Where to for Super Rugby?

[RedsHappy]

And im not really convinced there is much prospect of any particularly high returns. Sport is often a terrible investment.

Well, in fairness, sometimes the on-exit returns of PE into sports have been truly excellent. CVC into and out of F1 a good example.

But noting to add to your point: the good returns for PE or personal HNWs into sports have almost all come from investments in very major, already-rich comps and teams in those comps, eg as above, the Manchesters in EPL, Chicago Bulls, etc.

 

[KOB1987]

Sport is about building equity and greasing the wheels of other businesses. If you lose 2-3m a year on a team but it helps facilitate income in other businesses it’s a positive investment. Thing is does Rugby in this country have the ability to do this?

If I was the one doing it I would set it up so that every franchise initially has the same capital structure.

So to get things going, what's a reasonable amount per franchise? I reckon $5m isn't enough and $10m is probably too much. SO let's settle on $8m as an example.

80,000 shares/units at $100 each. I'm a family of 4 so I'll buy 4 shares (seat entitlements). A corporate suite has what 20 seats? So a corporate might buy 20 shares. A medium corporate might buy 100 shares, a bigger one maybe 1,000 (these would come with a different benefit aside from seats in the form of quasi sponsorship, etc). Then there's the rich guy up the road, he'll buy his maximum $1.6m (20%) worth just to boost his ego and get a seat on the board.

It doesn't really matter who buys in, the point is that in a city the size of Sydney, and even with the dwindling fan base, I don't think it would be all that hard for two franchises to raise $8m to kick things off. In fact, there would probably be an over-subscription. Even Brisbane should do 2 franchises comfortably enough despite being about 40% of the size. Canberra, Perth and Melbourne should be able to do one each.

 

[RedsHappy]

Twiggy Forrest has a net worth of approx $13 billion. To put that into perspective, if he spent $100 million on something that would be equivalent to someone with a net worth of $1 million spending $7,692. If he wants to take over the professional tier of Australian rugby he can do it, whether he makes or loses money on it would be a rounding error to him.

Well, I would say that many super HNWs have in part got that way through not losing buckets of money in ancillary ventures despite what they already had, but anyway.

To me the bigger assumption within your post is that RA would have the balls, requisite fleetness of foot, and adequate corporate gumption to approach Twiggy in the right way to have him positively consider such a major investment in all of Aust pro rugby.

RA is an organisation with an MO not known for any of: speed of action, humility or big-scale innovative imagination.

 

[KOB1987]

Well, I would say that many super HNWs have in part got that way through not losing buckets of money in ancillary ventures despite what they already had, but anyway.

To me the bigger assumption within your post is that RA would have the balls, requisite fleetness of foot, and adequate corporate gumption to approach Twiggy in the right way to have him positively consider such a major investment in all of Aust pro rugby.

RA is an organisation with an MO not known for any of: speed of action, humility or big-scale innovative imagination.

That's true. But once they have it and they're getting on in life they start to think there's no point having it if I can't have some fun with it.

 

[dru]

well anyway, guess we shall just have to wait and see. Personally, fingers crossed for a 10 team TT comp.

This is where we are. The proposal being eked out follows a predictableed pattern but we are left with crossed fingers.

The new group in at RA has some big hitters, not sure exactly their rugby/sporting prowess but there are few parties involved who will do anything other than treat them with respect. A very positive step.

The negative leaks and attack media has dampened - another big step.

Rennie is settling in with his team - big step.

So far the franchises, incl Force, have not been irreparibly damaged by the current circumstances. Good.

While I remain stouchly unconvinced that the purported strategy is good, the ingredients are coming together to give them a chance at it. I wish them the best.

 

[Omar Comin']

Well, I would say that many super HNWs have in part got that way through not losing buckets of money in ancillary ventures despite what they already had, but anyway.

To me the bigger assumption within your post is that RA would have the balls, requisite fleetness of foot, and adequate corporate gumption to approach Twiggy in the right way to have him positively consider such a major investment in all of Aust pro rugby.

