Despite the advent of this here internet, rugby league news can still take a day or two to spread from the northern to southern hemispheres.
Take the likelihood that England would play a Sonny Bill Williams-powered Samoa in Australia next June.
When it broke in the UK, the focus was understandably on England’s opponents for a mid-season Test. That meant it took a while for Aussie journalists to spot the SBW angle, which eventually carried the story onto Aussie websites.
As an aside, you would think that Wayne Bennett is as short odds to retain his England job if the team is going to travel to Leichhardt or Campbelltown in mid-season, since that is one of the cornerstones of his World Cup planning.
But one story that still hasn’t made it Down Under is the report that Super League has attracted millions of pounds in private equity funding. The reason is the same: no obvious Aussie angle.
Of course, there is a semi-obvious Aussie angle: the days of NRL clubs plundering the British game might be numbered if the salary cap there goes up as a result of this funding.
For those who missed it, on December 16, the Daily Mail – a paper that does not normally cover the sport – reported that “Super League clubs are close to selling a share of the competition to a private equity company to inject money into rugby league”.
Toronto’s key recruit Sonny Bill Williams is the Super League’s star attraction. (Photo by Alex Pantling/Getty Images)
The paper said the Super League board had already approved the sale and that investors would “put tens of millions into the competition in return for a share of future revenues”.
How, exactly, is this going to work?
My understanding is that the money, firstly, would not go straight to clubs – allowing them to pay off debts – as happened in British rugby union.
Rather, it would follow the AFL model of “disequal” funding. In other words, it all goes into the centre and the Super League administration decides what each club needs to be sustainable.
Salford would be given loans or grants for specific projects, not just a lump sum that would quickly evaporate paying bills.
The private equity investors may even have a desk or office in Super League’s Manchester Northern Quarter headquarters.
In return for the funding, the clubs would have to surrender more power to the competition’s governing body. Playing four or five games at the same time on a Friday night would go straight out the window.
Those sort of freedoms, which Super League clubs have and NRL sides do not, would be early victims of the takeover. Promotion and relegation? I wouldn’t regard that as being safe either.
A big issue is the next TV deal, due at the end of 2021.
But the way it’s been explained to me is that investment makes this less important. In other projects I’ve been working on recently, it has been made apparent that investment gives you a “runway” to do things.
It’s like a giant financial catapult. You are thrown into the blue sky and it’s up to you to fly or crash to the ground.
So the investors are more worried about the next TV deal, when their funding is running out and they expect the business to return a profit.
In many ways the cash influx compensates for a reduction in the TV money on the next deal – it matters infinitely less than just about everyone in the game thinks it does if this investment comes through.
But this gets interesting because under an agreement between Super League and the rest of the game in Britain, if the TV funding dips below a certain level on the next deal, they get nothing.
In this way, the looming investment could irrevocably change the balance of power in the British game.
No doubt, SBW’s name has impressed these private equity people.
Yet Toronto were accepted and nurtured by the Rugby Football League and spent three years in its system while Super League waited until the 11th hour to confirm it would accept the Wolfpack for promotion in 2020.
Now the RFL, looking in from the outside, risks being left behind by this influx of cash into the top tier – thanks in part to the monster they helped create.
In sport, as elsewhere, money talks.
Snoop Bloggy blog
Roar Rookie
Very interesting piece Steve thanks for that. I got the feeling you know a bit more than you let on which is understandable. The WP have been marketed to Toronto in a very specific way and if the investors bring that mentality to the rest of the comp SL will benefit. The SL needs a total overhaul. Promotion/relegation 100% has to go as the comp has to grow together which is impossible currently. Head office taking control away from clubs is a positive and should save the clubs from themselves.
Justin Kearney
Roar Rookie
No.
bbt
Guest
890K followers on Twitter would be the first thing that a PE firm would look at. The rest is irrelevant.
Bernie Vinson
Guest
Impressed by SBW - hasn't played a game - is often injured and has 2-3 years left in the game. Is that right that the Toronto Wolfpack live in England (according to reports when SBW signed)
mushi
Roar Guru
Tough to respond sensibly in this format. First we aren't PE investors we're consumers. Our concern for administration should be focused on long term viability first (not a PE concen) and product development (not a PE concern). The overarching thing to remember is PE trades vision and social licence for capital efficiency. First thing to go - R&D budget /project pipeline (grass roots) unless there was a specific IP asset (not the case here). PE management is effective but never the pinnacle. Generally closer to a jack of all trade teams (though they advertise to the contrary) The typical PE play would reduce the experience for customers but increase the return on equity. Think Myer restructure that reduced the staff per m2 to industry lows and ran down inventory levels. Both negative for customers but an immediate effect on expenses and working cap to create a hockey stick in returns for the IPO multiple. This is done by taking more financial risk across a portfolio and generally stripping out marginal experiences. It's a "good" thing if your base case was failure due to management. I really struggle to see PE suddenly ramping up salaries as the article suggests. I also don't think they'll care the slightest about fan engagement or experience as it is contrary to their MO. Now if it is a PE guy doing it as a pet project, that changes things and it's been misreported.
Justin Kearney
Roar Rookie
Couldn’t agree more. The cynicism amongst this mob is quite amusing. Any potential good news brings out their worst.
Steve Mascord
Expert
To say I write a column every week because I am payed to does not equal making things up, by the way.
Justin Kearney
Roar Rookie
Nah just your usual negativity
max power
Guest
hasnt made any difference. plenty better union players to chase. your economic insight is amazing especially how you linked it to your pet hate of PC (which is a tenuous link)
max power
Guest
a bit of common sense, considering the long term effects of a 35 year old who is a very good but over rated players
Steve Mascord
Expert
I’m glad you liked it. I wasn’t being sarcastic, just reporting the banal truth!
Zimzam
Guest
SBW has made a difference already. The 15 man game in Europe has indicated recently that they wanted SBW. The super league (SL) game is a good standard. Therefore, SL gets the funds, they attract the good players, the competition gets attention and expands/grows - it’s simple Math/growth economics! The PE are in it for the above reasons and rightly so. Rugby League/13 is an attractive sport, if the political correct agenda is set aside!!
Justin Kearney
Roar Rookie
Another optimist!
Nat
Roar Guru
Why is that a bad thing? Every chance there's a lot of bad practice within the administration. At the top level, they need the game to be attractive enough to sell so I'm not sure why that's bad for the fan?. My only doubt, based on my PE experience, is how long is their view? Costs savings found could be used at GR level but that's a longer term investment then most consider reasonable.
mushi
Roar Guru
Sarcasm, I thought it was the first logical contribution he's made in a while. He mailed it in like a post Christmas party Friday in the office.
Tick Tock
Guest
If the money fails to materialise and it will. RL in England will have no alternative but to look to alternatives. RL is just too small a sport in the UK. It's played in the north and at the fringes. By 2030 Wigan, St Helens, Hull and Leeds might well be involved in the 15 man game.
Justin Kearney
Roar Rookie
Nice new alias.
Maximus insight
Guest
The only way super league is on par with the NRL in a decade is if the latter experiences a calamitous decline which itself is highly unlikely. It's playing stocks and revenues are fraction of the quality and size of the NRL's
Stat Meele
Guest
Not new at all Freddie.. Remember PNG are the sleeping giants. They have been for 15 years according to you
Fred
Guest
Cheers, nice new alias you've got this week.