The viability of teams participating in the NRC

Scott Allen Columnist

By Scott Allen, Scott Allen is a Roar Expert

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    The ARU’s announcement of a third tier competition to commence in 2014 is a real positive for Australian rugby. I am going to attend as many matches as I can and watch every televised match.

    In order to develop more depth in the professional levels of Australian rugby we need as many players as possible competing in more highly competitive matches.

    The NRC will allow us to test the best amateur players among professional players.

    I hope the competition is a great success, as we need it to be a permanent part of the rugby landscape.

    However, there is so much detail for the ARU and Bill Pulver to sort out and there is not a lot of time in which to complete that work to avoid disorganisation in the first year of the competition.

    The earlier it is determined how many teams will participate and which teams will participate, the earlier a draw can be finalised. Each team will need as much time as possible to organise coaches, their playing roster and approach sponsors etc.

    The two questions surrounding a third tier competition have always been; which teams should participate and how can the costs be covered?

    Which teams should participate?
    No matter the answer to this question, not everyone will be happy. We all have our own ideas on who the participants should be – existing clubs, geographically based teams or the second XV from each Australian Super Rugby franchise.

    The ARU have decided to allow for any of those options and other possibilities by opening up applications to any party and then selecting participants based on capabilities judged against a range of criteria.

    That also means any club in Australia has the opportunity to participate in the competition, if they meet the criteria.

    The ARU have got it right with this approach. They are determined to establish a national competition so have made it clear at least one team from Canberra, Melbourne and Perth must be included.

    They have also acknowledged Sydney and Brisbane need more than one team, given those two competitions produce the majority of professional players in Australia, but the model also allows for teams from other locations to participate such as Adelaide, Newcastle or country teams if they can meet the criteria.

    The ARU know the success of this competition in the future relies on the teams participating being viable. There is no point in cobbling together teams together to participate that may not survive in the long term.

    I suspect the ARU will use a cascading selection system based on who applies and how well they meet the criteria, with preferences along the following lines to get a minimum of eight viable teams (although the ARU has made it clear they are open to up to ten teams in the competition if they are all viable):

    Priority one – three joint venture teams in Sydney; two joint venture teams in Brisbane; and one joint venture team in each of Canberra, Melbourne and Perth – a minimum of eight teams.
    Priority two – two additional joint venture teams regardless of location.
    Priority three – existing clubs entering stand alone teams if not enough teams in the first two categories meet the criteria.
    Priority four – teams entered by Super Rugby franchises if there are any spots remaining.

    As an example of what I mean by a cascading system, if there are no joint venture teams that apply from Perth that meet the criteria, the ARU would then consider an application from a standalone club in Perth if they meet the criteria and if there were no other teams from Perth that meet the criteria, they would consider a team entered by the Force.

    In this way clubs can decide who participates. If enough clubs get together to form viable joint venture teams those teams would be the participants in the competition.

    If clubs don’t want to join together or can’t put together enough viable joint venture teams then they can hardly complain if any existing club fills any remaining spot in their own right by meeting the criteria and demonstrating they are a viable option.

    That would mean if only two joint ventures are formed in Sydney that meet the criteria, an existing club such as Sydney University may be the next team selected if they meet the criteria.

    I see no reason not to allow a standalone club to participate in those circumstances. Every club has the same opportunity – it’s up to each club to determine their own destiny.

    We need strong, viable teams in this competition – not teams cobbled together that may not survive.

    What do I mean by viable?

    At the end of the day it means economically viable.

    All the other criteria are important but each team must show they are economically viable and can fund their ongoing participation in the competition.

    The ARU have done a great job to get Foxtel to pay for television rights for the competition.

    While it would be good for there to be some free-to-air exposure for the competition, if the ARU insisted on free-to-air coverage and the free-to-air networks were not prepared to pay for the rights, the competition wouldn’t be able to proceed at all.

    This fact demonstrates the cold hard reality of this competition – the ARU can’t afford to fund it so without the broadcasting revenue and viable teams that can fund their portion of the costs, the competition may not get off the ground and if it does, may not survive – just like the previous ARC.

