Where to for Super Rugby?

[Braveheart81]

no, that is elsewhere. The increase is not explained

It says it in the notes to the financial statements.

2016 - "Super Rugby team costs of $8.1m, an increase of $4.8m, being share of increased costs (predominantly travel costs) resulting from the expanded Super Rugby competition;" (page 15 of the financial statements and page 64 of the entire annual report)

2017 - "Total expenditure on Super Rugby teams in 2017 of $12.2m is an increase of $4.1m from 2016. This variance includes the costs related to running the Wester Force Super Rugby season for 2017." (page 15 of the financial statements and page 62 of the entire annual report)

 

[Strewthcobber]

no, that is elsewhere. The increase is not explained

Player payments are elsewhere - this is some of the other operational costs with running the Force

page 15

This variance includes the costs related to running the Western Force Super Rugby Season for 2017

 

[charlesalan]

It says it in the notes to the financial statements.

2016 - "Super Rugby team costs of $8.1m, an increase of $4.8m, being share of increased costs (predominantly travel costs) resulting from the expanded Super Rugby competition;" (page 15 of the financial statements and page 64 of the entire annual report)

2017 - "Total expenditure on Super Rugby teams in 2017 of $12.2m is an increase of $4.1m from 2016. This variance includes the costs related to running the Wester Force Super Rugby season for 2017." (page 15 of the financial statements and page 62 of the entire annual report)

thanks BH happy to be corrected on this one

 

[hoggy]

So a bit confused, this is operating costs? so in 2014 per team $4.053m to 2017 $12.169M that seems extreme if you look from 2015 that's 200% in two years. This is monies put in by RA, so would some of that increase be due to the franchises not generating there own money ie: ticket sales/sponsorship ???

 

[charlesalan]

Super Rugby team costs would be operating costs, but as pointed out by BH, about 4 m of the 2017 $12.169 M related to running the WF , so that takes it down to about $8 m, which is 100% increase from the 2014 and 2015 numbers - due, as per the 2016 annual report, to the increased travel costs. Still, it's a big increase cost to us to have Jaguares and Sunwolves in the comp.

 

[Braveheart81]

Super Rugby team costs would be operating costs, but as pointed out by BH, about 4 m of the 2017 $12.169 M related to running the WF , so that takes it down to about $8 m, which is 100% increase from the 2014 and 2015 numbers - due, as per the 2016 annual report, to the increased travel costs. Still, it's a big increase cost to us to have Jaguares and Sunwolves in the comp.

Which also came with a big rise in the broadcasting agreement.

Clearly the expansion to 18 teams was a failure. Perhaps it would have worked if they'd had a better structure (3x6 conferences) but they botched it.

Adding those teams (particularly Japan) increased the revenue substantially though.

 

[charlesalan]

Which also came with a big rise in the broadcasting agreement.

Clearly the expansion to 18 teams was a failure. Perhaps it would have worked if they'd had a better structure (3x6 conferences) but they botched it.

Adding those teams (particularly Japan) increased the revenue substantially though.

but not by enough to maintain our five Aussie teams

 

[Quick Hands]

It is an over simplification of the problem, but the Top down nature of the game here is part of the reason the game is so unprepared to change. that money pit is going to certain people, and none of those people are keen on making themselves possibly redundant.

Sadly I can only see things change is if Super rugby literally goes belly up, if they cobble together another deal come 2020, I reckon thats it for the game here.

The ARU/RA remind me of the gambling addict who keeps betting on the next race, or putting a few more dollars in the pokies because the next win will make it alright. In the case of RA, it's the next broadcast deal that is always going to fix things.

Super rugby is unfixable in its current transcontinental model.

 

[charlesalan]

The ARU/RA remind me of the gambling addict who keeps betting on the next race, or putting a few more dollars in the pokies because the next win will make it alright. In the case of RA, it's the next broadcast deal that is always going to fix things.

Super rugby is unfixable in its current transcontinental model.

But in this case, they dont have to bet with their own money and if things go awry they still get paid

 

[Quick Hands]

It says it in the notes to the financial statements.

2016 - "Super Rugby team costs of $8.1m, an increase of $4.8m, being share of increased costs (predominantly travel costs) resulting from the expanded Super Rugby competition;" (page 15 of the financial statements and page 64 of the entire annual report)

2017 - "Total expenditure on Super Rugby teams in 2017 of $12.2m is an increase of $4.1m from 2016. This variance includes the costs related to running the Wester Force Super Rugby season for 2017." (page 15 of the financial statements and page 62 of the entire annual report)

But they picked up $4.4 million in income from the Force sponsors. (page 15)

 

[Quick Hands]

Super Rugby teams costs - it is not explained what this is, but I think it could be the travel expense associated with the competition. Here are the figures for the last four years:
2014: $4.053m
2015: $4.178m
2016: $8.084m
2017: $12.169m
This was one of the factors that Mr Clyne put forward as a reason to reduce the playing group to four and clearly, the travel costs have increased dramatically. Hopefully they will reduce in 2018.
So many international trips - airfare and accommodation in this competition though.
Total operating expenditure was $130 m.
Would like to have a look at NZ teams costs if any of our buddies can help out that would be great

Clyne used to run one of the big 4 banks, so shafting customers (or in this case the Force) is his standard practice. He should have gone with Pulver.

