Exit from Super Rugby?

[kiap]

Some extracts from an item in the Australian about a "Plan B" for the Oz sides. Would be a big call and sad to see, but it might be the way to go.

ARU has to stand up to South Africa in expansion debate

Wayne Smith: April 22, 2014

AUSTRALIA must have the courage to go it alone until a Super Rugby competition involving only New Zealand and South Africa inevitably falls over, an Australian team’s chief executive officer said yesterday.

The CEO, who asked not to be identified, said the Australian Rugby Union had to be prepared to make “some big, ballsy calls” if a thorough cost analysis demonstrated that expanding to a 17 or 18-team Super Rugby competition — as SANZAR envisages — would imperil the financial viability of the professional game in Australia.

“If that means going it alone until an NZ-SA competition collapses, as it surely would, then that’s what we have to be ready to do,” the chief executive told The Australian yesterday.

. . .

In this instance, South Africa is under pressure from its government to promote the predominantly black Southern Kings to Super Rugby, which should require SARU to make the tough call of jettisoning one of the existing five franchises — the Sharks, Bulls, Stormers, Cheetahs or Lions — to make room for the new team.

Instead, South Africa is taking the soft option of foisting another weak side on the competition and expecting its SANZAR partners to acquiesce.

Former Wallabies coach John Connolly insisted yesterday Australia had to call the SARU’s bluff and block the move. “South Africa cannot have a sixth team, for the integrity of the competition,” said Connolly. “Australia has to be prepared to play hardball with South Africa over this issue.”

But Connolly said that for the long-term viability of the game, Australian rugby could not continue to divert more than a quarter of its revenue into the pockets of players. Instead, he said, Australia should consider mimicking the New Zealand model of targeting the retention of three or four key Test players and being prepared to back its production line.​

 

[I like to watch]

Poor timing for the Safers to be requesting another team in the comp.
They currently have four teams that can't compete ATM.

 

[Train Without a Station]

Historically they have had the worst team most seasons too.

 

[ACT Crusader]

Relegation should become formalised. The SARU have been doing it for a while, but there should be formal opportunities for NZ and OZ to do the same.

I know it has been an issue of debate in NZ with a North Auckland/Northland team given the Blues doesnt really represent, or a team based in rugby heartland like Taranaki.

I can see why this would be a very attractive opportunity for South Africa, but it will just be more of the same, not a better product.

 

[Set piece magic]

I sent my take on this whole sage to Matt but he hasn't gotten back to me yet, have a read if you want:


SHOULD THE ARU DITCH SOUTH AFRICA?

There’s been a large amount of discussion recently about the SANZAR partnership and its relevance to Australian Rugby’s future. In this article I will attempt to analyse the options the ARU has.

From a business sense, when considering product, the ARU will always come back to profitability. In a professional environment, the bottom line will always be the ultimate decision maker. From this perspective, each television deal with South Africa makes some sense – SANZAR spreads revenue roughly evenly, South Africa gets a large amount of money and shares some with us. Thus, from a micro, one off business perspective, one would always choose the deal to play with South Africa.

But looking at Rugby from a macro perspective, and looking at the entire system would give you a different result.

Firstly, as these teams are foreign, and play their home games at 3am, they are unrecognizable. The result is that when they play in a comparable time slot against an Australian team, like a Saturday night game at 7.40, they pull less crowds and less television ratings by a substantial margin. The average South African team playing in Australia rates at 88,000 on Foxsports, which pulls the average below 100,000.

Australian crowds certainly dip for South African teams, but not as much as I thought they would. In 2013 there were ten games involving South African teams on Australian soil, which averaged 16161 spectators. By comparison, there were twenty Australian derbies which averaged 18072 spectators, an 11.8% increase. Based on these numbers, it would appear that South African teams in Australia are a minor part of the issue – ~10% less viewership on both television and at the game, whilst substantial, is not a ridiculously large amount to justify a hardline case at the negotiation table.

However looking at the numbers for Australian teams playing in South Africa there is a different story. Games involving Australian opposition average just 22,000 on Foxsports, and Australian rugby obviously don’t get the gate receipts. These numbers are diabolical for the ARU. Last year, the AFL staged 207 matches, the A-League staged 140 and the NRL 201, all of which are played at a good timeslot. By comparison, only 40 Super Rugby matches are played in Australia, and including New Zealand that number rises to 82 matches that are in a good timeslot. With Super Rugby shorter than the AFL, NRL and A-League seasons as is, having a third of your product (which is already considerably less than competitors) as dead product is a disaster.

