Vituperative and pointed barbs about how the game is broken, and almost broke; about how rugby league is barren of valuable assets; and the usual consequential character assassinations and “dead man walking” whispers, staining the good name and reputation of anyone considered responsible. How. Very. Rugby. League.
Under Australian law, directors and senior officers of companies – chief executives and chief financial officers, especially – are rightly burdened with heavy obligations concerning companies they control. Directors and officers must exercise due care and diligence in discharging their duties, and make proper business judgments. Directors must always act in the best interests of the company.
One must proceed with caution, and refrain from gleefully incinerating the name of any person who has been in charge of rugby league, without first analysing the facts. We live in utterly frightening times.
Six months ago, nobody could have predicted that by early April 2020, this blue planet would’ve properly soiled itself. To whatever extent sport matters in the wider context, every sport is devastatingly affected in ways never imagined. Even if some organisations, like the All England Club of SW17 in London, did (apparently) have the prescience to purchase pandemic insurance coverage; this is no proverbial “rainy day”. These catastrophes are impossible to plan for.
In that context, and all the while noting the utopia of “NRL Island” remains a mirage on the horizon, perhaps it would be sensible to actually examine the sport’s finances as the figures have evolved, before ripping off anyone’s head.
In 2010, rugby league in Australia finished its 13th season of what’s known as the NRL competition. Then the professional game was controlled (and owned) by a Kramer vs Kramer partnership between the Australian Rugby League (the exact same company, now badged the ARL Commission) and a subsidiary of News Limited (as the Murdoch conglomerate in Australia was then known).
That forced marriage was welded together following a horrible, three-year fight for control of rugby league, which ended after the 1997 seasons for the ARL and Murdoch’s “Super” League competitions (alas, Rupert’s players never did make it big in China).
The ARL had $20 million or thereabouts in the bank before News Limited pulled the trigger on its April Fool’s Day devilry in 1995. The “war” properly robbed the game of whatever wealth it enjoyed in the early ’90s. To put perspective on the ARL’s financial position in 1994, the AFL had less than $6 million in cash.
Rugby league’s Treaty of Versailles, executed in early 1998, brought under one roof two parties that fairly detested each other, but nonetheless were co-dependent. Though known as the NRL Partnership, it was anything but a partnership by definition.
Starkly, it was a term of the marriage agreement that News Limited owned the right of first refusal, and the right of last bid over every form of rugby league broadcast rights – defined to include television, pay TV, radio and internet rights, as well as types of audiovisual dissemination not even conceived of in 1998, such as Netflix and Facebook – until 2023: TWENTY-FIVE years.
Essentially, the NRL Partnership couldn’t properly monetise its assets, because the Murdoch empire had rugby league shackled in an awful Christmas hold. And the powerful, compounding effect is self-evident.
The NRL Partnership, which ran the game before it was dissolved in 2012, is the entity to compare to the ARL Commission in the present day. For the period ending after that 2010 NRL season, the NRL Partnership annual revenue was $146 million. It had $20 million in the bank, and total equity of $34 million. For that year, it granted $55.2 million to the 16 NRL clubs; $3.45 million a slice. Total broadcast revenue was $96 million.
Again, those amounts are meaningless as a snapshot of nine years ago, without something to compare it to. The financials of the AFL constitute the best barometer. For the same year ending on 31 October 2010, the AFL reported revenues of $367 million. In 2010, the AFL paid $141 million to its 16 clubs (almost triple the NRL Partnership numbers; GWS and Gold Coast hadn’t joined the fray yet), and yet retained assets worth $166 million, including $54 million in folding.
The AFL’s broadcast revenues were a multiple of the NRL Partnership’s. The AFL of course wasn’t smothered by contractual obligations to News Limited, the effect of which was the NRL Partnership was forced to undersell its rights, year on year on year.
Rugby league was only freed from News Limited’s clutches once the ARLC structure was cemented in 2012. It would be another three years, however, before all “first and last” rights provisions, favouring incumbent broadcasters bidding for new rights agreements, were obliterated (and it has never been highlighted sufficiently how valuable this achievement was for the game).
To pause at that juncture, rugby league in Australia was financially massacred by the Super League fiasco. The financial recovery has taken more than two decades. If the ARLC is in a parlous financial state, it’s not as simple as sheeting home blame to those who presently control the game’s destiny. The finger ought instead be pointed at Jerry Hall’s husband.
That’s not to say questions shouldn’t be asked after an examination of the ARLC’s financials, released last February. Since 2010, total game revenues and the commission’s net assets have slightly more than tripled, whereas aggregate payments to NRL clubs have more than quadrupled.
The total equity of the commission now is a bit more than four times that of the NRL Partnership a decade ago. The commission reported a surplus of $30 million for the year to 31 October 2019; it has reported a deficit as many times as it has a surplus since 2012. Margins in this business are on a hair trigger.
What to take home from all this? Yes, in a way it’s staggering that it costs $181 million per year to run the NRL – and rugby league has seemingly morphed from being just a sport to some sort of cultural and societal way of being.
Yes, NRL clubs have had it too good, being funded over each of the past two years to the tune of more than $220 million; a 42 per cent increase from the funding arrangements in place between 2014-2017. Moreover, the NRL gives a higher percentage of its revenue (44 per cent) to its clubs, compared to the AFL (40 per cent), and the AFL has two more mouths to feed. And yes, the total equity of the AFL in the last reporting period is double that of the ARLC.
And yes, the AFL’s revenues presently are 45 per cent more than the ARLC. But squarely – and you can only really appreciate rugby league’s situation by contrasting the numbers against the AFL’s – rugby league’s parlous position can only be explained by arguing that it’s News Corporation’s and Jerry Hall’s husband’s fault. The disastrous events of the mid-90s jettisoned rugby league on a trajectory that has only, in the past few years, been somewhat arrested.
And remember this: matters would have been magnitudes worse had the Murdoch empire not been exorcised from its part-ownership of professional rugby league in Australia. Otherwise, News Corp would still have a stranglehold on all the game’s media rights for another three years.
Darren Kane is a sports columnist for The Sydney Morning Herald.