Super Rugby is a good competition. It is the feeder for the Wallabies. It provides an income to Rugby Australia (RA) of $40 million per annum, of which some of it is in cash, and some is in promotion via Stan and Channel 9.
It provides a strong competition for the up and coming stars to see how they perform at a high level. That’s the good news, and the positives.
Super Rugby in turn, only provides $40 million per annum, in whatever form or benefit it gives RA. This amount of money is clearly insufficient for Australian rugby to defend itself from the loss of talent overseas.
It is no surprise NZ wants Australia to reduce the number of Super Rugby teams to make the Australian teams more competitive to the NZ teams. NZ quite correctly have suggested dropping the Australian Super Rugby teams to four.
If one uses that trajectory it will become 3, then 2, then eventually 1, just like the Fijian Drua. How much money will Australia then receive from the broadcasters? One could assume it won’t be $40 million per annum.
Strike one against Super Rugby!
Super Rugby the feeder to the Wallabies is the another supposedly benefit. However the feeder system is slowly being undermined, as the best players head overseas.
I wrote an article in March 2013 for The Roar proposing a Giteau Law structure be introduced, as the writing was on the wall that the Wallabies would need the overseas players to fill the weaknesses in the squad.
Australia in 2013 thought it did not need overseas players to strengthen the squad. Now we’re in 2023, eight years after the Giteau Law structure was introduced in 2015, and we can all agree the Wallabies now need all the overseas players for the World Cup, like Will Skelton, Rory Arnold, Quade Cooper et al if the Wallabies are to be competitive.
Eddie Jones is acknowledging that he needs more overseas players and the Giteau Law to be expanded to be unlimited with no minimum threshold. The value of Super Rugby is as a feeder is on the trajectory downwards.
Strike two against Super Rugby!
How much money does RA need to defend itself against the overseas competition? Based on the best players being picked off and leaving overseas, one can conclude $40 million per annum is not enough. By staying in Super Rugby Australian Rugby’s value is capped at $40 million.
It is dictated to by what the broadcasters will offer. RA is effectively a price taker not a price setter. Rugby league earns $400 million per annum from its broadcasting arrangements and the AFL earns circa $650 million. They are also price setters, unlike RA.
There is no “blue sky” in Australia participating in Super Rugby.
Strike three against Super Rugby!
In my opinion Australian rugby should go domestic and leverage club rugby. That is the NSW Shute Shield, Queensland Premier Cup, ACT, Victoria, Western Australia and South Australia club competition.
Australia should copy Japan and have a three tier domestic club rugby competition, with relegation and promotion at the bottom of the tables.
Additionally, Australia has most of the wealth is held in circa $4.5 Trillion in super funds, real estate and 2,750 companies listed on the Australian Stock Exchange, with some cross over.
Then, in my opinion, the Australian clubs who wish to compete will could be owned by a corporate entity, with the players to be employees on tax deductible salaries.
Just like Japan and instead of rugby clubs owned being owned by Toshiba, Toyota, Kobe Steel and Mitsubishi in Australia we could have clubs owned by BHP, Fortescue, Harvey Norman Westpac, ANZ, Cbus, News Corp, AustralianSuper, Pilbara Minerals just to name a few possibles and as examples only.
The clubs in turn would be free to recruit anyone and at any price, no salary caps. Rugby league always poke fun at how rugby union is played by private school boys. I see that as an advantage as they are now the heads of industry and investment (including Gerry Harvey – Scots All Saints College, Bathurst).
Samu Kerevi and Quade Cooper of the Wallabies. (Photo by Jono Searle/Getty Images)
One could see the, for example, BHP Randwick take on the All Blacks, just like they did in 1988 at Coogee Oval and be competitive. That would be possible again under this new structure.
The benefit to the club’s owners, being the advertising profile and specifically the broadcasting income could be split amongst the club’s owners, with a cash contribution paid to Rugby Australia to assist them with their other rugby activities e.g. school, women’s, sevens and all other things rugby.