Thus the major issue really is the games in South Africa, which also have the intangible effect of killing a team’s support base momentum – when an Australian team goes to play in South Africa many casual fans lose track of their team.

So what is the solution? Well to the man on the street it seems clear, the solution is to ditch South Africa and play with New Zealand only. This option has been considered by the ARU, and it’s their preferred model, however, they could not get the support of SANZAR or their broadcast partners, quote Bill Pulver, “Our preferred Super Rugby structure is a two conference model, with Australia and New Zealand linked with Asia. However, this option wasn’t supported by our SANZAR partners or the broadcasters.”

So why hasn’t the ARU said that it’s not an option? The answer is they can’t:

i) The ARU, as a result of the existing agreement which has led to the product being so stagnant, doesn’t have much money and can’t afford the short term loss of the South African share of TV revenue
ii) New Zealand, for whatever reason, does not wish to join Australia alone in an Australasian conference.

This means the ARU has a pretty bit dilemma. They really can’t afford to tell SANZAR to stick it and lose South Africa’s money at the moment, and even if they did they would have to develop some form of expanded NRC as it appears the NZRU isn’t interested in joining the party. (This definitely should have been done after the 2003 Rugby World Cup.

At the same time going with the status quo has big issues as well. South Africa are interested in getting a Spanish team involved as well as an Argentine team and a sixth South African team.

In my view, the ARU will be forced into continuing the status quo, only using whatever negotiating clout it still has to persuade/demand that there is no Spanish team and find a solution to limit the Argentine expansions negative impact on Australian rugby. In the meantime it should hope that the Wallabies win both a Bledisloe and World Cup and fast, which would increase the value of the next television deal and gate takings dramatically.

This would put the ARU in a position to take the appropriate short term money cut to put Rugby on FTA and ditch South Africa in the next round of TV negotiations, which in my view is exactly what the ARU should do. Whatever the case, we will get a clearer picture of the ARU’s hand when the annual report for 2013 is released.

 

[Braveheart81]

I just don't see that playing 2 games out of 18 in a bad time slot (i.e. the South Africa tour) is what is making life difficult for the Australian sides.

There is no magic bullet to fix Australian Rugby or make it more lucrative overnight.

Like it or not, the Wallabies are the driving force behind Australian rugby and their success or failure goes a big way to determining the level of interest of Australian sports fans in rugby.

Priorities for the ARU should be to get one game of Super Rugby on FTA TV in the next TV deal and work on streamlining costs and marketing such that the Super Rugby teams and the Wallabies can be made as popular and successful as funding enables. Make sure that scarce funds are spent on players actually playing for the Wallabies and not tied up in funding a glamour player who is injured most of the time by heavily funding Wallabies through match payments. Try and centralise some marketing as there is a common theme between every Australian Super Rugby side that they are looking to get more local fans. More people supporting any Super Rugby side in Australia and then supporting the Wallabies benefits every team in the long run. Their financial outcomes are so closely linked by the overall success of Australian rugby. If one of our franchises struggles and the ARU needs to support them then the rest of the franchises miss out on money.

I disagree that we need more content to compete with AFL, NRL etc. In any of those codes, how many supporters watch more than two games per week? My guess would be very few. I think the vast majority would watch one game a week, a substantial number would watch two games and then it would drop off rapidly beyond that.

When you combine the Super Rugby and Wallaby seasons, the rugby season is substantially longer than the NRL or AFL.

 

[kiap]

From a business sense, when considering product, the ARU will always come back to profitability. In a professional environment, the bottom line will always be the ultimate decision maker. From this perspective, each television deal with South Africa makes some sense

Cheers for the article, Spikhaza!

Do we have a ball-park idea of what the financials are? . . . According to this, the TV rights from the three nations for the competition are pooled, with the following contributions per year (presumably this is for Super Rugby only):

​

Fox Sports (Aus): $US 12.6 m​

Sky Sports (NZ): $US 11.9 m​

SuperSports (SA): $US 10.9 m​

But from this older item (originally in the Australian), the Oz sides might actually do better being out of such a deal than being in because . . . "South Africa gobbles up around $8 million of SANZAR's annual $11 million transport and accommodation budget."

