Let’s call the company Turinui-English Nuclear Science Enterprises (TENSE).
It was a financially-distressed firm when it was bought two years ago and rebranded by Morgan Turinui and Tom English, two Melbourne-based businessmen who mapped out a vision to turn TENSE around.
The company had bled money for five years, but Turinui and English would make TENSE a leader in the field of nuclear medicine technologies.
There was much potential in a fertile marketplace. They would grow the company, bring on investors and be lauded for their work.
But despite a robust business plan, some personnel changes, much anticipation and plenty of passion and energy, TENSE’s results didn’t change.
They couldn’t attract enough true believers. Overseas competitors were hammering them and they sat on the bottom of the pile domestically. The company’s value stagnated, at best. Might have even fallen. People in the so-called lucrative Melbourne market were sticking with traditional medicines that had been around for over 100 years.
Turinui and English wanted to keep the faith, but the writing was on the wall. TENSE had already burnt through loads of cash. How long could they keep it going? The strong, viable, sustainable company they envisaged wasn’t coming to fruition and there weren’t any signs of a turnaround.
But then the bombshell.
Some surprising regulatory changes meant an industry body – Australian Nuclear Research United (ANRU) – became an interested suitor.
They made it clear from the start that if they bought TENSE they’d close it down soon after. There were too many players in the market, TENSE had been underperforming for too long and it was hard to see how TENSE could start making money.
Turinui and English were reportedly set to be offered between $6 million and $10 million.
What were they to do?
It was hard to tell whether they would come out winners or losers if the sale went ahead, but given the risk and stress of pouring money into a business venture, perhaps they would pocket a nice little earner after all.
And who could begrudge them?
Maybe that analogy was cumbersome, but why is rugby union any different? We’re constantly told that professional sport is a business, right?
Put yourself in the shoes of Melbourne Rebels owner Andrew Cox.
No matter which way you dice it, the Super Rugby club hasn’t made substantial inroads in Australia’s second-biggest city.
Their on-field results over six-and-a-half years have been poor and they’ve won one game of 10 this season.
Fans aren’t flocking to AAMI Park. There’s no buzz for the Rebels around the city. The outlook is pretty gloomy.
(AAP Image/Joe Castro)
What would you do if the ARU wanted to hand you $6-10 million to walk away from a fragile business? Would you, as a business person, take the exit?
We can assume Cox is a savvy businessman with 25 years of experience. His investment company, Imperium Capital Group, has stakes in hotels and restaurants.
Surely he didn’t buy the Melbourne Rebels in the middle of 2015 as a philanthropic plaything.
That’s why we shouldn’t be shocked if Cox approaches the potential sale of the Rebels to the Australian Rugby Union like any other of his business transactions. And isn’t he entitled to that?
After all, Cox bought the Rebels after they had lost $3.3 million in 2014. The ARU were understandably keen to get that liability off their balance sheet.
It was a deal praised at the time by Rebels chairman Jonathan Ling, who said the sale was “very good news for the club, our business partners, our fans and members”.
Perhaps being privately owned will come back to bite the Rebels. The ARU can focus on paying out Cox, arguably an easier option than the possibility of drawn-out legal action that the Western Force – backed by the West Australian government – might pursue if cut from the competition.
Cox could also choose to fight tooth and nail with the ARU in a bid to be retained in a 16-team Super Rugby competition or even survive in place of the Force.
He’d no doubt win himself a whole lot of fans if he stands up for rugby in Victoria and commits to forging on to build a competitive and sustainable club.
I’m sure Cox saw opportunity and a bright future two years ago; perhaps even now he can picture himself at Rebels reunions in 20 years’ time with adoring former players back-slapping him for his foresight and determination as rugby union was rammed headlong into the AFL-obsessed Melbourne market. He could be up for the battle.
(AAP Image/Tracey Nearmy)
I worked at Saracens in the late 1990s and was lucky enough to get to know the chairman and owner Nigel Wray. He had built a substantial fortune in the London property market but nonetheless was prepared to absorb financial losses over a number of seasons as he pursued his ambition of building a European rugby powerhouse.
