Interim Rugby Australia boss Rob Clarke has arrived at a critical time for the game.
Clarke’s predecessor, Raelene Castle, and departed board director Peter Wiggs bought the game six months with an emergency pay deal with the players, business-wide cost-cutting and a loan pending from World Rugby, which could be worth up to A$16 million.
But Castle’s sudden resignation two weeks ago plunged the organisation into chaos, leaving the game’s volunteer board to seize control of the many processes she had been leading or overseeing, including the World Rugby loan application and competition planning.
Wiggs, a private equity specialist who had spent the past six years trying to restore value to the ailing Supercars business in which his company Archer Capital had a controlling stake, had taken an immediate interest in the financial picture.
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His resignation from the board on Wednesday has left a hole in the organisation’s skillset, another gap Clarke will look to plug after returning to work in rugby after a three-year hiatus.
Clarke told the Sydney Morning Herald his top three priorities were finances, getting this year’s domestic competition off the ground and working out what next year’s would look like.
Rugby Australia has a major cash flow problem, which is to say there is no cash flowing. The coronavirus shutdown of professional and community sport turned off in a matter of days almost all of the game’s three sources of revenue – broadcast deal payments, ticket sales and sponsorship.
RA has never been clear about what sponsorship revenue it is still collecting from major partners Qantas, Vodafone, Asics, Mitsubishi, Estate, Jaguar, Landrover and others. In 2018, those deals were worth A$28 million.
What is clear is that with no rugby there is no money from broadcast partners Fox Sports and Ten, and without test and Super Rugby matches there is no ticket revenue flowing to the Super Rugby clubs or head office. In 2018, those two streams alone were worth A$80 million, or 66 per cent of the organisation’s total revenue.
The pay deal – a 60 per cent reduction across the board – and the federal government’s JobKeeper program has slashed RA’s player wages bill over the period from about A$15 million to just A$2.7 million.
Widespread stand-downs in head office, and a 30 per cent cut to executive-level salaries will also have helped.
But the pay deal expires in September and if the organisation can get a domestic Super Rugby competition up and running they will have to start paying the players earlier.
There are also smaller items to factor in, including ongoing payments to former Wallaby Israel Folau from the parties’ out of court settlement in December, and any ongoing payments against other debts.
So Clarke has work to do to double-check Wiggs and Castle and chief financial officer Simon Rabbitt have all bases covered, and there are no nasty surprises lurking in the books of RA or the Super Rugby franchises, who all rely on regular RA payments to bankroll their operations.
He said on Wednesday: “The first thing I need to do is to really understand the true financial position of Rugby Australia and the other unions. That’s key and I hope to have that picture by early next week.”
Depending on how long Clarke stays in the role – he ventured a three- to six-month time frame on Wednesday – and what government restrictions will allow, he will also have to budget for the fourth quarter. By then there should be some regular professional rugby underway and even a schedule of Bledisloe Cup tests. The revenue tap will start dripping slowly – empty stadiums mean ticketing and hospitality sales will still no-gos – but it means the player- and game-related costs will also come back online.
“We desperately have to re-engage our members and fans and broaden our appeal to sports lovers,” Clarke said. “Getting the game out there again is a key focus.”
RA’s high-performance staff Whitaker and Scott Johnson have been working away at the professional game’s return-to-play possibilities.
At this stage that looks like a five-team round-robin competition involving the four Super Rugby teams and the Western Force. Best-case scenario has that launching in July, with a potential combination with New Zealand teams in some sort of finals or champions clash after that. That is dependent on current trans-Tasman travel “bubble” talk that ramped up on both sides of the ditch this week.
After that, again pending travel restrictions, a Bledisloe Cup series could be held, with one model suggesting month-long tours in both countries, which would be a neat way to get the provincial and state sides involved, in the style of a British and Irish Lions tour.
Encouragingly, a gaggle of New Zealand’s and Australia’s top players held a conference call on Wednesday morning to discuss a few of these concepts and the two players’ unions are talking.
Indications are everyone wants to play as much rugby as possible and the old antipathies have been quickly buried for the good of the game on both sides of the Tasman.
In amongst this the club competitions in NSW and Queensland will also get back up and running, which will give fans something to do and watch again sooner than anything of the professional nature.
Now we’re getting into crystal ball territory, because Clarke will not be able to start giving the 2021 competition structure too much of his time until the first two elements are dealt with and underway.
But, eventually, he will have to dust off the reports authored by consultants Shane Mattiske and Michael Tange, pick up the phone to Optus and see where everyone is at and what sort of broadcast deal can be put together for 2021 and beyond.
The damaged Foxtel relationship will have a shot at a refresh with the likeable and pragmatic Clarke back in the RA building and discussions about this year’s competition have already forced the parties back to the table. The imminent arrival of likely new chairman Hamish McLennan, a former Ten CEO and News Corp top executive, will also offer ample opportunities to reconnect.
But Clarke made it clear on Wednesday he would not be putting the horse before the cart.
“First I’ll be working with the Super Rugby clubs and our Sanzaar partners to work out what the competition should look like next year,” he said. “Conversations with our broadcast partners will intersect with that at the appropriate time.”
All indications are that Optus may not be ready to restart discussions until midway through next year. Foxtel, meanwhile, under significant financial and debt pressures even before the coronavirus pandemic hit, is consumed by renegotiating its deal with the NRL.
Where rugby fits into the pecking order and at what price – rumours are rife rugby’s slice of the pie could be more than halved to A$10 million or A$15 million per year – is the big and existential question.