Why would private equity invest in Australian Rugby if it doesn’t include the National Rugby Championship?

By Rhys Bosley / Roar Pro

In recent weeks it has been reported that Rugby Australia Chair Hamish McLennan has begun discussions with potential private equity investors to invest in Australian rugby and resolve the code’s financial woes.

McLennan would undoubtedly be concerned then about the ongoing poor performance of the New South Wales Waratahs, who were flogged by the Queensland Reds for the second time in 2021 on Saturday night 46-14. The Tahs are winless in Super Rugby AU, having endured an even bigger flogging at the hands of the ACT Brumbies and defeats to the Melbourne Rebels and Western Force, a sorry reflection of the state of professional rugby in Australia’s biggest rugby market.

There have been concerns publicly expressed that the Tah’s on-field woes will start to impact rugby viewership in New South Wales. The view has been expressed that Rugby Australia must ‘do something’ to help the Tahs improve their performances, to prevent this from happening and undermining the excellent broadcast deal with Channel Nine and Stan, which has given Australian rugby a new lease on life.

The suggestion that Rugby Australia should help the Tahs to resolve their self-inflicted woes will undoubtedly cause the gnashing of teeth in other states like Queensland, where supporters have had to endure many seasons at the bottom of the Super Rugby ladder during Brad Thorn’s rebuild of the Reds. It would be an even more bitter pill for Western Australians to swallow after their team was kicked out of Super Rugby entirely for two years.

However, this situation is part of the commercial reality of Australian rugby, so Rugby Australia will undoubtedly need to help the Waratahs in some form. The rest of Australian rugby certainly doesn’t owe New South Wales a winning team, but sufficient support to prevent the Tahs going into a death spiral and to start a rebuild through player development is tolerable.

This would give their supporters some hope for the future and create a narrative that could be used to keep them interested over the several years that it will take to rebuild the team, as has happened under Thorn at the Reds.

However, Rugby Australia is currently in no better financial position to do something substantial for the Waratahs than the club is itself. Private equity is McLennan’s solution to the code’s financial woes. To attract private equity investors he will need to be able to assure them that Australian rugby is a viable business, so demonstrating that the failures that are plaguing the Waratahs are able to be resolved will be vitally important.

Even more importantly, he will need to convince investors that those failures will not be repeated in other franchises.

(Photo by Cameron Spencer/Getty Images)

Unfortunately, the decision last year to scrap the National Rugby Championship, Australia’s semi-professional tier between club rugby and Super Rugby, represents a nationalisation of the Waratah’s biggest failure. The Waratahs’ late commitment to using the National Rugby Championship to develop players and coaches has resulted in the outclassed team they fielded on Saturday, with the price that they are paying on the park against clubs that used the NRC to its full advantage being abundantly clear.

Thorn was asked in the post-match press conference after Saturday night’s game about the scrapping of the NRC and whether club rugby is strong enough to meet those needs.

He said, “I think there is really good rugby in the club competition, the Shute Shield is very highly spoken of. Also club rugby in Queensland, there is some really good footy there. What I love about NRC is that it is that sort of Currie Cup, ITM Cup middle ground, and it gives club players the opportunity to play rep football, which is important. It gives coaches and players the opportunity to cut their teeth in that middle tier.”

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Thorn’s observations highlight that if the NRC is not reinstated, standards in the Australian Super Rugby teams will fall and they will suffer poor performances against the New Zealand teams in trans-Tasman competitions. This will ultimately impact the competitiveness of the Wallabies, who are the real money-spinners in Australian rugby.

What is ultimately at stake is the medium to long-term financial viability of the code in Australia.

So back to the question in the title, why would private equity invest in Australian Rugby if it doesn’t include the National Rugby Championship? It is a question that Rugby Australia and the entire code needs to answer in a hurry, or nobody is going to be in a position to do anything for anybody.

The Crowd Says:

2021-04-05T14:28:35+00:00

BeastieBoy

Roar Rookie


Micko.. minimal changes.. too many stoppages.. no one is watching.. the game needs to be in play for much longer periods. There are many potential changes and many have been offered and ignored by the same crew who have been ruining the joint for years. Give it 2 years and the Broadcaster will pull out as no traction. They will take the coin from private equity who will insist on changes. Its logical..