 

[Quick Hands]

So far what I have learnt is:


- everybody in leadership in Australian rugby knows nothing about the game, and is incompetent by definition;

- there is a simple solution to all our problems, only a dope could think otherwise;

- there is nothing unique about the Australian winter sports marketplace;


-have I missed anything?

point 1 - yes

point 2 - there is no simple solution, but those in charge aren't making things better, so their solutions aren't working

point 3 - there are some things unique about the Australian winter sports landscape, but all countries with the exception of New Zealand also face issues. Apparently we can't learn anything from them because of our unique uniqueness - the all purpose cop out by those described in point 1

 

[Braveheart81]

But they picked up $4.4 million in income from the Force sponsors. (page 15)

I am not sure that all that extra sponsorship revenue was Force related. That same sentence says this was also due to new government event sponsorship deals.

My reading of it is that there are two different figures that are both $4.1m which is confusing.

The increase in Super Rugby team costs of $4.1m as discussed above and then the reconciliation in the Statutory vs Adjusted operating surplus on page 14 of the financials (61 of whole document) of $4.117m for 2017. The 2016 figure is $4.8m which was under a different category last year.

 

[Quick Hands]

Which also came with a big rise in the broadcasting agreement.

Clearly the expansion to 18 teams was a failure. Perhaps it would have worked if they'd had a better structure (3x6 conferences) but they botched it.

Adding those teams (particularly Japan) increased the revenue substantially though.

But if we go back to the 2016 Annual Report, we see that there was indeed a significant increase in the broadcast agreement amount. But all this has done is serve as a one of sugar hit and then normal service has been resumed in 2017.

2015 - LOSS - $3.343 million
2016 - PROFIT - $8.876 million
2017 - LOSS - $3.786 million

Broadcast revenue went from $18.102 Million in 2016 to $61.387 million in 2016, but the increase from 2016 to 2017 was only $0.3 million.

The massive increase in broadcast revenue has been spent and for the rest of the agreement, the will only be small incremental increases.

This stuff is unsustainable.

And many of the excuses are borderline pathetic. There are a number of things which we all know are coming in advance;

1 there will be a RWC every 4 years and revenue will be down in that year because there will be no June tests

2 there wil be a BIL tour to every 4 years and while we will get a windfall every 12 years when they visit Australia, on the 4th and 8th year when they visit NZ and SA, we'll take another revenue hit because the opposition available for the June tests will be poor

At some point, someone running rugby in Australia needs to bite the bullet and recognise that continual loss-making can't continue.

1 We can't keep participating in super rugby because we are losing money doing so.

2. We can't sign players that we can't afford.

3. The professional and semi-professional game here needs to be overhauled and reorganised so that it is financially sustainable

 

[Braveheart81]

But if we go back to the 2016 Annual Report, we see that there was indeed a significant increase in the broadcast agreement amount. But all this has done is serve as a one of sugar hit and then normal service has been resumed in 2017.

2015 - LOSS - $3.343 million
2016 - PROFIT - $8.876 million
2017 - LOSS - $3.786 million

I would say the sugar hit is more related to the June series.

RWC year we make a loss because there is no June series but we get some compensation from World Rugby.
2016 we had England which was a huge series financially.
2017 was a Lions year so the June series revenue cratered.

2018 should be much stronger because Ireland will be good financially in June.

2019 will be bad because it is a RWC year.

The next big financial improvement is the Lions tour in 2025 which is obviously a long way off.

I agree that there are huge challenges moving forward. I don't know what the solution is though. I don't think we can just exit Super Rugby because what's the alternative? Is that financially viable?

What happens to the Wallabies and the revenue they generate if we decide that some players (or the overall wage bill) has to be reduced?

I personally think we have to wait for Super Rugby to conclude and move forward with NZ and hope that whichever direction they decide to go is better than the one we have now.

I don't think anyone can realistically argue that starting a brand new domestic competition with a completely unknown broadcasting situation and some new teams is a financially sustainable option for an entity that doesn't have huge financial backing.

 

[wamberal]

Whether a new venture is financially sustainable is becoming more and more difficult to predict. The whole area of broadcasting rights is impossible to make any realistic targets for, things are so fluid.


Will NZ want to waltz with us, or will they choose to continue with the Saffers?


At the end of the day some form of NZ/SA/OZ competition might be the only viable option.

 

[Braveheart81]

I genuinely think there will be a restructure after the current deal finishes in 2020.

I think a competition involving NZ and South Africa but not Australia is the least likely of all potential options.

 

[Quick Hands]

I would say the sugar hit is more related to the June series.

RWC year we make a loss because there is no June series but we get some compensation from World Rugby.
2016 we had England which was a huge series financially.
2017 was a Lions year so the June series revenue cratered.

2018 should be much stronger because Ireland will be good financially in June.