    What are the costs for each team?
    The ARU have said they will use the broadcast revenue and expected sponsorship revenue to cover the costs of travel and accommodation for teams, referees and the costs of administering the competition.

    The teams that participate will have to fund the costs of players, provision of grounds, coaches and other staff.

    This is to be a professional competition so all players will be paid – the ARU and RUPA are still negotiating the minimum level of payment for players.

    Details such as whether the minimum level of payment will be different for players contracted by a Super Rugby franchise and uncontracted players and whether there is to be a salary cap for teams or not are still to be announced.

    Until all the details are announced by the ARU we won’t know for sure the level of costs each team will have to fund. However, most people I’ve spoken to are working on expectations of around $400,000 per season.

    How can any team fund these costs?
    This is the key question for any team wanting to participate in the competition.

    The revenue for each team will come from gate receipts, sponsorship, merchandise sales and memberships.

    There are very few clubs that have existing grounds that can host reasonable sized crowds and are suitable for television coverage so the arrangements each team has to make for a suitable ground will have a big bearing on costs.

    The costs of staffing the ground will also have a big impact on revenue. If the ground owner has to cover those costs, the team may have to pay a share of ticket revenue to the owner and may not earn a share of revenue from the sale of food and beverages.

    If there are eight teams in the competition each team will play a minimum of seven matches – a minimum of three at their home ground and possibly four.

    Only if a team makes the finals can they rely on any revenue from extra matches, so their budget will have to be based on three or four home matches per season.

    If there are ten teams in the competition each team would be able to budget on a minimum of four home matches per season.

    Who knows what size crowds will come to watch the matches but achieving crowds of 5,000 for each of four home matches at an average ticket price of $15 would produce $300,000 per season in revenue.

    Kids under 15 would probably gain free admittance and be in addition to those crowd numbers. Are those achievable numbers? I suspect they may be optimistic.

    I’m uncertain what teams could achieve in merchandise sales to supporters or from the sale of season memberships so I’m not even going to try and put an estimate on those.

    What could each team generate in sponsorship and what could a team offer sponsors?
    Clubs may claim they can offer sponsors exposure to crowds of 5,000 and by extension, let’s say 10,000 supporters.

    With eight teams in the competition each team should feature in at least one televised match per season but may expect two televised matches per season.

    That depends on who is selecting the matches to be telecast – Fox will naturally want to televise the teams performing best more often.

    It will be hard to estimate viewer numbers and it may be hard to show sponsors value for their money, particularly in the first year with so many unknowns.

    If you accept $300,000 in revenue can be raised from gate receipts, each team would need to raise $100,000 from sale of merchandise, sale of memberships and sponsorship.

    That sounds like a big ask to me so teams may be talking to benefactors as well as sponsors.

    Teams that make the finals could obviously generate additional revenue and may even be able to operate profitably but that’s not an assumption to base a budget on.

    Any club or group of clubs serious about participating in the competition in 2014 will have to take a bit of a leap of faith to underwrite the costs of participation if the levels of revenue I’ve discussed can’t be achieved.

    Hopefully the costs of a team participating in the NRC can be contained to around $300,000 per season, which would make the revenue equation a little more palatable.

    Disclaimer: I am a coach at University of Queensland but am not, and have not been, involved in any discussions regarding the club’s interest in participating in the competition or not.

    The views expressed in this article are my personal views only and I have not discussed the contents with any member of the club.

    Scott Allen
    Scott Allen

    Scott has been a rugby contributor with The Roar since 2013. After taking some time out to pursue other roles in the game, including coaching Premier Grade with University of Queensland and the Wallaroos at the recent World Cup, he?s returned to give us his insights. You can follow him on Twitter @ScottA_ to hear more from him.

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    The Crowd Says (158)

    • January 8th 2014 @ 2:47am
      Magic Sponge said | January 8th 2014 @ 2:47am | ! Report

      Great article. You have to decide if this is just an extension of games for s5 players and s5 contracts or blooding talented club players. I don’t agree with having brumbies, force and rebel franchises as it destroys the third tier concept and people will be sick of it by the end of a S15 season. Plus knowing the ARU ticket prices will be $30 +

      • January 8th 2014 @ 5:12pm
        IP Knightly said | January 8th 2014 @ 5:12pm | ! Report

        Yes, similarly heading over to NZ and taking a pool of the best club and fringe representative players from their competitions. For example, just a dozen players each from Auckland and Wellington club rugby will weaken their competitions.

