The Pulverisation of Australian Rugby

[Quick Hands]

Um,no it's not better than NZ.
The ARU intends on increasing their taxing of grassroots,not contributing to the grassroots.
And we all know the ARU participation figure is not even a good lie.

As an aside NZRU are not on their own.
The poms spend £45M on their pros & £30M on grassroots, from total revenues of around £150M.
The Irish €32M on their pros & €10M on grassroots, from total revenues of €70M.
I could go on,but most will probably see a trend.

All will see the trend except the devotees of the ARU line and the Pulver defenders.

 

[Dave Beat]

I thought it was fishing season - over this, as for budget.
I'll catch my own bait - Grass roots.
Hopefully catch the Kings - Wobs.
Always pay attention to the grass roots - see ya next year

 

[Strewthcobber]

[quote="TOCC, post: 694459, member: 1585]

By comparison, in 2012 the ARUs income was $96million and NZRUs income was $106million (in respective currency).

To further highlight the fluctuating nature of income in a RWC year, ARU income was $75million in 2011 and NZRU was $103millon.[/quote]

This is the crux of the problem. If you drop revenue by 25% every 4th year then you need to be making substantial surpluses every other to be sustainable. Which means dramatic spending cuts from where they are now.

Incidentally, the NZRU are going to have the same problem from now on, now they've had their world cup, though they at least have a lions tour in the near future to bank on.

 

[Train Without a Station]

h
They have the money,we have just been discussing why are corporate overheads over $10M more expensive in a poorly managed business,than in a successful business.

You mean a business in a different country with different external factors.

If we want to compare that, AFL or NRL spending pro rata'd to reflect the size difference (5/6 teams as opposed to 16 or 18). Would be more accurate.

Right now you're saying your astonished that an organisation in a more competitive market (for share, employees, sponsors and everything else) with 25% higher rental costs spends more than another one in another cheaper country. I'm not.

 

[TOCC]

This is the crux of the problem. If you drop revenue by 25% every 4th year then you need to be making substantial surpluses every other to be sustainable. Which means dramatic spending cuts from where they are now.

Incidentally, the NZRU are going to have the same problem from now on, now they've had their world cup, though they at least have a lions tour in the near future to bank on.

You are correct, revenue dropping by 25% every fourth year isn't a sustainable business model unless you are posting healthy profits in the alternating 3 years. Based on present revenue for the ARU, anything short of a $3million profit in each financial year outside of a RWC window will mean an overall financial operating deficit by the time the RWC comes around again.

Its the very reason the NZRU, ARU and SARU threatened to walk away from the next RWC unless more financial remuneration was provided from loss of income. The IRB has increased the grants to the unions but its still not enough to cover the overall losses.

 

[Train Without a Station]

OK TWAS I take your aggressive tone as an absolute guarantee of your own credibility on the subject.

I am betting you have not looked at it either and you will be held accountable.

Well if you actually think it's reasonable to form a view on the content of something you refuse to read then I don't know what to say to you.

 

[Train Without a Station]

All will see the trend except the devotees of the ARU line and the Pulver defenders.

And similarly, it's only those with a SS logo and nobody without one that are saying the funding cuts to SS are money well spent.

Pretty damning that.

 

[Highlander35]

If the finances are really as shit as they seem. JON's wild attempt to grab that first Lions game in 2017 seems reasonable when you view it as an act of desperation.

 

[Strewthcobber]

You are correct, revenue dropping by 25% every fourth year isn't a sustainable business model unless you are posting healthy profits in the alternating 3 years. Based on present revenue for the ARU, anything short of a $3million profit in each financial year outside of a RWC window will mean an overall financial operating deficit by the time the RWC comes around again.

To put that in perspective, $3m profit is a cut of ~$12m of expenses from 2012.

And all things being equal you'd probably need to average a bigger profit (20m deficieit/3) = 6-7 mill.

The extra $10m on the broadcast deal from 2016 will help, and the exchange rate is getting better but costs around the super competition will be going up to...

