John Hartigan, chairman and chief executive of News Limited (left) with Chief Executive Officer of the National Rugby League David Gallop (centre) and Melbourne Storm Chariman Rob Moodie. AAP Image/Tracey Nearmy
There has been much suggestion recently from sports fans that the Melbourne Storm are doomed and that News Ltd have lost money through their ownership of the Storm. Firstly, I’d like to look into the suggestion that News Ltd may be suffering.
News Ltd’s connection to rugby league started with the disastrous Super League war, when News Ltd attempted to buy rugby league in the mid-nineties so it could show the game on its imminent pay TV network, Foxtel.
News Ltd didn’t try to buy one or two clubs, but every club – the entire competition, the entire game.
It was only the strength of character shown by many in the league community that forced a standoff where News Ltd received joint ownership of the NRL with the ARL.
So News came out of nowhere and suddenly owns half the game.
They then sat at both sides of the negotiating table and rugby league was consequently undersold to News Ltd’s own Fox Sports in the latest TV rights deal. (The excellent AFL Independent Commission, free of any conflict of interest, negotiated more money for the AFL from News Ltd for their TV rights deal, despite inferior ratings on Foxtel).
So News owns half the NRL.
They underpaid for the privilege to show 5 NRL games every week on Fox sports, where rugby league is still the highest rating sport. They also have 66% ownership in the highly profitable Brisbane Broncos and have given no indication of giving up that ownership.
But surely they deserve some credit for propping up the Storm, the one team they created in the Super league war (which caused the North Sydney Bears, Western Reds, and the profitable Gold Coast Chargers to go under, and the axing of South Sydney in 1999).
The Storm are reported to lose $6 million per year, $3.5 million after tax right offs. (Brad Walter reported in the SMH last week that it is being investigated that Waldron and co deliberately inflated the amount the Storm were losing to receive more money from News Ltd).
However, in the NRL agreement, News Ltd receives $9 million every year from the NRL. They use this money to pay any losses the Storm incur and then keep the change.
News Ltd keeps the Storm afloat using money received from the NRL.
The Storm salary cap debacle has made a quick sale of the Storm impossible for News and they have acknowledged this by stating they will continue to fund the Storm for the next 5 years.
It is difficult for league fans to feel any pity for News Ltd, considering the profits they have made from underselling rugby league for 15 years.
This is, of course, why the Independent Commission is so important for the game. It will remove all conflicts of interest and allow the game to be sold for its correct value, which will then allow an increase in the salary cap for all clubs.
Had the game not been undersold with the current TV rights deal, (and the NRL current leadership must take some responsibility for this), it’s very possible the Storms salary cap woes would have been avoided.
So what about the demise of the Storm?
As has been highly speculated, we may have to wait until the final rounds of this season, or the first rounds of next season, to see if the support for the Storm in Melbourne has been pushed back 5 or 10 years, or not at all.
Many good examples of the Storm’s future have been made in regards to the Swans.
If the Swans were at the centre of this salary cap incident and had their 2005 premiership taken from them, would the AFL stand aside and let a club in Australia’s biggest TV market roll over and die? It’s ridiculous to suggest they would.
If CEOs of other NRL clubs wish to complain of the money spent to keep the Storm going into the future, they may well see that an independent commission puts the greater good of the game ahead of any individual club, as we have seen countless times with the AFL.
If you want to see the demise of the Storm, you’ll need to convince News Ltd and the NRL independent commission that the game will have the potential to make more TV revenue by not having a team in Australia’s second biggest TV market.
That would surely be impossible.
Col The Bear
Guest
BRING ON THE GOOD NEWS BEARS..READY WHEN YOU ARE NRL...:-)
Emperor Penguin
Guest
Yep. The AFL clubs get what, 90% of the TV deal revenue? The NRL clubs get around half that %. Where does the rest of the NRL TV money go? sure, a little goes to News and comes back through the Storm as outlined, but what about the rest? It can't all be going to junior development and the State RL's... Wheres the money? The Commission is needed desperately
M1tch
Roar Guru
We'd all agree that news shouldnt be in the game, but they have handled this pretty well, Jim has spoken well and handled the situation at the Storm well. They will ensure the Storm survive long term
John Melbourne
Guest
When a Lawyer & Company Director uses the Sergeant Schultz "I know nothing" defence after News Ltd millions$$ prop up of the NRL (not just in Victoria) then you know the cancer goes deep! That explains all the sudden & ealy smoke and finger pointing.