    • January 8th 2014 @ 3:12am
      Johnno said | January 8th 2014 @ 3:12am | ! Report

      Good article. Alot of good points rasied.

      -After reading more about the NRC in 2014 this year, alot of problems for me are starting to happen, and potentiall more than teething problems.

      -Don’t panic, Slow down!, Rome wasn’t built in a day. Australian rugby won’t collapse if this 3rd-Tier NRC starts in 2015.
      -Allows far more time for tender’s to get approval, and for local Metro cups eg Shute Shield,Premier Rugby Brisbane,John Dent Cup Canberra, to structrally adjust etc. And also of suitable recuritment of players etc it goes on and on.
      -I just reckon 2015 would be better to start comp, and fear 1st year could be rushed job. 2015 would have been better start for this comp. In World cup year so good publicity. I know the ARU are not losing any money 1st year, but inreality they are, if 1st year is rushed job and poorly planned, and less crowds and quality of spectactle etc, and wrong teams picked.
      -Slow down I say this comp should been done in 2015.
      -And also in NZ, the 4th-tier, which is now where comps like shute shield will be, they play in same zone as NPC. This NRC will be played after shute sheild etc 4th-Tier so called.
      -That also shows OZ rugby is not ready to demote shute sheild and other comps. Kinda trying to do 2 things at once NRC.
      -2015 would allow a clean break, and structral break of the NRC becoming the undisputed 3rd-Tier.
      -I hope a bidding war, doesn’t break out, and rebel factions where team that miss out on this comp, eg shute shield teams eg Randwick, or Souths in Brisbane, bid vs these teams, and encourage players not to play in these comps, and pay them more cash etc. I’d play it in same season, and have clear disticntions or 3rd-Tier, 4th-Tier like in NZ.
      -But the sydney,brisbane,canberra clubs aren’t willing to accept that, so now I fear we have 2 (3rd-Tiers) in OZ, unless this new NRC aligns with shute shield etc, and those type of comps eg Shute shield/John Dent cup/Premier rugby Brisbane, become the 4th Tier outright on the food chain.
      -This just feels like ARL/Super League style right now between existing clubs, and new franchises coming up.

      • January 8th 2014 @ 10:05am
        Freddy from Bondi said | January 8th 2014 @ 10:05am | ! Report

        I agree, I really hope this gets off the ground…but it looks as if it might be too rushed to commence in 2014.

        Lets do it once, and do it right…the public will lose interest if teams collapse after the first season because it is not viable.

        Great to see the ARU put some plans in place though.. it seems like this really will happen which will be great for Aus rugby!

        • January 8th 2014 @ 6:05pm
          Magic Sponge said | January 8th 2014 @ 6:05pm | ! Report

          Can’t wait for the Balmain bugs vs the Brumbies. 100-0

      • January 8th 2014 @ 11:14am
        canadiankiwi said | January 8th 2014 @ 11:14am | ! Report

        Johnno. You are wrong about New Zealand’s club competition set-up.

        The NZ Club competition does NOT run at the same time as the NPC (ITM Cup).

        The NZ Club competitions in each provincial union begin in early March and are completed by the end of July. In other words,the club competitions runs simultaneous to Super Rugby (which is perfect as it assures that all of NZ’s rugby talent is playing in competition at the beginning of the season- the top 160 professionals for the five NZ Super franchises and everyone else in the amateur club competitions).

        The ITM Cup (formerly the NPC) then runs from the beginning of August to the end of October. Each of the 14 provincial unions fill their rosters with the Super 15 players not selected to the All Blacks (fully professional players) and the best performing club players (amateurs) from their provincial union. This gives the opportunity for club players to earn Super Rugby contracts for the next season, while forcing current Super players with contracts to grow their game and improve or risk NOT having their Super contracts renewed the next season.

        • January 8th 2014 @ 6:01pm
          Johnno said | January 8th 2014 @ 6:01pm | ! Report

          canadiankiwi, I didn’t know that. Thanks, I always thought the Provincial club comps ran in line with the NPC(ITM Cup).
          But they don’t, thank you.