2021-04-02T09:51:24+00:00

Micko

Roar Rookie


The Shield has a fanbase, just the modern society, built around a busy (and expensive!) 24 hr economy means that people don’t have the time to support things like Shield cricket. My old man and his mates used to knock off work early in the 70’s to go down to the Waca, get on the sauce, and watch the last session…which actually featured Lillee and all the Test players. There usually was a crowd of at least 5,000+ down at the Waca too according to him! How often do you see Test players in the Shield now?!!

2021-04-02T09:47:00+00:00

Micko

Roar Rookie


Change the rules regarding what? (And haven't they changed rules since last year?)

2021-03-30T13:11:37+00:00

AndyS

Guest


See, that is the problem when you just make assumptions instead of actually looking into things. As reported at the time, the Spirit won the NRC over a Vikings team with 15 Super contacted players, five of which were Wallabies. So anything but a team of amateurs, and collectively paid much more than a Force team comprising players that either hadn't played SR at that point or had been punted as not wanted. Similarly with the lack of tribalism in the NRC. The ARC was killed off because the Sydney clubs claimed they were left out, so when the NRC was created they were given their wish and allowed to organise the Sydney teams. Now history gets rewritten as though it was forced upon them to their cost, rather than them progressively failing through their own hubris and delusions. But they had every opportunity to mobilise tribalism behind their teams; they couldn't. Yet they're talking it up yet again, apparently having learned not a thing. I think they are all on a fast road back to bankruptcy myself, but they're driving the bus now.

2021-03-30T12:18:40+00:00

BeastieBoy

Roar Rookie


Why Would they? One of the reasons would be if they were given the power to change the Rules to attract spectators & viewers. Accepting that, which to me, is so OBVIOUS. Why don't we change the Rules NOW and at least get a better price?

2021-03-30T09:26:52+00:00

TJ-Go Force!

Roar Rookie


I've written this before and I think it has some merit. I think we expand the Shute Shield to a 16-team comp. Include the Brumbies Runners, Waratah A's and Melbourne Rising. 15-round robin comp, then 8 team finals series. Run it from Mid April onwards. I think Reds could add a team into the Brisbane comp. That would make logical sense for them. Sadly, for the Force, I'm not sure in current times there would be scope to include them to have Reserves in the Shute Shield comp to due to a multitude of factors (geography, COVID restrictions, financial costs, etc.). The NRC will never work. The invention of new teams with no history and support won't work in the current Australian sporting climate. Anyone who thinks it will is crazy. It didn't work when Rugby had mainstream support. It definitely won't now. Shute Shield has history, heritage and some tribalism. 3000 fans watching Sydney Uni vs Easts looking full on TV looks a lot better on TV than an empty NRC game.

2021-03-30T05:48:24+00:00

Just Nuisance

Roar Rookie


Incidentally the same Graeme Joffe highlighted in my link, an investigative journalist who has worked for CNN and delved into corruption in SA Sport which includes rugby fled South Africa fearing for his life.

2021-03-30T04:41:17+00:00

Micko

Roar Rookie


Whinge? I'm giving you an outsiders perspective, I have no skin in the NRC comp. I just noticed the Perth NRC side won after being heavily topped up with Forrest's fulltime Force players (albeit GRR), which surely defeated the purpose of the comp, if fulltime players are going to dominate over teams with all amateur players, no?

2021-03-30T04:26:18+00:00

piru

Roar Rookie


If the comp couldn’t even facilitate any sense of tribalism in union’s key markets in Sydney, it never really stood any long term chance of success. Yep, and that's the crux of the issue, I find it hard to believe the folks in charge of the Sydney sides didn't know (or at least guess) that would be the result of the confusing setup. Even with that being the case though, if they'd left it alone and given the teams time to embed the story would be much different (imo). I think that's generally the biggest issue with Aussie rugby as a whole, this demand for instant results and throwing the baby out with the bathwater when they don't appear. Ask Penney!

2021-03-30T04:18:43+00:00

Micko

Roar Rookie


No worries, just kiwis' hostility towards aussies and our culture is baffling to me considering how many of you love the fact that you can migrate here anytime you like, and live the rest of your lives here. Apparently the Sydney guys had no idea who to support either, with one guy telling me their local guys were shoved between all three Sydney NRC franchises, meaning there was no clear promotion of players based on local geography, so the location of the side made no difference as it's just a meaningless development league, with teams artificially made to be even. If the comp couldn't even facilitate any sense of tribalism in union's key markets in Sydney, it never really stood any long term chance of success.