Crosscoder
Roar Guru
The amazing part about the whole debacle,we at teh same time have the nationwide Govt trumpeted BER with all the building,and the many riip offs being uncovered,indicating a very loose auditng process ,coupled with the insulation debacle.The Fed govt must be really thanking the Storm for putting the Feds on the back page. The ATO indeed will be having a field day over the next few years,and the lawyers pockets will ring to the sound of legal fees. Despite whatever comes out of this mess,the Storm will survive,as News continually states it will(and will look silly now if they don't),the NRL state they will(and will look silly if they don'T).the one thing that is a given,there will be changes as to the Storm's personnel. I would rather listen to Hartigan ,than listen to Waldron .I saw a recorded interview of Waldron banging on about how the Storm was ale to keep the whole team under the cap.The cap is needed to ensure all teams are viable.Looking straight at the camera.Funny I now see a forked tongue protruding. The player managers have a lot also to answer for,but little has been said about them.The Mr 7percenters.Greed is good baby.
Bam Bam
Roar Guru
I think we need News Ltd in some sort of field, they have the media to give us exposure, may be we force them (like the AFL did with 7 and 10) to show games into Melbourne and Perth, whilst forcing their international arm to put in articles about RL in their newspapers, just like we get the EPL news and sometimes NFL news. And I do believe the Storm can get more members out of this, RL lovers in Melbourne (albeit their is not that many) will want RL to survive and get onto them to support them then they will get memberships to ensure the survival of the frontier of RL in Melbourne.
jus de couchon
Guest
Fortunately , when the Lawyers get involved , Ignorance is not a defence. Should be interesting , especialy when the Tax men get a wiff.
Boerewors_boy
Guest
News are reaping what they have sown, it is going to cost a lot in dollars and integrity. There are plenty of other skeletons about to be uncovered elsewhere. The pious Mr Hartigan is Rupert's rottweiler and using the media to blame all and sundry and deflect heat from News in this monumental stuffup. Rugby League players are dumb, RL Administrators are dumb and duplicitous.
Mushi
Guest
Come on a bit of hyperbole here: - The Brisbane broncos are not “highly profitable”. - the opposition to super league wasn’t courageous it acted purely out of self interest and it was this uncommercial self interest that allowed super league to occur - an independent commission is actually run by the existing clubs so it will require them to put aside their own self interest. Not saying this is impossible but also not a certainty.
Justin
Guest
Agreed Tom and the same is applicable to the Swans in Sydney. No one has ever really explained the maths behind having expansion teams in new areas where virtually no one watches them (relatively speaking) on tv. You always just hear we need to be in the second biggest market...blah blah blah
Harry
Guest
The most sensible and truly perceptive article I've read about this whole situation.
Tom
Guest
How many games are actually shown live into Melbourne? Doesn't seem like the NRL get much out of the 'second biggest TV market' at the moment.
Adam Ballard
Guest
Thanks Paul J for a realistic insight into the business that is the NRL. For the next 5 years at least you will see Melbourne Storm with more members and premierships than before. The hard yards for the storm in this short time is to turn a profit. In a week of guessing game journalism, your realistic view of the "business" is refreshing.
oikee
Guest
:) Now you have to ask yourself why the ARL fought so hard not to have a independent commission.? How much have they been ripping out of the game. ? Look, rugby league is a joke. The people running the game are jokes, the fans are nothing but puppets to money grabbing conglomorates. Its very sad, but still, one day, we might get our carvery. They are struggling under the burden of making money from our humble game. :) Do you think they will survive. :) :) :)
ac
Guest
What a mess. It seems this was just waiting to happen. I agree the AFLwould not have allowed this to happen but they have an Independent commission which isnt club controlled like the NRL and also has News Corp to deal with!