Rugby’s pricey ankle tap tackle

    2016-11-06 05:45
    Super Rugby trophy (Getty Images)

    Simnikiwe Xabanisa

    Johannesburg - Two things feed into clarifying that picture: an ever-shrinking slice of the Sanzaar pie, what with Argentina also coming along for the ride, and major sponsor Absa’s decision to pull the plug on its deal.

    Sanzaar broadcasting rights amounted to R330 million (a third of South African Rugby’s annual revenue), a sum that is divided into 15 between the 14 provincial unions and SA Rugby.

    While the share is becoming smaller, travel costs have increased due to the new destinations (Argentina, Singapore and Japan) added to the roster without necessarily growing the game in those areas.

    According to an insider, the six Super Rugby franchises get an additional “franchise fee” for the duration of the tournament.

    What angers most of those involved is that the smaller unions have an equal share of the pot by virtue of having an equal vote, as opposed to how much their contribution to the success of the game is.

    Absa’s late, late show in deciding not to renew was a significant financial blow. When it decided to pull the plug on its sponsorship of the Springboks and the Currie Cup, it was paying R90 million for the space on the front of the Bok jersey and a further R45 million or so for the domestic competition.

    To get a sense of how much SA Rugby has lost, one has to consider that Blue Label Communications, which has stepped into the breach on the Bok jersey, would be hard-pressed if it was paying even 50% of what Absa was paying for the upgrade, according to an industry insider.

    Added to the pretty bleak picture is that BMW and Unilever are also not extending their deals.

    How solvent are the 14 unions?

    The exaggerated response by one official was that “an overwhelming majority of the unions are insolvent”, while a more tempered view is that more than half of them are in the red.

    The truth may be somewhere in the middle, but when Western Province say they will make an R11.2 million loss and have a R72 million lawsuit hanging over their heads, the outlook can’t be rosy for the rest.

    Province have always had a reputation for being one of the moneyed unions, and if they don’t have money, who does?

    Eastern Province have already been liquidated this year for failing to pay creditors the R28 million they owed them.

    This means their Super Rugby team is now SA Rugby’s burden because it insisted on a sixth franchise.

    That “legal and moral” obligation costs SA Rugby about R30 million per Super Rugby season, which is apparently a third of what you really need to run a team in that competition.

    There are relative success stories, such as the Griffons and the Valke, teams that rely on begging and borrowing for players and operate on shoestring budgets.

    What do the numbers say?

    The Blue Bulls’ battle to “fill up Loftus” for their Currie Cup semifinal against Western Province three weeks ago was instructive of how people just don’t go to stadiums any more.

    In the end, they got between 12 000 to 17 000 people to a 52 000-seater stadium that would have expected at least 45 000 five years ago.

    The bigger issue here is that the season’s ticket sales have gone down by almost 50% for pretty much all the major rugby unions.

    The TV numbers aren’t better, either, with Super Rugby as a whole having gone down by between 30% and 40%, while that figure is about 15% to 20% for South Africa.

    The reason offered for this is that people tend to watch two to three things at the same time these days, and the advent of social media and live scoring means people can braai and keep an eye on the rugby on their phones.

    A bloated and confusing Super Rugby format has not helped.

    Privatisation: what are the pros and cons?

    When SA Rugby president Mark Alexander said the organisation was open to private funding to take up to a 74% share of the provincial unions, he was saying two things without saying them.

    The first is that, if a provincial union is owned by that much, it makes it less of a dependant for them, while the 26% left means SA Rugby would have veto rights as per the Companies Act.

    The veto powers will come in handy when the inevitable clash between national and club interests rears its ugly head.

    Also, a free market would mean the development aspect of the game would lag behind as teams can buy a quick fix for their needs.

    Unfortunately, in South Africa, development also implies transformation.

    But the pros are that if teams are 74% privately owned, SA Rugby can focus the money it no longer has to funnel it to other areas, while the game as a whole benefits from a professional approach not driven by amateurs.

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