          • January 9th 2014 @ 10:27am
            canadiankiwi said | January 9th 2014 @ 10:27am | ! Report

            No problem.

            As a complete outsider, it would make sense for the NRC to begin after the completion of all the Club Competitions so that the NRC teams have access to the best club players and the Super players not selected for the Wallabies in the RC and November tours.

      • January 8th 2014 @ 1:51pm
        paul said | January 8th 2014 @ 1:51pm | ! Report

        It wont succeed, why? Australia doesnt have the players/depth to support such a competition. crowds, who would want to turn up and at $30 per ticket why would they, they can watch NZ NPC/ITM Cup…much better.
        So why bother

        • January 8th 2014 @ 4:07pm
          Wozza said | January 8th 2014 @ 4:07pm | ! Report

          One thing the ARC proved beyond doubt was that having the playing stocks to fill teams wasn’t a problem. With regards to crowds, Scott was working of a figure of $15 to approach some sort of financial viability so where do you $30 from? I also think the 5000 (adult) spectators Scott mentions can be achieved, may take a few years but not many IMO, if not Improved on. Given the nature of broadcasting the game here, the Australian rugby public is starved of decent quality rugby and at last they have some product. The ground scheduling needs to be reasonable. I lived on Sydney’s Northern Beaches when the ARC was on and we would’ve loved to have gone to some games but our team was based on the Central Coast, similarly, the Sydney City/Eastern Suburbs team was based at North Sydney which meant the Sydney rugby heartland teams were playing at venues away from their support base which was stupid. As for watching NPC, firstly they can’t as its not televised here and secondly, a lot of spectators, myself included, have no interest watching matches when they don’t have a team to support. I couldn’t care less about Kiwi rugby and would rather watch an NRC game any day.
          And why bother, seriously, given the amount of articles that have been published here on this topic, that question borders on being to stupid to bother answering.

          • January 8th 2014 @ 10:55pm
            Bakkies said | January 8th 2014 @ 10:55pm | ! Report

            Foxsports televise the NPC

    • January 8th 2014 @ 5:00am
      AndyS said | January 8th 2014 @ 5:00am | ! Report

      Two main issues I would take with the approach outlined. I think the idea of setting up structures in places like Perth, Canberra and Melbourne entirely independent of the Super Rugby teams would be a pointless duplication. The Vikings and the Force were the only teams that broke even last time and there is a reason for that. I’d be astonished if the ARU doesn’t go with the established State Union structures in single team states. I don’t think the Super Rugby players should be additionally paid for this competition either. This comp will be the only thing running in parallel with the Wallabies, so staying in the frame for that should be the motivation for the S15 players. To my mind only the players outside that framework should be paid by the NRC teams.

      Related to that, and looking further ahead, the obvious problem is going to be distribution of SR players and development of new players. What they should be looking to avoid is a situation where players for Super teams just transfer to the nearest NRC team. It would be an obvious preference for the Super teams, keeping them playing and training together under their control. But it will risk a two speed comp like the CC, with the regional teams reduced to development teams. And the ARU trying to act in some sort of policing role forcing players to move around would be ludicrous.

      In the short term I’d allow the regional teams some scope for paying SR players to encourage some of the more mobile ones to think about a move to help balance things out. But what I’d like to see is the Super teams being part of the funding structure, especially as this competition is more for their benefit than anyone. The ARU was happy enough to relax the Super salary cap so long as the teams found the money themselves, and they have access to funding that the domestic game doesn’t. So what I think they should be doing is paying (say) $15k per contracted player and $10k per EPS player. They might build to it over a few years, and initially it would be split evenly, but as new players are contracted the money would be split in proportion to the NRC teams they had played for prior to signing. Teams could stack with Super players rather than develop players, but only at the cost of future funding.

      • January 8th 2014 @ 8:37am
        Mick said | January 8th 2014 @ 8:37am | ! Report

        I agree AndyS, Melbourne, Perth and Canberra should all get a team aligned with the Super team. Also, the current ‘Melbourne’ Rebels, should become the ‘Victorian Rebels’ with ‘Melbourne’ to be the ‘B’ team in the NRC. With these 3 teams naturally having more Super Rugby teams, you’d expect them to go better in the NRC – this is a good (great thing), as it’ll help their exposure to have them higher in the table.

