The Roar Rugby Project Part 4: Who owns and controls Australian rugby and the need for change

The Roar Rugby Project aims to document the challenges and opportunities facing rugby at all levels across the nation. We are looking to Roarers’ experience as players, officials and supporters to find new solutions for the problems that have dogged the game over the last 25 years.

1. Introductory launch – an overview of the challenges facing the game.
2. Financing rugby- revenue challenges all community and professional rugby.
3. Debt, Windfalls, Lessons Learned, and Other Myths – Refinancing RA losses.
4. Governance – The need for constitutional change.
5. Supporting community rugby.
6. Delivering elite professional rugby.
7. Improving refereeing.

I wrote in my first article that my father could not figure out why he no longer loved the game. Like most rugby supporters he felt a little bit of pain every time there was a setback for the Wallabies, NSW, Easts, Uni, or the sport of rugby.

Yet there is nothing he could do to prevent it, or to fix it. Grassroots rugby supporters have been disenfranchised by Rugby Australia, which has lost touch with its community support base, resulting in falling attendance and revenues.

So who owns your rugby club?

The typical rugby club is now operated as either an incorporated association or as a company limited by guarantee. Income is dedicated to carrying out the objectives of the club.

Members are custodians not owners, they cannot share in income, any surplus assets on winding up are transferred to another organisation with similar objectives, and any liability to the members is limited to a fixed nominal amount.

Commercial goods and services are often provided or arranged on a pro bono, or heavily discounted rate by members or community supporters.

At an AGM the rugby club members will vote to establish the committee to administer its affairs in the following year. If things are not going well, a new committee can be voted in to restore affairs.

Other governance models

We are mostly familiar with the governance model of a publicly listed company on the ASX where shareholders can elect or remove the directors who are appointed to protect shareholder interests.

The integrity and performance of organisations such as Trusts and Charities are governed by a mix of their constituted rules and objectives, applicable legislation, the interests and influence of the owners or stakeholders, together with the control they exercise over the management of the Trust or Charity.

Neither one nor the other?

As a quick test I pose to you, who owns rugby? I would suspect that the most common answers would be “no one” or “everyone”.

Unfortunately, the Constitution of Rugby Australia lies somewhere between your local rugby club and the typical governance model of a larger organisation. The directors have the protection of the corporate shield, but without the burden of oversight.

In 1995, when the game turned professional, the ARU had built significant intangible value in the game over the previous 100 years. This was based on the volunteer efforts of players, coaches and officials and the financial support of the rugby community through match attendance and similar support.

In my view, the rugby community are the real owners of the game even though its assets are legally held within a corporate vehicle controlled by its directors, who then do not represent the rugby community.

Unlike your local rugby club, it is difficult, if not impossible, for stakeholders to influence the way the board of directors conduct the affairs of Rugby Australia.

A brief history

Historically the ARU had been dominated primarily by New South Wales and, to a secondary degree, Queensland, with their combined vote delivering control.

The concentration of votes with the most important states to the game had some basis prior to the game becoming professional in 1996. This became increasingly impractical with the increasing influence and participation of the ACT, Western Australia and Victoria.

A decade ago, the new constitution was agreed, restructuring Australian rugby into a corporate structure controlled by its directors. In theory, the directors are responsible to Members who have the following voting rights:
• one vote per state,
• one vote per super Rugby franchise,
• one vote for each state with 50,000 registered players, and
• one vote for the Players Association

The resulting 16 votes are allocated to NSW / QLD (3 votes), ACT / VIC / WA (2 votes), and SA / NT / Tas / RUPA (1 vote).

In practice of course, Members are not independent, with the state unions and super franchises relying heavily on RA and its directors for financial support. I can only assume that the three minor states would also hesitate to openly defy the board.

Furthermore, overturning the board requires 75% of the members support (12 votes), needing all 5 super Rugby states in agreement (as if?) or at least 4 of them with RUPA and the minor states.

For example, irrespective of the merits of the Western Force being excluded, there was no chance of obtaining that unanimous support, especially given that the ACT and Victorian franchises were the alternative sacrifice as RA had pre-emptively agreed to axing a side.

How are Rugby Australia directors elected?

Generally, the Nominations Committee appears to nominate for election at the AGM, only enough directors to feel the remaining vacancies.

The Board is in a strong position to significantly influence the nomination of directors and while the guidelines for the Nominations Committee are broad and appear to be inclusive, they also provide a broad basis to exclude applicants.

In my opinion there is no meaningful vote for the election of directors at the AGM, although as noted previously, I don’t see voting Members choosing to ignore the boards preferences.

In some ways nothing much has changed since the amateur days, with the previous unsatisfactory system of delegates working their way from club to state to national executive, either through hard work and talent, time and persistence or good old-fashioned fast track patronage.