RA is an organisation with an MO not known for any of: speed of action, humility or big-scale innovative imagination.

I definitely agree with all that! I've said a few times that I think the most likely outcome is that we'll drop to 3 teams in a TT competition, but I just think we should do everything possible to not have to cut any teams. And ultimately I think we need more teams in Australia. When you cut teams you lose thousands of fans to the sport forever.

And the thing with Twiggy is that he's already invested a lot of time and money into GRR and has a lot of incentive to make it work. Adding the 4 other Australian teams to it would add significant legitimacy to the competition.

 

[Quick Hands]

Forget about Wayne Smith and the others: this 'Aust Super teams merger' speculation is arising from the laws of economics and what Aust pro comp sizing 2021+ is going to be financially even vaguely viable.

Namely:

Logic Path A

- 2021 pro rugby media income (if any comes) will be drastically cut from historical levels and Wallaby gate income has also been in inexorable decline as less and less punters go to games and the Wallabies win less and less (likely to continue as trend into 2021)
- This means, inter alia, that 2021 RA grants to the local RUs will also of necessity be very heavily cut pro-rata
- The 2019 profitability of the RUs was marginal at best and their $ gate income also gradually declining year on year; these RUs very clearly depend for solvency on RA drop-down revenue from RA media deals for Super and TRC
- RA used to gain materially from the SANZAAR 'media revenue sharing' averaging formulae that de facto favoured RA, this being one of the major reasons RA clung on to SANZAAR come what may, that is now almost certainly over for ever
- Aust RU's will have to heavily cut a mix of local overheads (like RA's, often bloated) and/or player salaries
- If 2021 player salaries across all 4 local RUs are cut pro-rata the total RA cut, the net effect will likely induce (a) some players simply finding pro rugby's salaries are too low for them and/or (b) the better players will surely attempt to leave Aust for the Nth Hem in some way, and asap. Imposed salary reductions = contracts cancelled by employer, employee is free from the prior contract.

Logic Path B

- Assessing Path A, any sensible analyst can see: Path A applied to the status quo of 4 teams may quickly mean all simultaneously become dangerously non-viable at a solvency and/or player-viability level, the whole structure may soon collapse and
- The only logical alternative is to close one of the RA's Super teams and force a merger with another so the cuts' effect is substantially lower as 3 overhead systems and 3 playing squads are very obviously more readily viable than 4, especially if there is a long overdue functional cost rationalisation over the whole RA overhead and management structure which aids the survival of what's left.

The above pathway to teams size shrinkage is clear and logical. It is not idle speculation. Please communicate an alternative financial universe for RA pro rugby than this one (bar the potential arrival of large chunks of PE money that will still not sit back and invest in something that is at core not financially viable. PE is intrinsically more commercially ruthless than RA will ever be).

The above is one reason I keep banging on about speculated 2021+ Aust pro rugby comps based on an imagined 6-8 Aust pro rugby teams - where is the _immediately available_ money and resourcing for all these extra teams coming from? The objective answer surely is: nowhere.

I don't think a scenario exists (short of a collection of benevolent billionaires), which sees Australia pro rugby financially viable AND paying players anything comparable to what they receive now. This includes a 3, 4 or 5 Aust team involvement in a TT version of Super Rugby.

The Foxtel $57 million per season offer is long gone and that would have at best allowed the status quo of payments to 4 teams based on a longer Super Rugby season. Recent comments suggest that Fox would be willing to pay $10-15 million per season on an incentive basis. That involves a 75% reduction in wages, possibly less of a reduction if other costs are trimmed, bust still not enough.

As far as I can see, and I'm happy to be corrected, PE will not only need equity and control of the teams but also equity and control of the competition itself. Something like the structure of Premiership Rugby in England - which would mean that RA and NZRU have no role. This is the only structure which can deliver as far as I can see.