He got there in emphatic fashion. That’s one shining rugby example of how private ownership can work after an early battering.
The pulse is weak and the circumstances very different but there’s always hope that an emboldened Cox could resuscitate the Rebels in the same vein if given a few more years.
But there was Turinui earlier in the week lobbying like a rusted-on trade union official, effectively demanding Cox guarantee his workers their jobs.
The Rebels assistant coach slammed the ARU’s handling of the Super Rugby team cull as an “absolute disgrace”; the players’ association had gone missing; the mental health of the Rebels players was called into question.
It was heartfelt, forthright and at times emotive. Turinui wanted to vent and he didn’t waste his chance. Respect to Turinui for standing up for his players.
As good a spray as it was, it’s fanciful to think that the Rebels and Force, Australia’s elite players – via the players association RUPA – and the Victorian Rugby Union can win the PR war.
Without looking at dismal TV ratings and below-par crowds, what about this season’s results? Are the Rebels, RUPA and the VRU got blindfolds on? Are they in denial? Australia can’t support five Super Rugby teams.
Can I suggest that every time a Rebels player, RUPA boss Ross Xenos or a VRU official plead the case for the five-team status quo in Australia, their testimony is interspersed with video clips from Melbourne’s 56-18 loss to the Blues, their 71-6 capitulation to the Hurricanes or the 44-3 mauling they copped from the Southern Kings?
At least the Kings – one of the South African teams on the cull list – have galvanised and stepped up in adversity. The Force have been gritty. The 17th-placed Rebels would’ve gained more fans if desperation for survival had translated into sorely needed wins.
The Rebels need to stand behind their results and be judged accordingly. They’ve hardly earned the right for retention. Do they believe inclusion is their right? That’s the great thing about sport – results are the currency and they paint a vivid picture over time about competitiveness.
Professional sport is a business, and people are there to make money and make competitions and clubs viable. Tough calls need to be made.
Turinui brought mental health into the picture. It seems to me that if the ARU made a quick decision they would be accused of lack of consultation, belligerence, a knee-jerk reaction; drag it out and they’re indecisive, lacking leadership and affecting mental health.
I’m sympathetic to those wanting clarity and job security, but as a comparison, how many NRL players are there as yet unsigned for next season? About 150.
The ARU have guaranteed that Super Rugby players from the axed club with contracts for next season and beyond will be paid.
And as Michael Cheika said on Fox Sports early in the week, players have options if the indecision is unbearable.
Why wait if that contract offer from Northampton, Narbonne or the NEC Green Rockets is ready to go? End the uncertainty.
Rebels winger English demanded a few weeks ago that it’s time for the ARU to “rip the band-aid off”. Perhaps the Rebels owner will be the one that does it before the ARU are forced to.
Train Without A Station
Roar Guru
Nah. They'd be playing in Europe since they could get paid.
AndyS
Guest
Agreed, it is only about $20M.
Marlins Tragic
Guest
Only 10 out of your entire squad of 39 come from Canberra, that's not even half! So who do the Brumbies REALLY represent? Canberra or Sydney & Brisbane where 60% of your players come from! Merging to form the Southern Brumbies give you even more access to our Sydney & Brisbane developed juniors via the Rebels. You also get to keep a team each in the NRC for local player development before they transition into a Southern Brumbies Academy with the best talent from Canberra & Melbourne coming together. Surely that makes sense, even to the most rusted on Brumbies supporter, whom don't even seem to be attending games in Canberra anyway.
Unanimous
Guest
That's one of the worst comments I've seen. Hope they remove it. P.S I don't agree with TWAS on this topic overall.
Unanimous
Guest
Exactly correct. SR will either change to have competition wide equalisation, or it will die.
Bakkies
Guest
Unlike England the French are lethal with their auditing and financial relegations. Bordeaux's model doesn't leave them exposed unlike Paris and Castres who have been dependent on the same men for so long
Unanimous
Guest
It's like trying to value a single phone or a single railway station. Neither of those are of much value at all without connections to other similar items. Their value depends on other items, and the value of the other items depends on them. The network as a whole has value, and the whole network has more value than the parts added up individually. You can value the network with and without a particular member, and get a value to attribute to the member. You can do that for all individual members and find that their individual values generally add up to more than the total value. You can value the network with two members missing and find that the change in value is not the same as the sum of removing them individually.