        Queensland and NSW is where it gets more interesting/challenging. As a country boy, I easily go for the Qld Reds, but if there were Gold Coast, Brisbane and Sunny Coast teams (for example), I wouldn’t really go for any of them, and would just hope they all go generally well, without ever getting fully behind one. In saying this, I realise that a ‘Country’ team isn’t easily commercially viable – my 2 cents worth would be to have a Country team, that could perhaps play 1-2 games a year in Toowoomba and Townsville (and Townsville, Cairns, Toowoomba, Rockhampton, Mackay, Bundaberg – similarly, NSW could have Newcastle, Central Coast, Wollongong, Wagga Wagga, Port Macquarie, Tamworth, Orange, Dubbo….). Obviously, this puts the Country team at a bit of a disadvantage, having so much extra travel, so I reckon they’d have to still be based in Brisbane and Sydney, and play 2-3 games a year there (+ training…).

        Another way could be to have 2-3 Sydney teams + rest of NSW (including Central Coast + the others mentioned). And 2 teams in Brisbane + rest of Qld (including the earlier ones mentioned + Gold Coast and Sunny Coast).

        Basically, as a someone from the country (who lives in the city), I need to care enough about a team to actually have my interest (and proudly buy a Qld Country jersey + membership, etc.).

        Anyway – I hope someone from the ARU is reading this article and all of the comments!!!

        • January 8th 2014 @ 9:50am
          Mick said | January 8th 2014 @ 9:50am | ! Report

          “With these 3 teams naturally having more Super Rugby teams” – should say “more Super Rugby *players*”

          • Roar Guru

            January 8th 2014 @ 1:42pm
            jeznez said | January 8th 2014 @ 1:42pm | ! Report

            Mick – teams are only going to have 3-4 home games a year – this is a quick and dirty comp. They aren’t going to play a bunch of games around the state plus 2-3 in a big city.

            • January 8th 2014 @ 6:26pm
              Wozza said | January 8th 2014 @ 6:26pm | ! Report

              I think people are wrong to think that the Canberra, Perth and Melbourne teams are are going to be pseudo super teams. A lot of these teams players are contracted from Sydney/Brisbin club teams and there’s just as much chance they’ll want to play for their clubs region as there super team. Most Brumby players still came back to play club rugby in Sydney even though Canberra still has a decent enough club comp

              @ Mick, I feel you as a country guy not feeling you have a team to support. It’d be good if they say started off with 8 teams, Canberra, Melbin, Perth, 3 Sydney and 2 Brisbin, and once thats established look to add a NSW and Qld Country team, that could spread their games round a few regional centres. Given these teams have a long history in the game it would be nice for them to be represented. Who knows, if things go really well they could then add Newcastle and Nth Queensland teams, 2 tiers…

              • January 8th 2014 @ 8:19pm
                Mick said | January 8th 2014 @ 8:19pm | ! Report

                jeznez, yeah, I think I overestimated the amount of home games. I don’t think it changes my point too much though, they can just play 2 in the capital + 1-2 in regional centres. Anyway, sounds like the regional / country teams aren’t getting as much support on here as the split capital city teams. Anyway, I’m living in London for another year or 2, so I probably shouldn’t complain. As long as the NRC games make Sky!

              • January 8th 2014 @ 10:56pm
                Bakkies said | January 8th 2014 @ 10:56pm | ! Report

                All Brumbies players now have to play club Rugby in the ACT

              • January 8th 2014 @ 11:13pm
                jimmyc said | January 8th 2014 @ 11:13pm | ! Report

                Wozza all the brumbies players played in the Canberra comp, a majority of the Rebels and Force players played in their local comps too. I agree for Sydney to support three teams players would need to be allowed to play for their junior teams or old clubs.

                In regards to regional teams they just don’t work. Look at how hard it’s been for the Sunshine Coast and the Gold Coast in the Brisbane comp. All the good players have to move to the city.

