The gap between the ARU and its partners share of the SANZAR broadcast deal is set to widen from US$40m to US$100m, according to reports. The reason for this growing discrepancy is simple – Australian rugby has no third tier.
The much awaited SANZAR broadcast deal post 2010 is set to be announced in the coming weeks and the estimated value of the new broadcast rights ramp-up to around $US400M – a substantial increase on the old mark of $US323M. However, of the $77m increase, the ARU is set to only receive $7m. This will leave the ARU very much out in the cold, and under funded, in relation to its SANZAR partners.
Under the last SANZAR agreement, the ARU received 29% ($US93M) of total revenue with NZ and SA getting 33% ($US107M) and 38 % ($123M) respectively. As part of the protracted negotiations surrounding the awarding of the new Super 15 franchise, all SANZAR Nations agreed to split revenue from the new deal equally as each country would have 5 teams.
The trade off for this concession to the ARU was that the new broadcast deal only included Super 15 games and Tri-nations tests with each Nation being able to negotiate its own deals for rights to their respective in-bound international test and domestic competitions. When these revenues are added to the bottom line, things look decidedly paltry for the ARU.
It has been estimated that with Currie Cup and in-bound tests, SA Rugby has been able to negotiate an extra $US58M, an increase in revenue of 46% on the old agreement. The NZRU, whose NPC is estimated to be worth $US20M, will increase revenue by 13%, even before in-bound test revenue is factored into this figure.
With no third-tier competition to hock, the ARU stands to only increase revenues by 7% or $US7M before in-bound test revenues are considered, not a great prospect given the poor TV ratings of this year’s tests.
What is clear from these estimates is the ARU has very little scope to earn significant revenue outside of what it receives from its share of the SANZAR deal. Although the ARU increased its earnings from sponsorships and gate receipts by almost $A9M from 2007 to 2008, this increase included the sugar hit provided by the first overseas Bledisloe.
Indeed the fact not one Wallaby game sold-out this year does not bode well for those expecting to see these two income streams increase at the same trajectory for 2009.
It is now time for the ARU to re-visit the idea of a domestic third-tier competition as it is the only way the organisation can keep pace financially with its SANZAR partners.
Speaking in June, our esteemed leader John O’Neil said of a third-tier competition, “Once we get the broadcast deal bedded down and once we’ve got a decision on where the new (expansion Super 15) team is going, and once we understand what we can and cannot afford, then we can turn our minds to the third tier.”
Australian rugby can wait no longer.
The idea of a new domestic competition has gone beyond a purely player development argument to now be an income increasing one. With very little else of value to sell, the ARU must quickly come up with a proposal that will attract Australian free-to-air TV stations, who are falling all over themselves to find local content to fill their multi-channel schedules.
Much was made of the money pit that was the ARC. In its first and only year the competition lost over $A5M and was budgeted to lose another $A3.3M in what would have been its second year (2008). An analysis of those two figures suggests the longer the competition may have gone, the greater the economies of scale and opportunities to reduce costs and, as the competition matured, the more attractive it would have been to prospective broadcasters. Sadly, we’ll never know.
With significant cracks appearing in the ARU’s private equity model to fund the new Melbourne Super 15 team, and the very real prospect the ARU will have to pay for the new team itself, this could become a burden on the ARU’s bottom line and eat up the estimated increase in revenue.
G&GR has made several attempts to contact the ARU for comment on the current situation but these calls have not yet been returned.
It’s time for the ARU to come up with something tangible and of value, or, sell off the family silver to pay for its future obligations. Let’s face it, as far as silverware in the ARU’s cupboard goes – there’s fuck all of that anyway.
Tags: super 15, tri-nations
i think they need to look at a summer season model, meaning Australian Rugby all year round, after the Tri nations through to just before the new super 15, 10 teams, those of the ARC with adelaide and Gold coast, looking to expand to 15 further on, using a similar competition to the New Zealand Air NZ cup. fully funded, as much as possible by private equity and have a close association with clubs.
Great piece of investigative journalism JC. Seems like we’re just holding our head above water. A third tier competition is absolutely essential, logically to be held concurrent with the NPC and Currie Cup. Free to air content will be the only way forward for either Super 15 or any other competition.
agreed, hopefully the ARU has a brain cell and has left wiggle room for free to air sponsorship.
1HD please come to the party on this one!!!
a 7% increae in revenue is actually a fantastic bonus in the current tv climate, super rugby and international rugby dont rate, NRL and AFL are worth a crapload more to any tv station in this country and they deserve credit for that. We didnt really have anything to bring to the table at all except a handful of extra games so i think they deserve a pat on the back.
a third tear rugby comp is never going to make any tv money though, if the abc wouldnt even show it on there primary channel, to think that someone is going ot pay for the privaledge is laughable. the best hope is one sport cover it for free, and even then that would be asking for a miricle!
I’m not so familiar with everything with all these broadcast details and such.