Bakkies
Guest
No coincidence that the Brumbies had much better fitness and less injuries. Whenever Damien Marsh is involved it is the opposite
Unanimous
Guest
The league as a whole is equivalent to a business. Individual teams are not at all like ordinary businesses. Blaming a team for poor performance only makes sense when the team has been given equal access to everything teams need to perform. If not it is the league's fault. A team should only ever be cut or moved if it has had some reasonable success on the field and still drawn a crowd distinctly smaller than average. The Kings are a perfect example of a team not to cut, but to be given an equal chance. They have had some 40,000+ crowds in their history, and recently 22,000 with just the tiniest hints of success on the field. The Rebels and Force have also had some good crowds at times without ever having a reasonable chance at sustained on-field success.
Train Without A Station
Guest
But ultimately I made no comment on what Smith had to say anyway. I only commented on Sheek's hypothetical assumption of me. But hey, you're not one to miss the chance to make a personal attack rather than actually contribute to any discussion.
Train Without A Station
Guest
They haven't sucked $30M out of the coffers. Piru, if you're reading, I would say this is an example for Force propaganda.
Train Without A Station
Guest
Wayne Smith is no different to you. Lobbing grenades from the grandstand but at no point does he ever need to follow through and make his proposals work. It's f---ING easy to say what sports need to do when you never need to actually deal with reality and run them.
Republican
Guest
......fair enough but how many of your persuasion exist in the Melbourne 'market' if we are to approach this from a purely rational perspective. I hazard a guess that there are far more Canberrans who support Australian Footy than there are Union or League supporters in Melbourne per cap at least. The difference is Melbourne assume representing in all and sundry based solely on a commercial criteria while a smaller market i.e. Canberra struggles for any sort of recognition from the AFL despite a significant cultural status in that code, while they remain an easy scape goat in respect of what may or may not unfold in the Super Rugby saga..........
Nicholas Bishop
Expert
I think the Bordeaux model is the best where the sponsors and fans own the team so they aren’t reliant on individuals I'ad agree Bakkies and you'd hope that the Force survives as they've made a move in that direction.
ScottD
Roar Guru
I totally agree with what you have stated about the rather short sighted attitudes. If we were only considering a single year then every team could have conceivably terminated at some point. That is a patently ridiculous suggestion of course. However we do have a problem and to some extent the problem is one of expectation. In 2016 the ARU made a profit of +$5m. This was on the back of some average performances by more than one Australian team and followed a year where Australia came 2nd at the world cup. Somewhere in that period there were several losses to the All Blacks (the most successful international rugby team in the world's history) and a draw and a win against them too if I remember. There were also some losses and a win against England etc etc etc. Overall there are at least two state that are growing rugby (Victoria & WA) very successfully and I can't be bothered looking at the details of the other states but I'd suggest that tales of their demise are greatly exaggerated. However individual SR franchises have had financial problems - in fact ALL of them have had problems in one way and another. However I contend that the difference between losses and profits (whether they be monetary or performance) is often less than a 5% difference. For example, over a 4 year period the Force lost $2.5M in operating losses on roughly an average of $18M per annum. That is a loss of about $600 k per annum or 3.5%. They also spent a one off $2m on a stadium relocation which is why the ARU bought their license for a total "loss" of $4.5. In its first 3 years it had revenue of about $21m and made a profit once start up costs are removed. in 2016, its revenue was about $16.5 M - somewhere in that period it had the Firestone debacle followed by Richard Graham and then Foley as coach and some pretty horrid on field performances. It also lost its main sponsor and existed for about 4 years (maybe 5?) with no main sponsor. Lack of money and lack of a quality coach combined with lack of results - a bad mix. Over the same period the Brumbies had more severe problems and dipped into their accumulated savings so they didn't have to compromise on coaching/playing stocks. Their performances were creditable given the circumstances off field. However they have little of that reserve now available and are one bad season away from being in financial trouble. NSW is a serial under performer (yes I know they have had good years but with their playing stocks they should be a SR powerhouse every year (the Crusaders of Australia). Their crowds