Premiership Rugby is owned 73% by our stakeholder clubs and 27% by CVC Capital Partners .
The decisions made by our Boards are in the best interests of the professional game and the sport of rugby in England.
Premiership Rugby established a new Board of Directors to oversee its strategic and financial growth and development in 2019. The Board, which is chaired by Andrew Higginson, is part of the revised governance structure for the organisation following the investment by CVC Capital Partners to help grow the sport and the appointment of Darren Childs as CEO earlier this year.
The Premiership Rugby Board is composed, in addition to the Chairman, of two executive directors (CEO Darren Childs and CFO Jan Gooze-Zijl) and seven non-executive directors: three representatives of CVC Capital Partners, three representatives of Premiership clubs and Ian Ritchie chair two separate Premiership Rugby committees: an investor committee and a sporting committee focused on sports governance matters.
https://www.premiershiprugby.com/about-premiership-rugby/about-us/who-we-work-with/our-clubs/

 

[The Honey Badger]

The type of model you suggest here of a huge infusion of 'highly patient' new cash funds - irrespective of whether it's Twiggy or PE or XXX or GRR etc - is the only way to attain a viable 6-8 teams Aust pure domestic rugby pro comp. There is no other realistic and credible way and the multiyear $ investment thus required would be very large and the financial return prospects intrinsically high risk.

And major changes in management would be key with existing local Aust RUs' management essentially replaced and in the order of at least 20 new well-credentialed pro coaches and c. 20 top players imported from other countries so as to ensure the calibre of as-played rugby would be uplifted as rapidly as possible. Plus Law variations to enhance the comprehensibility and speed of each match, and so on.

Disagree

We play our own players with limited imports. The level will be what it is, probably something close to what the Force are. Still very capable of entertaining. We will have more players playing elite competition, this is good for the development of Aus Rugby.

I would think each new franchise would need 3 coaches max (so given we already have 5 teams , with multiple coaches, we only need say 3 teams to fill - so maybe 9 coaches). Pretty sure most of those would be found here.

 

[RedsHappy]

Disagree

We play our own players with limited imports. The level will be what it is, probably something close to what the Force are. Still very capable of entertaining. We will have more players playing elite competition, this is good for the development of Aus Rugby.

I would think each new franchise would need 3 coaches max (so given we already have 5 teams , with multiple coaches, we only need say 3 teams to fill - so maybe 9 coaches). Pretty sure most of those would be found here.

Fair enough, but the 'level of rugby close to approx where we are now/Force level' is not attracting fans or viewers today in adequate nos, on the contrary. IMO, that will not be materially changed just by dint of the fact that, suddenly, we are always playing each other in an all-Aust domestic comp. Are out natural fans (the base today) that mesmerised by 'oh, we'll all turn up to games a lot more now it's just Aust teams and the quality of play and rugby skill (a bit dropped down from 2019's comp) barely matters'.

if you think that all the Super coaches and team constitutions we have in place now are just fine (evidence?) then you are right, my figure assumes _all_ 4/5 teams we have now plus your c. 3 more require various coach upgrades and an infusion of an element of new elite players to uplift the total new comp standard of rugby by, say, not much latter than starting the 2023 season.

 

[RedsHappy]

I don't think a scenario exists (short of a collection of benevolent billionaires), which sees Australia pro rugby financially viable AND paying players anything comparable to what they receive now. This includes a 3, 4 or 5 Aust team involvement in a TT version of Super Rugby.

The Foxtel $57 million per season offer is long gone and that would have at best allowed the status quo of payments to 4 teams based on a longer Super Rugby season. Recent comments suggest that Fox would be willing to pay $10-15 million per season on an incentive basis. That involves a 75% reduction in wages, possibly less of a reduction if other costs are trimmed, bust still not enough.

As far as I can see, and I'm happy to be corrected, PE will not only need equity and control of the teams but also equity and control of the competition itself. Something like the structure of Premiership Rugby in England - which would mean that RA and NZRU have no role. This is the only structure which can deliver as far as I can see.