 

[Pfitzy]

Need the NRC to launch to help this situation.

The Kiwis are in a maximised market whatever happens - several of their media, and their administration, have stated that Australia presents the best hope of growth in terms of TV deals because the market is not even close to fully tapped.

The franchise systems in NZ are also getting a little stale, so the opportunity to bring other provinces into play (rather than 5 supposedly representative regions) would be good.

I don't think Australia can support more than 6 teams for such a competition, without its third tier being in place for a number of years.

 

[hoggy]

Spikhaza, I think that you are right about the situation the ARU find themselves in, they have few options and really have to go along with what is dished up.
But i am concerned that if the new deal is from 2016, that means that they will be committed to probably 2020-21 season.
IMO i have genuine fears that the code will survive in this country if that is the case. How the ARU let ot get to this stage is just mind boggling. The whole top down approach has left the code so vulnerable.
The lack of grassroots development and its total dis regard to mainstream support is just staggering.
I hope we walk away from the whole sorry Super saga come 2016. we don't have the money but until a domestic competition is the forefront of the ARU, then nothing will change.

 

[Braveheart81]

I hope we walk away from the whole sorry Super saga come 2016. we don't have the money but until a domestic competition is the forefront of the ARU, then nothing will change.

I don't get this. I think Super Rugby has helped make the three SANZAR nations the dominant force in world rugby.

I can't see the Wallabies being backed up by a domestic competition as the second tier being anything other than the path to us moving down the rankings and becoming less of a force in world rugby and with that even more of a financial basket case.

 

[Gnostic]

I don't get this. I think Super Rugby has helped make the three SANZAR nations the dominant force in world rugby.

I can't see the Wallabies being backed up by a domestic competition as the second tier being anything other than the path to us moving down the rankings and becoming less of a force in world rugby and with that even more of a financial basket case.

I think it could be argued it has helped MAINTAIN the dominance of SA and the ABs, and the relatively modern dominance of the Wallabies. SA and NZ have traditionally dominated the world of Rugby with only the Welsh challenging that really, in the now distant past.

Since 1982 onwards Europe was left behind by Aust. and NZ (and SA when they returned in 1992). This evidenced by the numbers of appearances at RWC Quarter Finals and Finals.

Without SANZAR I think that the Boks, Wallabies and ABs may have come back to the pack a bit since 1995 but now with the French clubs now dominating the market so thoroughly I do not see any significant threat to that dominance in the near term, simply because of structural issues regarding the conditioning and release/access to players for test sides.

It may seem like semantics to argue the point, but it is significant in terms of philosophy and why we would seek to keep SANZAR.

I personally think the ARU is %$#$ financially and unless something miraculous happens restructure on a Greek level will be forced upon the Australian Rugby public in the near future. That being said all options have to be explored.

 

[Braveheart81]

I think it could be argued it has helped MAINTAIN the dominance of SA and the ABs, and the relatively modern dominance of the Wallabies. SA and NZ have traditionally dominated the world of Rugby with only the Welsh challenging that really, in the now distant past.

I think the advent of professionalism has pushed NZ, SA and Aus further ahead of the Northern Hemisphere even though we are more poorly funded. I put a lot of this down to the strength of Super Rugby and has served us better than the various Northern Hemisphere competitions.

More money in the NH should have closed the gap yet it has widened. I think a big part of that has to be due to Super Rugby.

 

[kiap]

More money in the NH should have closed the gap yet it has widened. I think a big part of that has to be due to Super Rugby.

I also think that Super Rugby has helped keep SANZAR ahead and it remains Plan A.

The gap to the NH has narrowed, though. If you restart the rankings calcs at the beginning of the last RWC, the Wobs are definitely not in third.

 

[Ignoto]

​

Fox Sports (Aus): $US 12.6 m​

Sky Sports (NZ): $US 11.9 m​

SuperSports (SA): $US 10.9 m​

That's not quite the figures I've seen. Sky is somewhere between 18-19 million a season while Fox is between 16-17. The major difference is due to the NPC which Sky is has to pay a middle 8 figure sum (over four years) while Fox only has to pay a mid 6 figure sum.

The majority of money earnt from TV comes from the super rugby area. Fox is getting away with murder for Wallaby games (largely due to the FTA option). Put it this way, Fox only had to pay the value of half of Izzy's contract for the entire Lions tour coverage.

