Australia’s future rugby landscape to be shaped by critical pay cut talks
The good news from Rugby Australia’s annual general meeting on Monday was that the game is still solvent. But after the game’s governing body posted an operating deficit of $9.4m, there are doubts over how much longer that will be the case.
The loss might have been expected after a World Cup year where revenue from playing less Test matches was reduced, but RA now finds itself in a vulnerable position with the coronavirus crisis about to punch a $90m black hole in the game’s finances.
RA has a survival plan for the next three months. What happens after
that? Most medical experts are pre
dicting it will be at least six months before society begins to return to normalcy, whatever that is in a post-coronavirus world.
With Super Rugby already suspended, RA is banking on Ireland’s tour of Australia in July and the Rugby Championship/Bledisloe Cup series in August and September to keep the cash flowing. But it is unlikely Ireland’s tour will go ahead, while the Rugby Championship and Bledisloe Cup must also be in severe doubt, unless the two events can be postponed.
With dwindling reserves and little or no income, like Mr Micawber in Charles Dickens’ novel David Copperfield, RA seems to be waiting for something to turn up.
Maybe there is reason for optimism, maybe not. Rugby Australia has four potential options for game-sustaining revenue – private equity, a World Rugby handout, federal government assistance and a bank loan.
Private equity partners have been the mythical saviours of Australian rugby ever since the Super Rugby clubs were opened to private investment over a decade ago. There have been reports that a British private equity firm has offered more than $100m in credit to assist the NRL and Australian rugby may be hoping to secure similar assistance.
But if Rugby Australia wanted to attract private investment in Super
Rugby, and maybe the Wallabies, it would probably need to lessen its financial controls over the franchises.
Rumours are swirling around that mining magnate Andrew “Twiggy” Forrest, saviour of the axed Western Force, might be interested in buying all of Australia’s Super Rugby franchises.
Rugby Australia will no doubt go cap in hand to World Rugby and the federal government for financial assistance. The global governing body will be anxious to keep major unions like Australia afloat, but there will be limits to its largesse because every union around the world will be seeking help.
The Wallabies are an iconic global brand, arguably deserving of federal government assistance. If there is no direct aid, the government’s wage subsidy package may at least help RA and the Super Rugby clubs keep some skeleton staff employed. But perhaps the lender of last resort for RA will actually be a bank.
The AFL has secured a $600m lifeline from banks after the league and its clubs stood down 80% of their staff and players agreed to take significant pay cuts. RA, and the franchises, has warned of standing down staff and will on Tuesday begin negotiations with the
Rugby Union Players Association about players taking pay cuts.
Player payments is the area where RA and the Super Rugby franchises can make significant savings. Players are rugby’s greatest asset but also its biggest expense. Super Rugby player payments alone are $22.4m a year, not including Wallabies top ups.
In an attempt to lead by example, Castle announced she was taking a 50% pay cut on her $800,000-a-year salary, but the amount she asks the players to sacrifice will determine the shortterm, and maybe long-term, future of the game.
Castle will meet with RUPA chiefexecutive Justin Harrison on Tuesday, some may say belatedly, after meetings scheduled for last Friday were cancelled. The RUPA has not been happy about being locked out of the process to deal with the crisis so far. Hopefully, it will not prevent talks getting off to a good start.
Rugby Australia has had difficult and challenging negotiations in recent years in relation to issues such as the termination of Israel Folau’s multi-million contract and the breakdown in talks with long-time broadcast partner Fox Sports.
In a sense this player payment negotiation is even more important if the game is to get through the coronavirus crisis in good shape – physically, emotionally and financially – when play eventually resumes, whenever that may be.
Rugby Australia will need to make a persuasive argument that the pain of the crisis must be shared fairly, if not equally. But what is fair? A 50% cut across the board? Or high paid players taking deeper cuts to help lower paid players?
Given the perilous state of the global economy, players may find that 50% of something is better than 100% of nothing while waiting for something to turn up.