Premiership Rugby is owned 73% by our stakeholder clubs and 27% by CVC Capital Partners .
The decisions made by our Boards are in the best interests of the professional game and the sport of rugby in England.
Premiership Rugby established a new Board of Directors to oversee its strategic and financial growth and development in 2019. The Board, which is chaired by Andrew Higginson, is part of the revised governance structure for the organisation following the investment by CVC Capital Partners to help grow the sport and the appointment of Darren Childs as CEO earlier this year.
The Premiership Rugby Board is composed, in addition to the Chairman, of two executive directors (CEO Darren Childs and CFO Jan Gooze-Zijl) and seven non-executive directors: three representatives of CVC Capital Partners, three representatives of Premiership clubs and Ian Ritchie chair two separate Premiership Rugby committees: an investor committee and a sporting committee focused on sports governance matters.
https://www.premiershiprugby.com/about-premiership-rugby/about-us/who-we-work-with/our-clubs/

QH, I am not sure CVC CP 'control' the Prem Comp in England as such - see the board constit as you have listed - but the RFU as you say is effectively out of it (and possibly glad to be, club infighting in the UK is notoriously bad) and it has its own CEO etc and governing body.

Whatever, I would be delighted if a party like CVC CP say took over _and_ controlled a new pro comp here be it TT or domestic, it would certainly not be hard to do a better job than RA and the local RUs have generally done with Super Rugby and the wacky SANZAAR over the past decade.

 

[The Honey Badger]

Fair enough, but the 'level of rugby close to approx where we are now/Force level' is not attracting fans or viewers today in adequate nos, on the contrary. IMO, that will not be materially changed just by dint of the fact that, suddenly, we are always playing each other in an all-Aust domestic comp. Are out natural fans (the base today) that mesmerised by 'oh, we'll all turn up to games a lot more now it's just Aust teams and the quality of play and rugby skill (a bit dropped down from 2019's comp) barely matters'.

if you think that all the Super coaches and team constitutions we have in place now are just fine (evidence?) then you are right, my figure assumes _all_ 4/5 teams we have now plus your c. 3 more require various coach upgrades and an infusion of an element of new elite players to uplift the total new comp standard of rugby by, say, not much latter than starting the 2023 season.

I think "Level of Rugby" and attracting fans is not that well correlated. Fans can be attracted at a lower level.


Lets step down another level (From the Force to SS) from the not too distant past:

What’s been even more impressive is how attendances have grown. Last year, games at Manly Oval were drawing 10,000 fans to games, while one of the finals at Rat Park, home of Warringah Rugby Club in Sydney’s north, drew 15,000.
The crowning moment was last year’s grand final at North Sydney Oval. At least 16,000 fans – some estimates have it closer to 20,000 – turned up to watch a the Warringah Rats beat Northern Suburbs 30-25 in one of the greatest deciders in the competition’s history.

 

[Quick Hands]

QH, I am not sure CVC CP 'control' the Prem Comp in England as such - see the board constit as you have listed - but the RFU as you say is effectively out of it (and possibly glad to be, club infighting in the UK is notoriously bad) and it has its own CEO etc and governing body.

Whatever, I would be delighted if a party like CVC CP say took over _and_ controlled a new pro comp here be it TT or domestic, it would certainly not be hard to do a better job than RA and the local RUs have generally done with Super Rugby and the wacky SANZAAR over the past decade.

Clumsily worded by me, CVC own part (27%) and the 12 clubs have and equal share in the remainder (73%).

The RFU runs the international teams (men, women, youth etc) and funds the community game, juniors, coach and player development without trying to run either the professional league or teams within it.

It's a system I see as far more efficient and far more likely to be successful that something run by RA, NSWRU, QRU, ACTRU et al with the added complexity of SANZAAR/SANZAR bureaucracy above.

Some years back one of the Garlings ran an enquiry into the NSWRU and made similar recommendations.

 

[Quick Hands]

Twiggy Forrest has a net worth of approx $13 billion. To put that into perspective, if he spent $100 million on something that would be equivalent to someone with a net worth of $1 million spending $7,692. If he wants to take over the professional tier of Australian rugby he can do it, whether he makes or loses money on it would be a rounding error to him.