2021-03-30T02:51:17+00:00

piru

Roar Rookie


Apologies for the venom, but you're pushing my buttons with this Micko (and the hostile attitude is WA grown, I was a nice friendly Kiwi when I came here 30 years ago). But this is exactly my point. The A League has been (as I understand it anyway) more or less in it's current form for 10-15 odd years. NRC has been chopped, changed, cut, restarted, rebooted every few years. Soccer is the most popular code on earth, this is well known, of course they're more likely to draw in casual fans along with the local Glory lot who have been able to follow their team week in week out for 25 odd years. NRC meanwhile has to keep afloat with the hardcore rugby crowd because it's never allowed more than a couple of years in a given format before some genius changes it all again. You don't draw in casual fans like that,

2021-03-29T22:54:39+00:00

Muglair

Roar Rookie


The problem with computerisation is that we have cut costs to the bone because senior management think they can control and monitor everything. What happens is that internal controls over transactions are eliminated and decision makers are remote from the coal face. You can see this in the daily news with a conga line of senior employees making off with $millions, and there will be many more coming to light as the economy turns down. There will have been confusion over what was contractually required, allowed or disallowed which has been exploited by Roux, either through his mistaken beliefs of what was intended, exploiting confusion to maximise the investment in rugby, or for his own benefit. I would suggest the police were unable to establish through all of that confusion that it was fraud. Businesses tend to become increasingly sloppy during good times, RA and some of its unions being good examples.

2021-03-29T22:48:02+00:00

Muglair

Roar Rookie


As I have commented before RA should be finding a way to improve crowds and sponsorship by running rugby better. They are supposedly the experts. I would do exactly as you suggest. Approach Twiggy with an appropriate short term deal that gives him a handsome return and adequate security. Hopefully he would insist on some sort of oversight to hold the various organisations accountable. This is what is missing at the moment with insufficient numbers (if any) of hard headed rugby people to achieve the objectives set. You only have to look at the inflated 'scorecards' and perennial failure to get close to any objectives set. They still gave themselves a pass last year despite going backwards against their five year plan. At the end of the term: - RA might have turned itself around and require no further support, or - They have not turned around and will go broke, probably with Twiggy as a secured creditor, or - They repay Twiggy and still go broke If RA cannot grow crowds and sponsorship they will go broke anyway, and if PE is involved they will own the outcome.

2021-03-29T22:18:28+00:00

robel

Roar Pro


NRC is a must, the Tahs should be relegated to the NRC level to improve before rejoining the Super comp. This was the RECA (Rugby East Coast Aust) treatment of WA after the Force beat all the other Aust teams (it should be noted) in 2017. RECA then even withdrew support for the WA NRC team. There is no sympathy for the Tahs this side of the Nullabor.

2021-03-29T17:18:23+00:00

Poco Loco

Roar Rookie


Thanks Muglair for all the infomation. It is as I thouht and alluded to in my comments above that what funds you are paid now by PE dimishes your future income forever. A very expensive exercise in the long run. Much better if you can find other options even if it is going cap in had to twiggy.

2021-03-29T15:59:01+00:00

Micko

Roar Rookie


I never said the ACT, Victoria & WA shouldn't have a side though???

2021-03-29T11:45:07+00:00

Jockstrap

Guest


Eastwood went broke and Sydney Uni lost 100s thousands on the Nrc teams and got nothing out of it. NRC was a huge disaster and is relevant as Quade Cooper segment. Eceryone who knows rugby , who breathes it knows the Nrc is dead and buried. Private Equity in the nrc your having a laugh. Go speak to people in the know of rugby

2021-03-29T10:08:45+00:00

Pogo

Roar Rookie


So micko, who are the thousands of fans in ACT, Victoria and WA meant to support- mostly of us are passionately against nsw and qld. This is Sydney-based thinking not national thinking and will thus not help the code. You are going back to days of old not the future

2021-03-29T09:02:20+00:00

Just Nuisance

Roar Rookie


https://www.biznews.com/rugby/2020/12/26/jurie-roux-stellenbosch Hard not to believe Wayne when you read this stuff.. It was a legally binding arbitration process by the way..

2021-03-29T08:52:06+00:00

Pogo

Roar Rookie


A lot of commentators are saying the NRC doesn’t matter because it doesn’t have a fan base. Think shield cricket - never had a fan base but gave us world class cricketers and it’s model it held up by many overseas who lack it. Also, for those many Sydney based comments about club rugby being a great and therefore the only needed thing. The first doesn’t mean the latter is true. Also, please try and understand this is a national code and thousands of fans across the country have zero links to a club in Sydney or Brisbane.

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