 

[I like to watch]

You mean a business in a different country with different external factors.

If we want to compare that, AFL or NRL spending pro rata'd to reflect the size difference (5/6 teams as opposed to 16 or 18). Would be more accurate.

Right now you're saying your astonished that an organisation in a more competitive market (for share, employees, sponsors and everything else) with 25% higher rental costs spends more than another one in another cheaper country. I'm not.

Yep I am astonished that they do substantially less than than their counterparts in NZ,for double the cost.
That is the entire issue for me.
This is not all Pulver's doing,undoubtedly he inherited a mess.
But the culture of the joint is all wrong.
It appears to me that admin & pro players think the pie is theirs to share after costs.
We weren't always broke,we were awash with cash after RWC and we spent the fucking lot on players and a corporate fiefdom.
We spent nothing on player development,as is evidenced by the fact there are fuckall development staff to retrench because they were never employed.
As a comparison,the Poms employ 90 in their pro program & 250 odd in development.

It's no coincidence,that we
a) spend significantly more than other Unions on admin as a % of revenues.
B)we spend substantially less than other Unions on development.

Corporate lingo would suggest,the current businessmodel is out of shape.
Pulver needs to concentrate on bringing admin costs down to an acceptable percentage of revenue,rather than a knee jerk reaction to tax rather than foster
The grass roots of the game.

 

[Train Without a Station]

You mean like cutting costs across the board? That would be a good thing for Pulver to look at doing. Oh hang on, he has been.

Anyway, but once again you are comparing what the ARU does, and it's effectiveness with entities in other countries. How does it compare with the entities that need to work in the same market?

Part of the ARU's change in the money spent though appears to be an adjustment of the system. You mention the lack of development officers but part of that is surely a removal of an archaic jobs for the boys system that yielded nothing positive. Matthew Burke was employed as a Development Officer he mentions in his boring biography, and if I recall correctly there wasn't a lot of merit in the appointment or work involved in the job. Removing these positions has been important.

Anyway my point I was getting at is that ARU have adjusted how they run the game. Remember they still gave out $10M to the 5 states in addition to Super Rugby Funding, but part of the change is aspects such as funding the Rebels to grow the game.

I don't agree on focusing heavily on the professional sides, but if it comes down to propping up a team which brings in TV revenue in a new market and the Shute Shield, I think you need to protect the future investment. Still if the money is there to be spent, focusing on the younger juniors is the best investment long term. Increasing participation in 6-12 year olds in my view will create the greatest long term benefit.

Ensuring the ARU are spending money on the real grass roots is what they need to focus on with the increase of the TV deal though. Not semi-elite, semi-professional competitions where players are being paid. I wouldn't advocate giving any money to my club in Melbourne for the same reason I don't to the SS.

 

[Braveheart81]

There is no doubt the ARU lived in a world of excess through the 2000s, particularly after the RWC.

Personally I think we squandered a massive opportunity and are paying for it now and into the future as we're in a financial mess. The only real way I can see the situation improving substantially is if the Wallabies suddenly become world beaters. It is quite clear that we need to be competitive with and beating the All Blacks to really excite the casual sports fans and get extra money flowing into the game.

Lots of people pin much of the blame on John O'Neill however I think we need to look closely at the board. They approved his contract (and his excessive payout on leaving) and they have allowed us to spend way more on players than we should have. It is outrageous that the ARU were paying well in excess of the agreed percentage of revenue to the players for a considerable number of years. A fair agreement with RUPA was struck (I believe it is 24% of revenue) but the ARU persisted with spending well in excess of that.

Cutting costs dramatically, particularly from the corporate side of things takes time. Making staff redundant is more costly in the short term than keeping them employed so it will probably not be until next year that we really start seeing (or should see) a substantial drop in employment/corporate expenses.

 

[Train Without a Station]

Does anybody know the actual figure that was "squandered".

As Braveheart noted, player salaries were an issue. But that's another consideration. In 2003 for example, what was the competition for Irish players?

