Rugby Australia finances under more pressure after cut-price TV deal

The low value of Rugby Australia’s recent media-rights agreement with pay-television broadcaster Foxtel has increased the financial pressure on the union.

The Australian reported that RA’s deal with Foxtel, covering rights for the Super Rugby Australia competition this year, is worth no more than A$10m (S7m/€6.12m). Previous media reports had put the value of the deal at A$8m-9m.

The Australian said the value could increase by A$10m depending on how many national team matches RA was able to deliver this year.

RA’s finances were deteriorating even before Covid-19 hit. In March, the union reported a provisional A$9.4m operating loss for 2019 and it has been reported to be under threat of insolvency. On the field, anaemic performances in recent years by the country’s national team and Super Rugby teams have depleted the sport’s commercial appeal.

RA had a five-year deal with Foxtel, from 2016 to 2020, covering rights for Super Rugby, the Rugby Championship, Australian home national team matches and lower-tier domestic club competitions. The final year of the deal has been renegotiated due to Covid-19’s impact on the fixture schedule.

The international Super Rugby competition this year has been abandoned and Australia and New Zealand are running individual competitions within their borders featuring their Super Rugby teams. It is not yet clear whether the Rugby Championship and other planned national team matches, including the Australia v New Zealand Bledisloe Cup, will go ahead this year.

The reported A$10m fee Foxtel has agreed for Super Rugby Australia competition would be a more-than 70-per-cent reduction in what RA was originally expecting from the broadcaster this year.

RA also receives a share of media-rights income from international sales of Super Rugby and Rugby Championship rights. These competitions are run by the participating unions – RA, New Zealand Rugby, South Africa Rugby and the Argentine Rugby Union – via the Sanzaar alliance. Revenues from the international media-rights sales are split between the unions.

It is understood that the major international Sanzaar competition media-rights deals are also being renegotiated downwards in value this year due to the Covid-19 impact.

RA’s financial pain is compounded by the fact it rejected an offer from Foxtel late last year for a new domestic media-rights agreement that was close to the value of the previous one. RA planned to go to market with the rights, but stopped due to the pandemic. With broadcasters’ businesses now battered by the Covid-19 downturn, and Foxtel unhappy at being spurned, the union is thought unlikely to be able to generate offers on a par with what Foxtel offered last year.

It has been a tumultuous year for RA. Previous chief executive Raelene Castle resigned in April, partly as a result of the failure to secure the media-rights deal. The organisation was boosted by its appointment as chairman of Hamish McLennan, a former senior News Corp executive and chief executive of Australian free-to-air commercial broadcaster Ten.

Australian media outlets say McLennan’s role at News Corp should be a factor in negotiations over any new deal with Foxtel, which is 65-per-cent owned by News Corp.

Despite RA’s troubles, or perhaps partly because of them, in one of many mooted private equity moves on sport this year, US-based investor KKR is reported to have had talks with the union about a possible investment.

Additional reporting by Kevin McCullagh