2007. The All Blacks won every tournament and trophy available to them in 2008.
Hemjay
Guest
Rusty, Yes your right we are all entitled to an opinion however you are wrong in many of the assumptions you are making in regards to NZ rugby. Hobbs anounced the NZRFU had actually made a profit so I struggle to see where it is losing the money that you have said it is. Also how is it that my opinion of the ANZC not NPC (please lets get it right and start using the right name) is romanticised. Its just fact only two maybe three teams didn't make a profit in 08 and the fact remains South Africa does not have to compete with any other professional codes for fans or a slice of the broadcasting pie. For a country of only four million we are doing very well. I'm not here to belittle your competition but i and many others are scratching our heads wondering why on earth you would have a couple of teams in a competition that the have no chance of winning and why there is so much opposition to conference rugby when effectively thats all the Currie Cup is really isn't it? the only difference is that some of the teams operate under a different name and wear different Jerseys but are effectively a transplant from the S14? I personally am not a fan of conferences as i don't believe a country should get through to the supposed finals of the toughest competition in the SH for simply being the best of their country. If the standings today were used as an example NZ has 3 teams SA 2 and Aus 1 in the top 6, is it fair that the lowest placed NZ team drop out to accomodate an Australian team that didn't measure up during the season. bearing in mind any one of the three countrys could be in this position at some stage. Another point Rusty New Zealand has always supported SA in protecting its CC just not the way its going about it. And for your information the NZRFU supports the conferences the fans do not. but like anything they never listen to the fans and this is another reason why rugby is falling in NZ not to mention the fact we have other sports we play and are good at also. Like I've said there are many factors from both sides and if NZ only had rugby we too would probably be able to provide similar statistics as SA and the same thing vice versa for SA if you had anywhere near the competition for a slice of the pie as NZ and Australia do your figures would be similar to ours. Also the whole heat thing started after the SA player collapsed post game and others were complaining about being sick it wasn't NZ, but we have seen the logic in it. We even tried telling Aust to play the games at night instead. Im not saying your rugby isn't good what i am saying is ours is nowhere near as bad as you are making it out to be.
Rusty
Guest
obviously not writing - appalling grammar!
Rusty
Guest
Hemjay, Well we are all entitled to seperate view points and approaches, after all thats how we improve and in some cases subside. You mention the spread of talent amongst teams, well they are spread across the top 6 teams of Currie Cup. This approach was taken for competitiveness and to have the top players improve by playing other top players. So in essence its exaclty what you are talking about. Perhaps its not the right approach but given we dont employ the use of a draft then you will always get top players playing for the big unions and no benefit to diluting the comp with loads of minnow teams. Results havent obviously been as good as we have liked through the history of the comp/s and yes I agree with the fact we dont a very good job with the talent at our disposal. As you mention given our resources (player and financial) we should be top of the pile. However, I think both are on an upward curve and it will pay dividends throughout the pyramid from grass roots to the national level and from there the silverware will come. I also, and dont take this personally, think your notion of NPC is a bit romanticized. It might breed sucess but its not successful. The fact is the domestic nature of New Zealand rugby at this juncture is in direct opposition to its on field achievement. This has been aknowledged by Steve Tew and the NZRU within the Franchise Forum and other key notes. That currently NZ rugby as a whole is bleeding $10million more a year than it earns and that the NPC and franchise structures require further review for better viability says all is not well as it seems. Unsustainable I think was the way the report phrased it. The key would be for a combination of both.. how thats possible I dont know. Also seems we have gone into a discussion on the merits of respective domestic comps rather than a super expansion. Funnily enough in my research I have come across 2 interesting facts to this whole thing - NZ support the conference model proposal and have since 08. So looks like JON being the issue on this front - The Super 14 has always started in Feb. So must be a global warming making this an issue now Probably better get back to what they pay me for
Hemjay
Guest
Rusty, Most of our unions made a profit in 2008 only a few struggled namely BOP and Southland. the fact that the ANZC and Super rugby in New Zealand competes with many other professional and semi professional sports is a major contributing factor as to why the numbers aren't as great as in SA and this is something that SA has to take into consideration not to mention the sizeable population differences and the obsession for rugby in the republic. We love our rugby in NZ but the country has evolved to the point Rugby is no longer the be all and end all that it once was. I know you have mentioned that SA rugby is predominantely a white sport the fact remains the white population alone is nearly a quarter larger than that of NZ total population of all ethnicities and where your not competeing with other codes for the dollar it all balances out doesn't it.
Hemjay
Guest
sorry Van derwe what i was suppossed to say is if you do your homework you will find most of the canterbury players are from the province and those that weren't born there have played nearly all their formative rugby in and around Christchurch be it through their Schools and Club competitions.