Because in Australia there was rugby league where since Super League, the best players were getting paid $600,000 per year.

Obviously it hasn't worked out the right decision, but the marketing factor of your highest paid players needs to be considered. It's entirely possible that viewers could have declined if the ARU capped their player salary expenditure and subsequently lost a few big names.

It's only been in the last 5 years that the same competition for players, due to more money in France has been prevalent for all countries that don't compete with Rugby League.

JON's salary seems like a waste, but he also came in with success in the past in 2 codes. For his resume it seems perfectly reasonable. Like some hires, it didn't work out but a hire not working out isn't necessarily an indication of mismanagement.

Allowing him to stay on for as long was though.

Then there's the franchises. Brumbies and the Waratahs have also gone backwards in this time. Are we going to criticize the ARU, when the team in rugby's heartland has had a similar lack of commercial success?

Teams like the Force and Rebels will always bleed money in the short term, but you don't push for them for short term gain. It's 20 year planning sort of thing.

If the Brumbies and Waratahs were able to achieve similar commercial success to the Reds surely they would be less of a burden on Australian rugby. Surely the ARU lost some money bailing out the Waratahs and Reds over the past 11 years.

Then there's the ARU that cost a big chunk of money. Then there's the losses in the 2 World Cup years to consider.

But all of this can be attributed to management under JON, Flowers and JON.

Whilst there was mismanagement, along the way some decisions which resulted poorly for Australian rugby, were reasonably made.

The only trend that is apparent under Pulver is a focus on reigning in costs. Remember a big stop on player payments came in when they said no top ups would be offered unless a player had been a Wallaby for 2 years to prevent wasteful spending on player salaries.

 

[Strewthcobber]

Does anybody know the actual figure that was "squandered".

The ARU had equity of $35m in 2003. That was down to $3m in 2012, but has kicked back up to $13.5m following last years Lions tour.

So they " squandered” near enough to $3m every year under JON and Flower.

 

[Hugh Jarse]

I recall statements at the time from ARU that the RWC03 surplus was to be set aside for "Grass Roots rugby" or words to the same general effect.

I'm not sure that much of it found its way to the roots of the grass that the Junior Jarse's were running around on at that time.

 

[Train Without a Station]

In the context of professional sport and the turnover and costs of the ARU that is not a huge sum of money

 

[Train Without a Station]

I recall statements at the time from ARU that the RWC03 surplus was to be set aside for "Grass Roots rugby" or words to the same general effect.

I'm not sure that much of it found its way to the roots of the grass that the Junior Jarse's were running around on at that time.

But then again Hugh, the ARU is finding out that to survive on reduced expenditure they have needed to increase subs fees. Perhaps they resisted this as long as they could afford.

I'm not saying that's what subs should cost, I'm not saying they're doing it right, I'm just saying that it may be the cold hard reality.

 

[Hugh Jarse]

In the context of professional sport and the turnover and costs of the ARU that is not a huge sum of money

Yep you are probably right in that context. $40m of Federal Taxpayers money was mere petty cash to the Soccer Australia bid for the Diveball World Cup.

A solid investment for 1 vote. Didn't get one kid off the lounge and playing any form of sport, or improve community or sporting infrastructure in any way shape of form.

But then again Hugh, the ARU is finding out that to survive on reduced expenditure they have needed to increase subs fees. Perhaps they resisted this as long as they could afford.

I'm not saying that's what subs should cost, I'm not saying they're doing it right, I'm just saying that it may be the cold hard reality.

Are you suggesting that the $3m annual expenditure of the RWC surplus was spent to subsidise Under 6 to Under 18's insurances and registrations?

 

[Train Without a Station]

When we are talking $3M per year, when every 4th year there is minimal domestic income do you think it's squandering?

I'd consider it to be slowly bleeding and until now nobody being willing to piss off powerful factions (such as the Shute Shield clubs) to stop it before it's too late.

 

[I like to watch]

In the context of professional sport and the turnover and costs of the ARU that is not a huge sum of money

It was a huge sum nearly 15 years ago.....