Will free to air in Australia be an occurrence? Say with One HD?
no free to air super 14 coverage, test matches still on seven or perhaps ten if they get there sct together.
one HD is a crock of crap, it has an operating budget less than sbs and cant afford to really bid for anything, the AFL coverage and such will always be on the primary TEN channel with a similcast on one. Ten are keen for the test matches but i dont know when sevens contract runs out.
That’s a load of shit for no free to air. How else is rugby meant to be exposes. Channel 10 is really lacking in sports. It has half of the AFL games and some shitty motor sports. Surely they can be able to get a few repeats of matches and get Ben Tune and that other guy to commentate it. Maybe even get Stu Dickinson on board as it looks like his career is over.
10 don’t even have the Rugby World Cup, as Channel 9 do. Which really is puttign 10 last.
IMO ARU should be desperate to get a domestic competition as it stands like a “backbone” of rugby in NZ and South Africa especially (their rivals in the Super 14).
The horse has bolted once again! We all knew the rights were up for negotiation again, yet the ARU did nothing to bolster it’s share of the pie by developing more content.
If we had a 3rd tier competition planned and ready to go in 2011 we might have had something to negotiate with. There’s no TV money elsewhere for a third tier competition – the only potential buyer is News Corp.
This is a five year deal so the ARU will be in no hurry to reintroduce a third tier competition until around 2015 so they’ve got more content to sell in the next round of negotiations with News. It’s a chicken and egg situation – you need to invest to develop.
And that’s going to leave Australian rugby well behind New Zealand and South Africa in the first half of next decade.
this is horsecrap, the ARU has got us a 7% increase in the television deal during a period of economic downtown and with a product that doesnt rate as well as reruns of the simpsons.
the NZcup still has yet to be sold, if they get 20 million it will be a miricle as that is only an estimate not an actual figure.
south africa had spiked interest off the back of the world cup win, im sure if we won the world cup in 2003 and were able to sell rights on the back of it we would get a great deal as well.
there is no way, absolutely no way, that we are going to be able to negotiate a deal in any regard at any time in the next decade to sell a domestic competition with the number of players and the competition rugby has in the sporting market.
were are the mythical sponsors and supporters who are suddenly going to turn up and watch live or on tv this competition, you cant sustain even a semi professional legue on corporate or tv money if no one is watching.
in perth, seven show wallaby test matches on delay because they can show an old time movie in the same spot and get more viewers, isnt that telling you something about the product we have currently.
a third string competition will only be for rugby fans, the sponsors of super teams and the wallabies already have that covered, who is stepping up to throw money down the drain for nothing?
I reckon there are a few potential buyers out there, the market has changed since the ARC days with digital TV bringing several new channels into play.
That’s the point entirely about the free to air TV stations needing local content to fill their schedules.
I had a look at OneHD the other night and there was the Seppo National paint-ball series on…surely a third-tier rugby comp would be better than that?
It is a similar situation to when there were two pay-TV providers in Aust early on and they each paid premiums to secure whatever live Australian sport was going – if only the ARU had something to sell.
It hasn’t changed that much, only One is interested in sport. Plus i’d bet that prepackaged paintball, sports news or bull riding from the US comes a hell of a lot cheaper than filming/broadcasting a national rugby competition.
there is a reason why optus went broke.
OneHD has no money to actually broadcast anything, there never going to show live sport except in similast with there main channel, ten.
the cost of sending out a crew, several cameras and an opporating team to broadcast from a ground isnt going to be offset by advertising by any product the aru can put together, thats why the arc went to abc 2 last time, the investment was sending a camera crew which the aru had to help fund.
i would love a third string comp, i loved going to watcht he ARC but in the australian landscape, and not chicken and the egg or any other crap, in the australian landscape there is no way we can put together a comp that is going to draw interest to warrent its existance. and please dont post that it isnt about money, i know its about development, but the reality is, the players arnt going to develop if they cant train professionally and if there isnt the money there isnt the paycheck.
WJ – whether you’re right or not on this one is kinda irrelevant as it doesn’t change the fact that SA and NZ are pulling more and more money than us into developing and funding their talent pool. The longer this goes on, the bigger the gap gets between Australia and our key competition.
I see your points though about the commercial appetite for a 3rd tier.
To make any of this work I reckon you’ve gotta go bold and basically throw the whole club system into a big blender, set on blitz, and then repackage what comes out into something that has a chance of integrating with the NPC, conference stylie.
Our best superclubs go over and get mashed until we get better. Along the way we get some more cash and have something for the fans to get excited about.
The whispers are that JO’Ns got some big ideas coming. Something like this?
it dont matter how big the blender is, or how great the idea, the super 14 loses money for fox, the only reason we get a good share, and this is a great share, is because fox want the rights in nz and sa, if you took one of them out of the bargin, the chances are fox would halve what australia got, we talk a big game, but no one is actually watching except me and scarfman, and he only watches till 9 before he has to go to bed.