Rugby is bleeding money

Craig Ray

Mark Alexander’s re-election as SA Rugby president was met with a predictably negative social media reaction last Friday.

And in some ways the backlash is justified. This, after all, is a man who has been at the helm of the organisation during two of the Boks’ worst seasons and two years of financial losses that have amounted to nearly R60m.

But having sat through five hours of SA Rugby’s annual general meeting last week (not for the first time either), it was obvious that rugby’s problems are not the making of one man and one person won’t easily fix them either.

Around the table were representatives of 14 provincial unions, the bulk of which are financially unsustainable and all are running at a loss.

SA Rugby’s balance sheet shows revenue of R1.2bn earned for the previous tax year, yet it still lost R33m, which – weighed up against its income – is not a sustainable situation.

Most of the organisation’s money is ploughed back into the provinces (R306m) and into player contracts and other rugby expenses (R241m) as well as players’ image rights (R90m).

Not being a forensic auditor, I don’t know where and how the union can cut corners, though I’m sure there are ways. But all this serves to underline is that rugby is an expensive business, and not a very lucrative one at that.

It’s easy to say that incompetents run the unions and if ‘real business people’ ran rugby it would suddenly become a sport that thrives commercially. That’s highly unlikely.

Successful businessman Altmann Allers bankrolls the Lions. He has made a fortune in the private sector and clearly understands business, yet without his own funding, the Lions wouldn’t be a going concern.

This is not a problem unique to South Africa either. Do you think that the huge salaries paid to players at Top 14 clubs Toulon, Montpellier and Stade Francais are funded by the commercial success of those clubs, based on the professional structure of the French league?

Those clubs are the playthings of mega-rich industrialists who are dipping deep into their own pockets to draw the best players to their clubs.

English club Saracens, usually held up as the definition of professionalism and success in the modern club game, has lost over R260m in the past four seasons. Recently, South African billionaire Johann Rupert sold 50% his stake in the club to fellow investor Nigel Wray. Rupert admitted that his Remgro shareholders would no longer accept bankrolling a vanity project.

The Exeter Chiefs are the only English rugby club currently operating at a profit while the Australian Rugby Union just announced a R32m loss.

There is a trend here. Professional rugby is, for the most part, not a profitable business.

The only people making any money out of the game are the players and broadcasters. Owners, clubs and rugby unions are bleeding funds; that’s the reality.

Alexander may not be the best president or person to lead SA Rugby into the 21st century, but rugby’s problems are not going away regardless of who is running the show.

At least Alexander appears to have identified one of the key stumbling blocks to rugby in SA, which is that the country has far too many ‘professional’ players. He cited 750 pro players and he wants to see that number cut in half.

That would be a huge step forward, but having listened to the pettiness of representatives of rugby unions around the country, making that change is going to be almost impossible.

As a consequence rugby will continue to meander to commercial failure because it’s still bogged down in its bloated amateur structure.

- Craig Ray

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  • Dean

    Why not combine unions to make them stronger, like they did with the cricket so long ago. We are probably only strong enough to have 6 professional unions. The rest can play amateur rugby. The smaller unions should only act as feeder unions to the Pro one’s. I’m not surprised they are in the loss, considering WP, Border, Kings and Lions have all been declared bankrupt in recent years. He’s definitely right about having less pro players. 250-300 spread among 6 would be ideal. Once you have those players centrally contracted, how about loaning players out to European clubs on a short term basis. That way they gain exposure abroad but still stay in the system. Imagine the IP they would bring back. It’s a win-win situation. Less is more.

  • sharky

    So the problem is an international one. Clubs have over-reached themselves in the on-gong player salary arms race. But which club would be mad enough to be the first to cut their salaries? The only way to make this happen would be for World Rugby to institute a strict salary cap to bring things back down to earth.

    So who is making money out of rugby then? The broadcasters you say? Well then let’s hike the prices to the broadcasters. Or better yet – go the NFL route and create a dedicated rugby broadcaster owned by World Rugby or some other umbrella organisation. Cut out the middleman (sorry Super Sport).

    How else can we cut expenditure? Central contracting (thereby limiting the number of professional players) and cutting the number of pro clubs to 6 (Sharks, Lions, Bulls, Cheetahs, WP, and the Kings). And like Dean says – surplus players can be loaned to European clubs (either as a revenue generator or as a means of investing in them and providing them with experience).

    Also – and here’s a left-field idea – use the Vartisy cup scene as a breeding ground and institute an NFL-style draft for young players coming out of that tourney (all centrally contracted but picked by each of the big unions). Any leftovers can go into the smaller (amateur/semi-pro) unions and be fed into the larger unions as and when needed.

    Thoughts?

  • Camel

    What is the pettiness and who are the culprits?

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