The Awful Truth About The ARU's Financial Position

[TOCC]

It needs to be remembered that the ARU faces massive drops in revenue in RWC years, so it's likely the ARU will return to a multi $million loss in 2015

 

[Train Without a Station]

TOCC, I don't see your comments being at all negative towards a Melbourne Super Rugby Team. I was just trying to add what I felt may be commercial benefit of it.

Whilst I agree in a rugby context that figure is concerning. Compare this to the money AFL has poured into Gold Coast and Western Sydney and it's not too bad for a long term investment in a time in a prosperous, but saturated market.

Just on your comments, if the annual revenue from TV is only $20M for Super Rugby and $4M is being dispersed to each franchise, than that is concerning. That whole amount only pays player wages and nothing else.

 

[Braveheart81]

I don't know the details of the $5.5million 'loan', but I thought the ARU already provides $4million to each province annually as part of the broadcast allocation..

To my knowledge, the loan was needed to keep the place running when the ARU took control of the Rebels on Harold Mitchell's exit.

That is why the Rebels numbers are now consolidated within the ARU's financials.

 

[I like to watch]

I've not had time too look at the accounts.
If the Rebels have been consolidated within the ARU's financials,to whom is the $5.5M loan to?

 

[Train Without a Station]

BH, does that mean the Rebels are reported with the ARU so essentially the Rebels would merely break even and all losses/profits be incurred by the ARU?

 

[Braveheart81]

I've not had time too look at the accounts.
If the Rebels have been consolidated within the ARU's financials,to whom is the $5.5M loan to?

BH, does that mean the Rebels are reported with the ARU so essentially the Rebels would merely break even and all losses/profits be incurred by the ARU?

There are three lines of figures. 2012 (where there was just the ARU), 2013 Parent Entity and 2013 Consolidated Entity. The 2013 Consolidated Entity figures include the Rebels.

The loan to the Rebels exists as an asset on the 2013 Parent Entity numbers but then nets out in the consolidated numbers. Despite being consolidated into the ARU's financials, the Rebels still very much run as a separate entity.

 

[BDA]

The ARU's position is pretty simple from here. provided they don't lose more than $17million over the next two years, they should know exactly what they need out of the broadcast deal to be profitable/sustainable. It must make enough profit every 3 years to cover any lose from world cup year.

It'll be interesting to see what kind of costs they've managed to cut in 2014. I'm quietly confident if they can maximise broadcast dollars and cut down costs, the ARU could be ok by 2016.

 

[Braveheart81]

Just on your comments, if the annual revenue from TV is only $20M for Super Rugby and $4M is being dispersed to each franchise, than that is concerning. That whole amount only pays player wages and nothing else.

I don't know if it's really a concern.

The Super Rugby franchises provide the professional framework for the Wallabies. Essentially, the 5 Aussie franchises are keeping the potential Wallabies employed and playing rugby through the year.

The Wallaby matches then provide the bulk of the revenue for the ARU.

 

[Inside Shoulder]

Just on your comments, if the annual revenue from TV is only $20M for Super Rugby and $4M is being dispersed to each franchise, than that is concerning. That whole amount only pays player wages and nothing else.

Subject to not imposing financially on the juniors what other economic purpose does the ARU serve?

 

[Omar Comin']

I don't know if it's really a concern.

The Super Rugby franchises provide the professional framework for the Wallabies. Essentially, the 5 Aussie franchises are keeping the potential Wallabies employed and playing rugby through the year.

The Wallaby matches then provide the bulk of the revenue for the ARU.

It's a risky model that leaves rugby in trouble if the Wallabies aren't dominating world rugby. And most of the time they are not going to dominate world rugby.

Super rugby needs to stand on its own two feet and preferably make money for the ARU. The A League now makes Football Australia money where as in the past they relied on the Socceroos. They are in a more sustainable financial position as a result. The success of of one team is no longer as critical to the success of the entire sport, which is a position the ARU needs to reach.

 

[Braveheart81]

It's a risky model that leaves rugby in trouble if the Wallabies aren't dominating world rugby. And most of the time they are not going to dominate world rugby.

Super rugby needs to stand on its own two feet and preferably make money for the ARU. The A League now makes Football Australia money where as in the past they relied on the Socceroos. They are in a more sustainable financial position as a result. The success of of one team is no longer as critical to the success of the entire sport, which is a position the ARU needs to reach.

Super Rugby makes Australian rugby money too.

It keeps over 150 Wallaby eligibly players signed professionally in Australia so they can be selected for the Wallabies.

The teams pay dividends to their state unions (the Waratahs one is around a million per year).

You need to remember that the bulk of the business of each Super Rugby franchise has nothing to do with the ARU (except the Rebels whose results are now consolidated into the ARU). The fact that the ARU is receiving the broadcasting rights and then distributing them to the sides to pay players doesn't mean that Super Rugby is losing money.

What the A-League has done for FFA is given them a local competition with reasonable players to bolster the foreign players they pick for the Socceroos. It means that in the non FIFA window Socceroos games, they're no longer using players who are only partially professional playing for Marconi Fairfield or similar.

 

[Omar Comin']

What the A-League has done for FFA is given them a local competition with reasonable players to bolster the foreign players they pick for the Socceroos. It means that in the non FIFA window Socceroos games, they're no longer using players who are only partially professional playing for Marconi Fairfield or similar.

