The Roar
The Roar

Advertisement
Advertisement
Advertisement

Opinion

Money matters a huge concern for Castle and RA

Autoplay in... 6 (Cancel)
Up Next No more videos! Playlist is empty -
Replay
Cancel
Next
Expert
28th November, 2019
279
10866 Reads

Raelene Castle no doubt thought she had helped to position Rugby Australia nicely for a solid shot at a decent broadcast deal.

It was eight months ago, in mid-March, when SANZAAR announced their Super Rugby update that Japan’s Sunwolves would be axed from the competition at the end of the 2020 season.

Super Rugby would revert to a 14-team competition from 2021 onwards.

The all-important market research and focus group data was in. The unpopular 15-team conference system was out and the round-robin competition model would return with four Australian teams, five New Zealand teams, four South African teams and the Jaguares from Argentina.

It continued a head-spinning period in which the numbers of teams and format of the competition had changed for the fourth time since 2015.

But early resolution regarding the structure of Super Rugby meant that RA and Castle had shown the decisiveness and clarity that broadcasters were seeking, right?

Like any industry, media want certainty as they compile massive multi-year deals worth hundreds of millions of dollars.

Mind you, even though rugby fans were being asked to provide their feedback on Super Rugby and what it should look like in the future, you can be sure that the broadcasters held more sway.

Advertisement
Advertisement

After all, broadcast revenue – which amounted to about $275 million over the soon-to-expire five-year cycle – contributes more than half of RA’s revenues. That’s a fair bit of muscle at negotiation time.

“Do we believe that this structure gives us the best platform to negotiate a good outcome with our broadcasters and commercial partners?” Castle pondered in March.

“Yes we do.”

There was talk Australian rugby should break away from the SANZAAR alliance given interest waned during away games involving Aussie teams played in the middle of the night, plus a few of the South African franchises were eyeing a move to the Pro 14 competition in Europe anyway and so it was a good time to brush them.

Castle reiterated that the SANZAAR alliance was crucial in “delivering outcomes” for Super Rugby but also “when you’re sitting around the World Rugby table”.

This was a strategic position particularly relevant when the World Nations Championship concept – a global Test competition administered by World Rugby and valued at around $A10 billion over 12 years – was still alive and kicking.

Advertisement
Advertisement

That died. Then the Wallabies exited early at the World Cup. A post-World Cup buzz would’ve given Castle and RA a bit of swagger in TV talks, but that didn’t work out.

Nonetheless, Castle was clear and transparent. Some tough decisions had been made over the years, including the axing of the Western Force, and external factors such as the player drain to Europe and Japan was hurting the local game.

But business was in reasonable order for a strong pitch to broadcasters for the rights to Super Rugby, the National Rugby Championship and Wallabies Tests, wasn’t it?

James Slipper

How do the Wallabies rebuild? (Cameron Spencer/Getty Images)

No way. It’s been doom and gloom, deepening the depression from the Wallabies’ World Cup failure.

Fox Sports, who have shown Super Rugby for 25 years, have reportedly pulled their offer for the next broadcast rights. Optus are said to be interested but their deal is around $30 million a year. That’s a serious blow given the last cycle reaped $55 million a year.

“Rugby Australia will be hit by an economic tsunami,” Allan Jones wrote in his The Australian column today.

“The last time Rugby Australia said they had to cut costs, they axed the Force. Which franchise will go next?”

Advertisement
Advertisement

Earlier this year, Foxtel said it would cut spending on “non-marquee sporting content” following the announcement of a $417 million loss last year.

Rugby union is in that at-risk category, lagging well behind the AFL and NRL in commercial strength.

Facebook, Amazon and Netflix – some of the beastly tech firms that are apparently keen on acquiring sports rights – aren’t going to be interested in rugby union.

So it’s a small market that RA have to source the majority of their revenue and it’s not looking positive.

Foxtel threatened to walk away from cricket broadcast rights in 2018, but eventually agreed to terms. They’re happy to give negotiations some public airing to boost their bargaining power, mostly because sentiment should favour the incumbent broadcasters who have a significant history with the code.

The guide to Optus’ ambitions – and RA’s hopes of stirring a bidding war – are to be found in CEO Allen Lew’s comments a few months ago.

Optus stunned the media market last year by bagging the exclusive Australian rights to broadcast the English Premier League for the 2019-2022 seasons, a competition that used to be shown on Fox Sports.

“Our focus right now is to see what we can do beyond soccer,” Lew said in August.

Advertisement
Advertisement

Castle needs to lock a deal away that’s well above the dire forecast of around $30 million a year. If not, rugby union’s problems will grow well beyond a stronger player drain to Japan and Europe.