              • January 9th 2014 @ 10:21am
                Wozza said | January 9th 2014 @ 10:21am | ! Report

                The Brumbies guys playing in the local comp was a Jake White directive and was, I believe, one of the reasons, not to mention David Pocock, that Micheal Hooper went to NSW. As for the Rabble players, I know Neville and Pyle came back to Sydney and I’d be interested to know who exactly did stay that there. Can’t help thinking its not many

        • January 8th 2014 @ 11:31am
          Doug said | January 8th 2014 @ 11:31am | ! Report

          I think from a merchandising point of view the Melbourne team will more likely want to be the the Victorian Wombats* and wear an orange and blue outfit, and the Perth team would want to be the WA Goannas* wearing pink and green. So the hard core fans will buy *both* the Rebels and Wombats*, or Force and Goannas* jumpers.

          * replace with favorite surly animal

          • Roar Guru

            January 8th 2014 @ 1:43pm
            jeznez said | January 8th 2014 @ 1:43pm | ! Report

            I hadn’t been considering surliness in my mascots. Thank you for flagging this important point. Now I want my South/East Sydney team to be called the Blue Bottles!

            • January 8th 2014 @ 11:21pm
              Ai Rui Sheng said | January 8th 2014 @ 11:21pm | ! Report

              They could get sponsorship from Blue Nun.

      • January 8th 2014 @ 2:42pm
        Qldfan said | January 8th 2014 @ 2:42pm | ! Report

        AndyS, I can’t agree with S15 players being involved, as the NRC is supposed to be a third tier to develop new talent. It’s not there for the S15 players, as I understand it.

        • Columnist

          January 8th 2014 @ 2:53pm
          Brett McKay said | January 8th 2014 @ 2:53pm | ! Report

          It’s absolutely there for the Super Rugby players, QldFan. It’s there to create a better level of rugby for those wanting to crack into SR ranks, and for SR players to be pushing their Wallabies claims in something better than club rugby..

          • Roar Guru

            January 8th 2014 @ 3:35pm
            jeznez said | January 8th 2014 @ 3:35pm | ! Report

            I concur – really looking forward to seeing the guys without contracts going up against those who have them. You know they won’t be holding anything back.

            • Columnist

              January 8th 2014 @ 3:46pm
              Brett McKay said | January 8th 2014 @ 3:46pm | ! Report

              Jez, if you’ve got time to go back through my archive, I wrote something last year about the ARC five years on, and identified some of the SR regulars we got our first look at back in 2007..

              And of course, when I say “last year”, I have forgotten we’re in a new year again…

              • Roar Guru

                January 9th 2014 @ 12:55am
                jeznez said | January 9th 2014 @ 12:55am | ! Report

                I recall the article – certainly identified some great players

        • January 8th 2014 @ 3:06pm
          AndyS said | January 8th 2014 @ 3:06pm | ! Report

          Indeed Brett. If I am reading their intentions right, the NRC should not be confused with the “seconds” matches played during the SR season before the derby matches. That would by definition feature mostly players outside the main SR squads, identifying talent for the NRC to subsequently develop. Mind you, it will be interesting to see whether it does still happen given it is probably the more contentious idea.

        • January 9th 2014 @ 11:03pm
          Jockosaurus said | January 9th 2014 @ 11:03pm | ! Report

          Well the club comps will have finished by the time the NRC starts so what are S15 non Wallabies to do? Twiddle their thumbs?

    • Roar Guru

      January 8th 2014 @ 5:15am
      biltongbek said | January 8th 2014 @ 5:15am | ! Report

      Very informative Scott, and happy new year to you and the family.

      I personally think the best way to grow the NRC is to ensure 8 teams in the first year and worry about more next year.

      If you consider the five Super Rugby Franchises and the eight teams you spoke about first up, surely there could be some financial assistance from the Franchises as they would ultimately benefit from the depth created?

    • January 8th 2014 @ 6:17am
      mania said | January 8th 2014 @ 6:17am | ! Report

      i still dont think this goes far enough. if u dont get the kids involved at school 1stXV level this is gonna struggle

    • January 8th 2014 @ 6:42am
      Kippa said | January 8th 2014 @ 6:42am | ! Report

      So going on the disclaimer, if qld uni get a team in, they will win it.

    , ,