2019 will be bad because it is a RWC year.

The next big financial improvement is the Lions tour in 2025 which is obviously a long way off.

I agree that there are huge challenges moving forward. I don't know what the solution is though. I don't think we can just exit Super Rugby because what's the alternative? Is that financially viable?

What happens to the Wallabies and the revenue they generate if we decide that some players (or the overall wage bill) has to be reduced?

I personally think we have to wait for Super Rugby to conclude and move forward with NZ and hope that whichever direction they decide to go is better than the one we have now.

I don't think anyone can realistically argue that starting a brand new domestic competition with a completely unknown broadcasting situation and some new teams is a financially sustainable option for an entity that doesn't have huge financial backing.

But as I said later in the same post - we know that RWC is going to come around every 4 years, we know that revenue will take a hit because no June series and so because we know this in advance we can't use it as an explanation for a drop in revenue because we should expect the drop and budget accordingly. Same goes for BIL tours, we know in advance when they occur and that we will suffer financially - we need to budget accordingly.

Both of the above situations need to be part of the financial planning and budgeting process because they are planned well in advance. One would have thought that budgeting would be done in a four year cycle, taking into account that for 2 years out of every 4 revenue will be down. Shouldn't revenue and expenditure be spread over these 4 years so that every second year isn't a big loss which is then explained away by events which are in fact known years in advance?

Whichever course Australian rugby takes will involved huge challenges, but what is very clear is that what is happening now isn't sustainable financially nor is it sustainable for the survival of the game. So, do we keep doing what we are doing ad infinitum in the folorn hope that we will see a different result, or do we recognise that we need to do something differently. As we are contractually committed to super rugby until after the 2020 season, i.e. 2021, the planning and modelling of options for rugby in Australia should start now (or probably should have started).

The only way that we will ever know whether a domestic Australian professional/semi-professional league will be supported by broadcasters, sponsors etc is by planning and modelling options now and engaging with broadcasters and sponsors. I'd have thought that broadcasters might like a prime time match every Friday and Saturday night rather than the current situation of multiple broadcast unfriendly time zones. If I was considering sponsoring a professional rugby team and my company was in the Australian market, I'd like my team on TV as much as possible at 7.30pm Friday and Saturdays and in Australia as much as possible. Take the Waratahs for example, so far they've played 2 games in Sydney, a game in Canberra, a game in Durban, a game in Argentina and a game in Tokyo. Not much value for money there I'd have thought.

They are just my thoughts, people running TV companies and potential sponsors may think differently - but I'd have thought that I have some logic on my side.

I sincerely hope that RA have a plan beyond waiting for 2020 and then turning up to the broadcasters expecting more money, but I suspect that that is precisely what they are doing.

 

[dru]

I genuinely think there will be a restructure after the current deal finishes in 2020.

I think a competition involving NZ and South Africa but not Australia is the least likely of all potential options.

Agree with this, unfortunately I think to have any chance of getting a SANZAR outcome that actually works for Australia requires:
a) a B plan
b) a genuine willingness to fallback to the B Plan if the SANAZAR option is not genuinely designed to give our rugby future a chance
c) an understanding from SANZAR that we are indeed willing to run the B Plan

Otherwise we won’t be offered more than three teams, our involvement in finals will continue to dwindle, slow death of Aus rugby continues. Maybe less slowly.

 

[Braveheart81]

But as I said later in the same post - we know that RWC is going to come around every 4 years, we know that revenue will take a hit because no June series and so because we know this in advance we can't use it as an explanation for a drop in revenue because we should expect the drop and budget accordingly. Same goes for BIL tours, we know in advance when they occur and that we will suffer financially - we need to budget accordingly.

Both of the above situations need to be part of the financial planning and budgeting process because they are planned well in advance. One would have thought that budgeting would be done in a four year cycle, taking into account that for 2 years out of every 4 revenue will be down. Shouldn't revenue and expenditure be spread over these 4 years so that every second year isn't a big loss which is then explained away by events which are in fact known years in advance?

Isn't this what they are doing?

Explaining why they made a loss in a certain year doesn't mean it was unexpected.

Effective budgeting should mean that they achieve a surplus in the years when they have a good inbound tour and a big surplus when there is a Lions tour and these cover losses in the years where there is a RWC or a Lions tour elsewhere.

Your expenditure is going to remain fairly similar across each year. You're still paying everyone. In a RWC year you don't have a June series so you have less matchday expenses but apart from that things should roughly stay the same.

I'm not really sure how they're meant to push more revenue into the years they know will be bad or push more expenditure out of those years into the good years.

Take the Waratahs for example, so far they've played 2 games in Sydney, a game in Canberra, a game in Durban, a game in Argentina and a game in Tokyo. Not much value for money there I'd have thought.

And their major sponsor is a Japanese air conditioning manufacturer. Clearly the international aspect of Super Rugby (and rugby in general) is not attractive to a sponsor based only in a local market but it is more attractive for one with international reach.

Compare to Rugby League, the team I follow is sponsored by a law firm in Sydney. They would have zero value in exposure outside Sydney let alone internationally.