But the primary purpose of the A League isn't to feed the Socceroos. The FFA is not a Socceroos centric organisation anymore. They're trying to build a great competition in its own right. The fact it will benefit the Socceroos is a consequence of that.

I think this is a problem we have in Australian rugby. We seem to care a lot less about creating a great competition in its own right than we do about developing Wallabies. And yes the Wallabies are the pinnacle but I think it's a problem that the primary role of Super Rugby is to keep 'over 150 Wallaby eligible players signed professionally in Australia so they can be selected for the Wallabies.' How do you build huge clubs and attract passionate new fans to a competition that is perceived as a glorified selection trial?

It's an all eggs in one basket philosophy that hasn't worked out well for Australian rugby in the last 10 years. Perhaps one day the NRC and Super Rugby will build into something that changes that.

 

[BDA]

I think this is a problem we have in Australian rugby. We seem to care a lot less about creating a great competition in its own right than we do about developing Wallabies. And yes the Wallabies are the pinnacle but I think it's a problem that the primary role of Super Rugby is to keep 'over 150 Wallaby eligible players signed professionally in Australia so they can be selected for the Wallabies.' How do you build huge clubs and attract passionate new fans to a competition that is perceived as a glorified selection trial?.

Well that's not exactly accurate. The Wallabies eligibility rules are designed to improve our provincial teams even at the expense of the wallabies.

I do agree tho that the ARU needs to work on building interest in the 2nd and 3rd tier comps. The NRC is their big opportunity and is begging for FTA exposure.

 

[BDA]

Did anyone actually read the whole report. Was there a breakdown on the Sevens income / expenditure. I'm wondering if Sevens rugby is a good opportunity for growth for the ARU. it seems to be a sport on the rise and is very easy to market to casual aussie fans. Introducing Sevens rugby in public schools is probably a great way to reeducate/remarket rugby to the aussie public (which is currently seen as unaccessible / unpalatable to many australians). Is there any potential in the ARU making money from Sevens?

 

[Train Without a Station]

But it brings in fuck all income really

 

[Omar Comin']

But it brings in fuck all income really

It's never really been developed into an income stream in Australia though. Imagine if our Sevens leg was like the Hong Kong event every year. There's no reason it couldn't be. It's not like Australians don't like fancy dress, fast paced football and giant parties.

I'd like to see the IRB leg moved to Brisbane or Sydney. That would give it the best chance. I also think a new top level domestic sevens competition played in summer is a must.

Also a women's world series leg at a suitable suburban ground in Sydney could be good. The fact our women's sevens team will be a strong gold medal chance is a big deal and a way to differentiate rugby to the other football codes, especially AFL and league. Developing the profile of the women's sevens team is definitely a way to attract more female players and spectators to the code.

Who knows, after 2016 the face of Australian rugby could be someone like Emilie Cherry!

 

[Train Without a Station]

Even if it was, that's 2 days of selling out a stadium, which you've got a bunch of teams to pay for. It doesn't provide a consistent income stream

 

[Omar Comin']

Even if it was, that's 2 days of selling out a stadium, which you've got a bunch of teams to pay for. It doesn't provide a consistent income stream

Well a summer series could potentially provide that in time.

I thought the IRB covered a lot of the cost for the participating teams? It would be interesting to know how much profit the Hong Kong, Wellington, Vegas and London 7's make every year.

I found this on the economic impact of the Hong Kong event:

http://www.hksevens.com/eng/news/842.php#.U4SH5ZRdWFw

Always a sell out, the Sevens attracted around 21,391 overseas spectators in 2011, just over half of the 40,000-seat capacity of the Hong Kong Stadium.

The average overseas Sevens spectator stays in Hong Kong for 6 days and spends HK$12,873 during his/her trip on accommodation, shopping, dining, transport and so on.

This delivers a direct economic benefit to Hong Kong economy of over $282 million from overseas spending alone. When factoring in local market expenditure over the course of the Sevens week this figure rises to considerably higher levels.

 

[I like to watch]

If You go to HK and spend $12,873.
The HKRU gets exactly the $900? They get for the face value of the tickets.
Who gives a fuck about the economic benefits to the Hoteliers/Publicans of the host city.
There will be no summer series to address specific funding issues the ARU might have.
The 7's tournament is pretty much established.
Next idea?

 

[Omar Comin']

If You go to HK and spend $12,873.
The HKRU gets exactly the $900? They get for the face value of the tickets.
Who gives a fuck about the economic benefits to the Hoteliers/Publicans of the host city.
There will be no summer series to address specific funding issues the ARU might have.
The 7's tournament is pretty much established.
Next idea?

Who cares? The government and the sponsors perhaps? You don't think the ARU would benefit from running a big annual event that attracted 20k tourists every year?

A lot of the profit generated by events like this is in corporate hospitality and sponsorship. And for events with big economic benefits the government will often chip in to cover part of the cost. Just look at the Australian grand prix. I would bet the HKRU make millions in profits out of the sevens.

And why won't there be a summer series? Because you say so? Rome wasn't built in a day, you have to start somewhere. A well supported domestic sevens series in summer could be a great windfall for rugby in the long term.