are well below what they should be and I believe (others can confirm) that they have required additional funds from the ARU over and above the significant levels of player top ups they receive to keep their "stars'. The Rebels are on their 2nd (or is it 3rd) ownership/structural change and in 2016 alone have been reported as losing $2m. In fact the ARU is on record as having selected the Force for the first expansion franchise due to their concern that Victoria didn't have the ability to provide enough funds consistently from sponsors to have a financially successful team. This has been proven to be correct. It is perhaps coincidence that the Rebels financial slide started almost immediately after the ARU removed the overseas player concessions that the Rebels received for their first few years (against no concessions for the Force start up). And I haven't mentioned the Reds here but I think you can get my drift. So what is my point? Well I go back to the 5% because i think we are 5% away from being in great shape! A 5% revenue increase ($900k) for the Force gives them a $0.5 profit every year. This year they have received a 3-6 year $1.5 m major sponsorship deal. They have made some good recruitment decisions, have a dozen or so local players in their team have several other WA players in the Rebels/Brumbies and Reds and have performed well enough that people are commenting favourably. So they are making a profit and their performances are close enough that a 5% improvement puts them at or close to a positive win/loss ratio. The same can be said most likely of all the Australian teams with the possible exception of the Rebels. Maybe they need 10% - but they don't need 50% as some would have us believe. A 5% improvement in on field performance of the Wallabies would have won them a lot more tests over the last 2 years. Some of this is confidence, some is coaching some other plus plus plus - in reality it is a lot of little things. A 5 % improvement in every team at every level would see Australian rugby back at the top. On field performance and finances are generally linked but I challenge anyone to know which comes first. What does come first is good management. I don't see anything I would classify as a good management decision in cutting one of our SR teams while we (ARU) are making a profit. What we need to do is stop panicking , look candidly at the root problems, address those we can address immediately so as to find a 5-10% improvement. Those issues that will take longer to solve (like the European player drain) need a longer term plan that is realistic. However the first step in all of this is for a bit of positive thinking and cooperation between the franchises and the states and the ARU rather than the cloak and dagger stuff, and the "short term fixes' that we have seen to date. And it starts here too - from today I am going to restrain my posts to positive ideas instead of negative comments about the ARU. My first positive idea is for the ARU to provide a statement about how they would address the NRC (or equivalent) if they were to cancel one SR license and what their plan is to get us back to 5 SR teams over say 5 years. Does anyone else have another one?
Chris Bayman
Roar Rookie
@jameswm Sorry for the delayed reply / have been out in the thriving junior rugby program in Victoria this morning.... A great s&c program is the bedrock of any great rugby program; the job of the rugby program is to get every player to play to their potential as part of a team - it is not just about fitness (though we know how important that can be) but moreso about injury prevention. I have witnessed s&c delivering and 80% reduction in soft tissue injury yoy just from moving from a good s&c program to a great one. It won't make a marked difference to structural injury, but they are the much smaller injury occurrence. What the reduction allows is for players to train for skills far more, and as a team/ squad more which makes them better players. We have all seen the lamentable injury lists of the Aus franchises...and most of them are soft tissue - if the players aren't able train then they won't get better. What astounds me is that Australia, as with coaching, has a great heritage in this space. It seems to have been lost in Rugby currently. They are still running around in AFL and NRL but the best Aus rugby s&c coaches are now overseas (most notably Dean Benton, who worked with the Wallabies leading into the 2015 RWC - they went way better then didn't they - who is now working with Eddie Jones and England).
Bakkies
Guest
Nick if they were based in France they would be playing in the Federale leagues. I think the Bordeaux model is the best where the sponsors and fans own the team so they aren't reliant on individuals
Bakkies
Guest
Watch him get smashed at his primary job without Pocock and possibly Fardy helping him
Bakkies
Guest
What's that got to do with Campbelltown, Camden and Liverpool
Bakkies
Guest
AIBo it's a pathetic thing and as usual your resort to SMH type and make decisions about the Brumbies without understanding the place and contracts in play