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As the SANZAR suits gather this week and begin to nut a path for the future of the premier Southern Hemisphere competition, I’m sure lyrics by the brilliant Manchester Orchestra will be at the forefront of their minds.
“Simple Math, that’s how our bodies even got here.”
OK, they probably don’t listen to the Atlanta-based rockers. However, the simple truth is the reason we’re now considering expanding the South African contingent, introducing Argentinian and/or Japanese teams, closing conferences, producing an even odder fixture list and putting a man on the moon is that it’s an easy way to make more money.
That’s even more important from the ARU’s point of view. It’s simple math.
To start with I’ll put this in the wider sporting context, and it’s not a pretty one.
A few weeks ago a Sydney Morning Herald article by Andrew Webster took my eye. It depicted the infighting at the Wests Tigers and the fact that the team weren’t paying their old coach, Tim Sheens.
The point that relates to the broader topic today is the way he quickly states the club was “drowning” under $2million of debt.
Only $2million, I thought to myself.
I mean, I’d be a bit worried myself if I had that kind of debt weighing over my head, but it didn’t seem like a big enough figure to scare an club that takes part in what’s probably the second biggest competition in these shores.
It has since been revealed the Tigers are desperate for a $1million cash injection to continue functioning properly .
The lesson here, kids, is to remember that most Australian sport franchises do it tough.
Many NRL clubs are either struggling with debt, or reliant on pokies money being shifted across to the sports operation budget from the leagues club.
Let’s bring it closer to home now, to rugby, the third-ranked (Fourth? Fifth? I don’t even want to know, it’s probably sliding faster than our IRB ranking) code in the country.
In the 2012 financial year the NSW Waratahs made a profit of $64,745. That comes from total revenue of $19million. The actual operating income and expense leaves the club $140,000 short.
Going a little deeper into the figures shows a club that makes more money ($5.6million) from its sponsorship deal than it does from combined membership/ticket sales and stadium payments and the main sponsor had to be replaced this year – who knows if Volvo can afford to match HSBC.
Want to take a look at the Reds, who are only three years removed from an ARU bail-out to prevent entering administration, it’s safe to say the two biggest franchises in Aussie rugby aren’t rolling in dough.
To begin with, it clearly states in the graphic at the beginning of the finance section of the Reds’ 2012 report that the ARU pays them $4.2million per year.
Do you think the Brumbies are making a motza with crowds that don’t sell out for finals? Can the University of Canberra fund an entire playing roster?
Does it cost $4million per year for McDonalds to put the inflatable sign on the hill?
And we haven’t even moved on to the Force who were so well financed they had to stop paying Matt Giteau among others and the Rebels who were so flush with cash their savvy businessman of an owner got out.
What about the ARU? More importantly, where does this math lesson end!?
Soon.
The ARU made a net loss of $8.3million for the 2012 financial year. That is expected to be a profit this year due to the bloated revenue from the Lions Tour.
Check out the graphic on page 80 of the report showing vividly the amount of income generated from Super Rugby compared to that of the Wallabies That is where the math gets ugly.
The broadcast deal for Super Rugby is worth about $2.5 million less than the Wallabies share from the Rugby Championship. The sponsorship for Super Rugby is a token gesture compared to the $27million or so for the Wallabies.
Overall, the ARU and the Super Rugby franchises are extremely reliant on that broadcast deal.
No, you might not watch the rollicking matches between the Cheetahs and Sharks at 3am, but the trickle-down effect of the large number of South African’s that do tune in means the ARU can afford to help the Waratahs sign Israel Folau.
In fact that Stormers clash with the Duendes Rugby Club in 2018 might make even more of a difference to the bottom line for Australia than another tense Hume Highway derby match.
Another layer to this is the exposure granted a competition that’s now being played on a fourth continent and country.
If you were, say, an international bank or investment firm thinking of investing funds in Super Rugby in exchange for exposure to the eye balls watching the game, would the fact the 40million people who live in Argentina were now also a potential audience, not to mention Port Elizabeth inclusive with Johannesburg, the biggest city in South Africa help loosen your wallet?
I think it would, and that piddling green bar on the graph representing the Super Rugby sponsorship portion of the ARU income would also agree it was worth trying to find out.
So, given the math, would you be the ARU representative who doesn’t push for expansion, and the easy eyeballs added to the ratings and brand exposure in favour of ‘consolidating’ what we already have?
Anecdotally, going on the types of people who rise through the ranks to CEO level, it might be physically impossible for such a person to knock back the extra revenue.
Manchester Orchestra said it so eloquently after all, “simple math, the truth cannot be fractioned.”
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.