How much would the broadcasting income earn for a competition like this? At a guess a lot more than $40 million, right? There are going to be many star rugby players from all over the world e.g. NZ, Fiji, Europe, UK playing Australian club rugby.
The broadcasting income to be just a matter of negotiation. This would be new content with an almost unlimited budget. One be aiming for a share of that juicy broadcasting money being paid to AFL and NRL and carving some of it off to the truly international sport of rugby union, played at the highest standard.
Whatever the number it is more than that paltry $40 million per annum being currently received by Rugby Australia.
Why are we still in Super Rugby?
Simon_Sez
Roar Guru
Barry, thanks fir your late reply. All I can say in return is one has to start somewhere. The longer itvhh it is delayed the harder it will become. It will also take time, but a necessary long term investment plan. Nothing wrong with that!
Barry Smyth
Roar Rookie
Late reply, so apologies. Fanciful, why? The sports marketing "market" here in Australia is saturated; we have a reasonably lousy stain on our sport due to all the infighting etc... Selling a club to a company would be such a hard sell; maybe if it were aligned with a Japanese company, it would be easier as they have already set a precedent, but... Running it would be a different story altogether again. I do like you ideas, I think it would take an army to get it off the ground.
Lindsay Amner
Roar Guru
you are ignoring the fact that companies are not currently lining up to sponsor rugby clubs therefore it is incumbent on you to provide evidence that this would change in a different model. It is not incumbent on me to show that your model would not work as current practice already shows it won't. But we do have an idea what broadcasters are prepared to pay for rugby content because there is a highly popular rugby competition in Australia already which is being bid for by broadcasters. You can't compare to AFL which is a different market for a bigger population and viewing audience, but you can compare to NRL and get a vaguely realistic figure based on what the NRL gets, which is currently $115m per year. No idea where your $1.050 billion figure comes from. Remember that this NRL money has to be divided among 16 teams which equals approx $7m each while currently the $40m is divided among 5 SR teams so approx $8m each. Not sure how you can justify rugby broadcasting deals ever getting better money per team than NRL. There’d be nothing left from broadcasting deals to pay the owners anything.
Simon_Sez
Roar Guru
Sheek, forget about trying to expand super rugby unless it can provide income to Australian rugby of at least $400 million per annum in broadcast income, the same as being received by the NRL. Expanding super rugby has limited upside and most likely little “blue sky”. The expansion and corporatisation of a tiered club rugby competition with no salary caps and recruit whoever from wherever is a scalable model. One could start with as many or as few domestic clubs who wish to participate, understanding some won’t want to join. The collective bargaining power of these clubs will hold a powerful negotiating position with the broadcasters. The clubs will be able to table significant financial backing, which by club standards, will look almost unlimited, on top of having grounds, staff and tribal backing, converting to public interest. Sheek, I know you’re a big supporter of club rugby, this is the way forward to take back lost ground to the other codes and international rugby competitions.
Simon_Sez
Roar Guru
Lindsay, thank you for your feedback. Your argument has two main parts, firstly you are skeptical to whether there are any potential corporate owners and one would be “lucky” to find any. This in my opinion is a defeatist statement and made without any basis apart from your opinion. If you can specifically point to an example of why it won’t be possible then I would definitely be interested in your input. The second is that you think there will be insufficient broadcasting income to be shared at the end of the road to support such a competition, is that right? I don’t agree as I can point to the current annual broadcasting income being received AFL and NRL of $1.050 billion, and this competition is starting from effectively $0. A professional domestic rugby competition delivered at a standard equivalent to what is being offered overseas, including all the rugby stars both local and international, with local derbies week in and week out, then with the greatest respect you have limited to no knowledge what gets broadcasters interested when it comes to content, let alone how much they would be willing to pay for such content.
Simon_Sez
Roar Guru
Barry, thank you for the heads up. I appreciate the feedback. The proposal being discussed here is more than a “sponsorship”. What we are discussing is creating the model for a fully professional club model. This will entail a multi million dollar case by case model to each individual club. Those clubs that think it’s not for them are under no obligation to participate. Those that do will benefit from the money, the additional resources, the improvements in player contracts. I would like to hear your opinion due to your experience whether this is “fanciful” and why. Your feedback would be invaluable.