Perhaps the only result of the Arbib Report was to overlay a facsimile of corporate type governance over the existing system. I would not be surprised if World Rugby continues this century old form of preferment and promotion of delegates internationally.

Can we monitor director performance?

Not really, although from a legal perspective the directors have an obligation to pursue the objects of Rugby Australia, the most important of which are:
a) to act as “keeper of the code” of the Game of Rugby in Australia from the grassroots to the elite level; and
b) to foster, promote and arrange Rugby throughout Australia.

Apart from these objects (a) and (b), most are administrative in nature. There is no specific direction on what must be done, or any criteria as to what successful performance would look like. I would normally expect the board to set a strategic plan with measurable milestones and report on its progress.

Instead, Rugby Australia has avoided measuring its failure by marking its “scorecard” a success against its Strategic Vision:

“To inspire all Australians to enjoy our great global game”

… and its 4 pillars:
1 Making Rugby a game for all
2 Igniting Australia’s passion for the game
3 Building sustainable success in professional Rugby
4 Creating excellence in how the game is run

While these are nice sentiments and might support its Constitutional objects, they easily become, and I believe have, a picture of activity without achievement.

What changes are required?

The proposition put forward by Geoff Parkes in relation to the professionalisation of rugby probably holds true in relation to governance as well. We made a few tweaks to the existing system, thinking that was all that was required.

Rugby Australia have declared their intention to rewrite the Constitution, but the only matters I have seen raised in public are a proposal to reduce influence of New South Wales and Queensland, and that a Commission is required, like the NRL and AFL.

In my view these are retrograde steps in that, presumably this will entail stripping NSW and QLD of their additional vote (50k registered players) which will increase the 75% threshold to 11/14 votes requiring unanimous support of all five Super Rugby states plus one other vote.

Regarding a Commission, the existing board effectively operates in a similar manner. There is already effective control over the appointment of directors, so it is only a small further step to having the Commission in control of appointing new Commissioners.

A significant and extremely important difference is that a Rugby Australia Commission will not be accountable to strong independent voting members like the NRL and AFL clubs.

Revised Australian Rugby Constitution

While the Constitution of Rugby Australia requires it to grow and protect both professional and community rugby, its primary focus has been on meeting the costs of administering professional rugby with community rugby scratching through the tailings.

If successful, professional rugby can drive interest and participation in grassroots rugby while providing funds to support it. However, grassroots rugby plays an important role in growing participation, developing the skills and ability of every player to their potential, and building financial support for itself and professional rugby.

There is limited expertise and resources in the current rugby infrastructure to support grassroots rugby and a defined split between amateur and professional rugby is required with separate capability to be specifically built to support the needs of grassroots rugby. These needs will be explored in part 5.

Membership

A significant difference with other governance models is the absence of an independent body that will hold the board of directors to account. As noted in Part 2, my view is that broad and strong membership is the backbone of sustainable rugby organisations.

All rugby supporters should have a unique ID so that their membership of affiliated rugby clubs is easily monitored, and each financial club member should be entitled to a vote. Where a supporter is a member of multiple clubs it should be a vote for each membership. While not wanting to incite revolution, there can be no taxation without representation.

I see no reason why Rugby Australia, if it gave reason for support, could not also introduce the concept of a voting member itself. This should not be confused with previous commercial packages offered to individuals in relation to ticketing and functions et cetera.

Nomination of directors

While there will be a continuing need to screen unqualified applicants, suitability for office should be determined by the membership.

Nevertheless, I do see potential issues with a vast array of dispersed members voting at an AGM to elect directors. For this reason, I propose the election of a commission by members as set out below.

Objects and structure

Rugby Australia will then have 4 roles:
• A central body affiliated with World Rugby
• Financial and expertise resource to support all levels of the game
• Administration and operation of professional rugby
• Dedicated service bureau to the needs of community rugby

Australian Rugby Commission

The Commission will monitor and improve the performance of Rugby Australia in supporting grassroots rugby.
• A body voted for by the financial supporter/member base
• Possibly 10 new members per annum elected for a five-year term
• Comprise “shareholder body” to elect board members
• “Rides the boundary” between professional and amateur rugby
• Monitors RA performance on service to grassroots rugby

Subsidiary Unions

• Might be the minor state unions as they are
• The roles of NSWRU and QLD RU may need to be refined if professional rugby is administered by Rugby Australia. I expect that in NSW amateur rugby will continue to have delegated administration through subsidiary unions such as Sydney Rugby Union, NSW Country Rugby Union, NSW Jr Rugby, NSW Schools etc.

Where you do you stand?

1. Are you an owner fully invested in the future of Australian rugby, or just a customer?
2. What suggestions would you have or rewriting the Constitution to protect your emotional and financial investment in rugby?
3. How should the directors be held accountable for the support of community rugby?
4. What other areas for review do you see downstream from Rugby Australia in the constitutional structure of your state, district, and other unions e.g. juniors, country, schools etc?