I've got no idea how much the ARU believe the National Comp will bring in, but it'd be a massive hit to the pocket if we lose super rugby. What the ARU would be better of doing is, resigning another 3 year deal with the current Super competition, get their National Comp up and running and then leverage it's success into a stronger bargaining position for TV rights.

 

[Gnostic]

I think the advent of professionalism has pushed NZ, SA and Aus further ahead of the Northern Hemisphere even though we are more poorly funded. I put a lot of this down to the strength of Super Rugby and has served us better than the various Northern Hemisphere competitions.

More money in the NH should have closed the gap yet it has widened. I think a big part of that has to be due to Super Rugby.

I think the biggest part of that phenomenon is the central contracts of the SANZAR nations and the input the national coaching staff is able to get. The NH sides are always fighting for a couple of extra days with their players before tests and the Arg. and PI sides are lucky to have their players not "retire" from test rugby.

I don't think Super Rugby has done much more that allow the SANZAR nations to control the season and availability issues far better.

More money doesn't necessarily equate to better performance.

 

[wamberal]

I think the advent of professionalism has pushed NZ, SA and Aus further ahead of the Northern Hemisphere even though we are more poorly funded. I put a lot of this down to the strength of Super Rugby and has served us better than the various Northern Hemisphere competitions.

More money in the NH should have closed the gap yet it has widened. I think a big part of that has to be due to Super Rugby.

Partly Soup, partly that the NH unions (particularly in France) seem to enjoy spending their additional money on imports.

Other factors are, firstly, we usually play on better surfaces (harder, quicker) in better weather conditions that are much more conducive to playing real rugby.

Secondly, we have the mixed advantage of the NRL, which is both highly competitive and, in its own way, quite innovative in tactics and tricks. We have learnt a lot from the buggers over the years, particularly in our defensive systems, the use of kicks, running lines, and intensity. There are probably other areas too.

 

[kiap]

The major difference is due to the NPC which Sky is has to pay

I liked the other points in your post, but I've gotta take issue with you on this.

The ITM was a separate deal (4 years @ ~NZ$25m or ~US$20m at the time, IIRC). That revenue – and more – is spent on the ITM. It's a separate component to Super Rugby.

The headline figure for the full 5-year SANZAR deal (Super Rugby + TRC) was US$400m, which is worth about US$27m per union per annum (it's actually quite a small deal). Take out about ~$4m per union p.a. for the travel pool and do a test/super split from there.

 

[Pfitzy]

I see a lot of comments - over the years too - about how we're fucked financially without Super Rugby, and fucked because the Wallabies aren't doing well, and about how the two are inextricably linked.

And yes, money is a big issue here. There are opportunities for players who are outside the golden circle to head off and make a nice living in the NH either in Europe or Japan.

The only answer - rather than just wringing our hands and worrying about whether we should fuck South Africa off - is to get right behind the NRC as a starting point. I've read a lot from people who think the competition is set up wrong, and how they see a better way. Well, they can go put their own money into that and see how it flies. Or fuck off, if that's their mealy-mouthed preference.

The only answer, if we want Australian Rugby to stand on its own two feet, and be a more appealing partner in an Australasian competition, is to get out and make the NRC work.

These things don't run on good wishes and unicorn farts people. Commit to your team, put up with the growing pains. Give feedback. Just fucking bar up and help out, because like any club, this is only going to succeed if we volunteer our time and money to help that talent bridge the gap from club rugby.

Eventually, if we provide the support, only good things can come of it, including expansion. And maybe then Club Rugby will have a good long look at itself and see if the traditions can move into something different. After all, the Rams are hosting 5 Premier clubs under their aegis, but there is nothing to say that further reallocation couldn't work.

 

[hoggy]

I don't get this. I think Super Rugby has helped make the three SANZAR nations the dominant force in world rugby.

I can't see the Wallabies being backed up by a domestic competition as the second tier being anything other than the path to us moving down the rankings and becoming less of a force in world rugby and with that even more of a financial basket case.

Whats the point of having a competitive Wallabies when no one is watching, compared to the other three codes in Australia rugby union is well and truly now running last. And all this so that the wallabies are competitive. And please exactly how can the finacial situation get any worse, the ARU are broke.

 

[Blue]

Let's go Wobs. Walk away.

Let's have the two best teams of each country play a round robin tournament after the RC and top 2 teams play a final.

We'd all be glued to that.

Let's have it. Enough talk.