How SA exit could kill Aussie game

Ben Smith looks into the precarious financial position Australia finds itself in and what it would be left if South Africa exits from (SA)NZAAR.

Nearly half of Rugby Australia’s revenue last year came from broadcasting rights, with the Union receiving AU$61.m, illustrating just how important the on-field product is.

They spend almost as much as they receive, registering a minimal cash-operating surplus of AU$600k from the AU$140m in cash receipts in 2017.

A major reduction in broadcast revenue would seriously compromise the state of the game in Australia. Reported attempts by the body to form a trans-Tasman club competition and calls to kick South Africa out pose serious financial risks. Without South Africa, would the rights revenue for a trans-Tasman or a domestic competition, like the NRC, be worth the same?

A realised drop in value in the next rights deal would have a rippling contagion effect across the States, who rely on 30% of RA’s revenue to fund their Super Rugby teams.

A South African ‘SANZ-it’ could be a serious blow for the professional game in Australia, one that it might not recover from, and could leave New Zealand with collateral damage to deal with too.

That is a scenario to be avoided at all costs, and even as it stands, the game in Australia still has a growing problem with its value proposition.

The quality of the product is already declining, with Australia’s sides failing miserably in Super Rugby for the last three years. The Wallabies have headed down the same path.

If Australia wants to stand on its own two legs, it is going to have to do so by building from the ground-up, which is what has failed to happen so far. Trans-Tasman or national independence is likely more than 20 years away, and that’s with all the dominos falling in the right place.

There is little room for error right now for new CEO Raelene Castle in righting the ship, or at least getting into a position to have more leveraging power.

Rugby Australia’s new leader has to plot a path ahead with the game almost needing a complete revival. Her actions today could save the game, or send it further down the gurgler. Not one dollar can be wasted and all need to be funnelled in the right direction.

Centralised contracting

Some tough decisions need to be made, firstly reigning in some of the state bodies who have run unchecked.

They have spent ‘unbudgeted expenses of $28m over five years’ in order to fund their Super Rugby teams, with the bill fitted by RA, in addition to the annual AU$35m-AU$40m that is already spent annually out of RA coffers.

The autonomy they have has not come with accountability. The team results have been poor but some coaches have been handed extensions, only to be sacked and paid out just months later.

Extremely bad, top-heavy contracts have been handed out to players which have ended up as pure waste. AU$1.8m was burned over three years by one team, overpaying for an ex-NRL star by ten times his actual value in the game. Just this year, over AU$1m was spent on two players playing club rugby.

These decisions have to come home to roost. And they say that French rugby has been living beyond its means. Australian Rugby is behind on the mortgage payments and buying overseas holidays on the credit card.

Centralisation, in this case, isn’t just a power-grabbing exercise, it’s a need driven by incompetence at this point.

The NZR handles any and all player payments to Super Rugby players above an AU$195,000 threshold, ensuring that top dollars go where necessary. It is not possible to pay a donkey like a racehorse in New Zealand, but it is in Australia.

Rugby Australia needs controls over player and coaching contracting decisions for Super Rugby teams, as a measure to protect their own interests.

Wallabies aren’t produced by Rugby Australia and Michael Cheika – the lion share of a players’ development is overseen by State unions. Right now they are not doing a good job of it.

Resource the current schools’ system

RA needs to understand this because NZR does – invest, invest and invest in the production line.

They know for every All Black they develop they need two or three more to take his spot, and they know the start of this pipeline is schoolboy rugby. They have invested in the system to produce where RA continually pays for cream at the top.

The top-heavy recruitment approach has run its dash in the age of professionalism and needs to change.

Rugby Australia’s community rugby expense was $3.7m last year, just 2.8% of its overall take. Three players – David Pocock, Israel Folau and Michael Hooper will cost more than that every year.

NZR’s system is completely intertwined with schoolboy rugby, with most top schools operating at a semi-professional level. This is churning out more and more pro-ready players almost directly out of school. Three schoolboys from last year made Super Rugby squads for 2019, a quantum leap in just two years.

The only current breeding ground for future Wallabies is private school associations, namely GPS associations. This is the real foundation of rugby in Australia, has been for years and has not changed, but seems to receive no recognition by administrators.

Before expanding anywhere else this needs to be strengthened as much as possible and leveraged to lift the standard of schoolboy rugby everywhere else.

They are the ones already recruiting, scouting and investing in talent, doing most of the work. The best players in each of the regions are already identified and then recruited by these schools, they are even convincing some of the best league players to play too.

Rugby Australia needs to achieve alignment with the current private schools’ system, build on the current foundation and even help fund these programmes. Whilst not politically correct, RA-funded scholarships would only increase the numbers of quality athletes getting into rugby and utilise the best development framework for a rugby player already in place.

A national schoolboy competition for Australian Rugby is a necessity, which would require RA funding. As a start, getting buy-in from the GPS schools as a must, before expanding to others. The best schools in New South Wales, Queensland, and other states must play each other more because the top schoolboy players quite simply are not playing enough.

Elite schoolboys in New Zealand will lodge 30-40 highly competitive games a year. In Queensland, at least, the eight-game GPS schoolboy season needs to be doubled in length in addition to a national competition at the end.

These things can only happen when Rugby Australia invests in its relationships at the very foundation of the system. This would only be the start, with club rugby another, but important, story altogether.

The high school system is the very first block in the chain towards professional rugby and therefore it makes sense to get as many quality athletes into the game to start with and get them playing with the same frequency as New Zealand’s players.

Tightening the wallets

Australian Rugby must save themselves by freeing up the cash to re-invest in their system.

Shaving 20% off the current Wallabies player bill, 20% off Super Rugby funding and 50% of Marketing expenses would free up $12.6 million for Rugby Australia to deploy back into the foundation, without any further increases in revenue.

Other vague areas of RA spending include a line item for ‘High Performance & National Team expenses’ for AU$8.4m.

There is sure to be plenty of fat to cut to raise funds across all areas to pool together close to $20m to start with. That needs to go straight to the heart the game and get the blood pumping again. Slowly but surely, the scales will tip as the crop rises through, strengthening the base from which to grow the game from.

Strong actions by Castle might not yield results today, and will certainly rock the core of Australian Rugby’s current structures, but it could set forth actions to save the game – and that could be her legacy.

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