Although I suspect he would have the smarts to run it at a profit, at least in the medium to long term.

I think we all have to change our thinking to and extent - including yours truly. It's become obvious to me that around the world it's the middle part of the game which is the most problematic to run and to fund. By and large national RU's seem to be fine with the national team and it funds itself in Tier 1 nations. The lower community/junior levels basically look after themselves (although the more support they get from the national RU the better). The minefield is the pro level immediately below the national team which requires plenty of money to run (which national RUs mostly don't have), requires a high level of pro level sports management expertise and is often the area where tension arises for a variety of reasons. As I look around the rugby world I simply see that the most successful versions of this level are club-based where the clubs are empowered to run the league subject to certain requirements relating to national team duty.

 

[Derpus]

I think "Level of Rugby" and attracting fans is not that well correlated. Fans can be attracted at a lower level.


Lets step down another level (From the Force to SS) from the not too distant past:

What’s been even more impressive is how attendances have grown. Last year, games at Manly Oval were drawing 10,000 fans to games, while one of the finals at Rat Park, home of Warringah Rugby Club in Sydney’s north, drew 15,000.
The crowning moment was last year’s grand final at North Sydney Oval. At least 16,000 fans – some estimates have it closer to 20,000 – turned up to watch a the Warringah Rats beat Northern Suburbs 30-25 in one of the greatest deciders in the competition’s history.

One off novelty games. Not the foundation of a professional competition.

 

[KOB1987]

Any of of the models/concepts that have been proposed on here can be made to work. All that is required is money, management and an audience.

 

[sunnyboys]

"level of rugby" is an interesting issue. i sometimes think we put too much emphasis on it. at Test level the highest level of rugby should be demanded. But at levels below that?? i think it has become a fixation for us because we lose >90% of games we play against kiwi opposition.

NRL fans know that club footy isnt the level of SOO or Tests. but they dont stop watching the comp. they happily expect different 'levels' from the different ... err levels..

English premiership and French pro were always considered lower than Super Rugby standard (and arguably still compared to the top kiwi and SA teams) but it didn't hinder growing the viewership and fans.

I think people can set their expectations differently.

what we struggle with is never being up the standard of the kiwi teams. its when one standard is compared to another and found lacking, that it becomes a problem. that is what turns fans off ... knowing your team will never be in with a shot.

what comps need is a fairly even level of rugby across all the teams. Super Rugby, with its purpose of feeding national test teams, meant that talent equalisation was impossible to fix.

 

[formerflanker]

One off novelty games.

Mods, can you ban this troll?
Manly don't play novelty games.

 

[Rugbynutter39]

Well, I would say that many super HNWs have in part got that way through not losing buckets of money in ancillary ventures despite what they already had, but anyway.

To me the bigger assumption within your post is that RA would have the balls, requisite fleetness of foot, and adequate corporate gumption to approach Twiggy in the right way to have him positively consider such a major investment in all of Aust pro rugby.

RA is an organisation with an MO not known for any of: speed of action, humility or big-scale innovative imagination.[/quot

True but nothing like the other choice being bankruptcy to force you to the table - sad though taken to be at this point for RA to be left with so little options

If RA can’t see learn to eat humble pie and build a bridge to twiggy then only positive is bankruptcy could force
the end of RA as we know it

 

[KOB1987]

The 5 NZ franchises hosted a zoom meeting with the 4 existing Aus franchises on Friday to discuss a way forward for next year. It sounds like the Force weren’t asked because they were starting from ground zero and then going from there, but are open to their inclusion. Positive signs.

What ever happens in 2021 is likely to be a once off, but could well pave the way for the future. So it would make the most sense to try this and see how it goes. Both countries have little to lose by doing that.

 

[stoff]

Sounds like the Force's lack of invitation was down to a thought around a sixth NZ franchise coming in, although that was mentioned as being unlikely (Wayne Smith, today's Australian). He couldn't resist ending his mainly positive story with a final Rebels Brumbies merge paragraph.