Lindsay Amner
Roar Guru
But who is going to pay your $210 million? No one. It’s certainly a pluck as there’s no broadcasting organization that would fork out this sort of money. You could perhaps pluck a vaguely realistic figure based on what the NRL gets, currently $115m per year but this is for a currently massively popular product, not an untried product with barely any fan base for the clubs. You’d be lucky to get $40m for what you’re proposing. Remember too that the NRL money has to be divided among 16 teams which equals approx $7m each while currently the $40m is divided among 5 teams so $8m each assuming the national bodies take none of it… So actually the SR teams are better off than NRL teams from their broadcasting deal. Not sure how you can justify rugby broadcasting deals getting better money per team than NRL, and none of that money goes back to sponsors or team owners. There’d be nothing left of your $10m to pay the owners anything.
Lindsay Amner
Roar Guru
this is simply silly reasoning, the ridiculous slippery slope argument. It's like saying legalising single sex marriage will eventually lead to legalising pedophilia, which was the most common argument against single sex marriage. Has any slippery slope argument ever come true? It's possible NZ might ask Australia to go down to 3 teams, the ones representing the three traditional powerhouses of Australian rugby NSW, Qld and ACT. Anything lower than this is stupidity.
Jacko
Roar Rookie
I like the sound of a Twiggy or Gina cup. No matter who brings it its crucial if RA want improvement.
Lindsay Amner
Roar Guru
If this lifting of their profile was so valuable, then companies would be doing it already. But other than Fortescue, they're not doing it. Any rugby club which attracts a significant sponsor can consider themselves lucky to have done so. Finding a company to put in vastly more money to actually own the club would be beyond lucky! There also isn't significant broadcasting income to be shared. Every cent of broadcasting income is needed to keep the game going. You need to find more than one example to say that this model would even get close to a start.
Barry Smyth
Roar Rookie
Simon, with all due respect, have you ever tried to sell sponsorship for a rugby team? I have, and at junior and senior club levels, let me tell you, it’s not easy to do, so expecting corporations to buy a club rugby team would be almost impossible, I love the idea, but I think it’s fancyfull at best.
Barry Smyth
Roar Rookie
Why not get Twiggy or RA to revive the GRR or Indo Pacific Cup and chuck our SR teams into that? Quick fix that does not involve wrecking CR.
Paulo
Roar Rookie
No, that’s why I asked. It seems you’re trying to say that narrowing Australian pathways will benefit NZ, or that NZR think it will benefit. “It is no surprise NZ wants Australia to reduce the number of Super Rugby teams to make the Australian teams more competitive to the NZ teams. NZ quite correctly have suggested dropping the Australian Super Rugby teams to four.”
Simon_Sez
Roar Guru
It was a question, do you think it does benefit NZ?
Paulo
Roar Rookie
Yea, that’s not what I was asking at all. It looks like you implied Australian Rugby narrowing its pathways would only benefit NZ. Is that not what you said?
Simon_Sez
Roar Guru
Paulo, one thing is super clear, NZ does not need Australian rugby. NZ rugby has a force and momentum of its own, it’s the national sport and national obsession. Australian rugby will never overcome NZ by participating in Super Rugby, the statistics, game results are enough evidence alone. The only way Australia will ever compete with NZ is to look to the past, because that is where the future is for Australia.
Paulo
Roar Rookie
You said, “do you really think narrowing the pathway for Australian rugby players is any benefit to anyone apart from NZ?” I’m asking how narrowing pathways in Australia helps NZ? This is what you have implied here, isn’t it?
Simon_Sez
Roar Guru
Hog, you’re right it is 3 men and a dog who are watching, plus you and me. So what’s the plan?
Simon_Sez
Roar Guru
Highly unlikely? Ok so what’s your plan stay in SRP?
Simon_Sez
Roar Guru
Jacko, the companies haven’t been given a proposal to start with, and the broadcasters haven’t been either. A simple business plan would do the job. Investment vs return.