User:Seand23/Funding for NRL clubs under new pokie laws
St George Illawarra may be the reigning National Rugby League premiers, but proposed new poker machine laws could force them to fold by 2014. The laws are estimated to cost 14 leagues clubs over $215 million, which would cut financial support to NRL teams.
Independent MP Andrew Wilkie is the driving force behind having mandatory pre-commitment technology in poker machines. A person must register for a ‘licence to gamble’ then set their bet limit online. If they reach their limit they are locked out from playing any poker machine. The Prime Minister has agreed to the reforms as Mr. Wilkie has threatened to take down the minority government by pulling his vote.
Rugby League clubs argue they face devastation if the technology is introduced, pointing out that last year they donated $40 million to help fund the purchase of items like football jumpers, shorts, socks, trophies, insurance, medical kits, referee outfits and ground developments. The same amount would be spent on the installation of the new technology alone. Executive Director of Clubs Australia Anthony Ball states that clubs have been the 'financial backbone of rugby league' for more than 50 years. He believes pokie reform will kill registered clubs and the 1,200 junior league teams they support.
This paper will discuss the solutions available to NRL clubs such as alternative revenue sources and the possibility of private ownership. The feasibility of the laws will also be covered. Could they stop a problem that is destroying the lives of individuals and their families or simply turn gamblers to unrestricted online outlets?
The proposed poker machine reform has brought forward an unfortunate reality. Australian Rugby League is dependent on problem gamblers. The top ten pokie clubs in NSW earn a combined $400 million every year from the machines (Carson, 2011). One of the nation’s largest clubs, the Panthers Group, pulled in $91.7 million (60% of it’s revenue) from pokies in 2010 (The Guardian, 2011). This money is put back into the community to fund rugby league at the expense of problem gamblers. It ensures the financial security of our beloved NRL teams and creates opportunities for our youth at a grassroots level. Leagues clubs have reinforced that they must maintain similar revenue if they are to continue funding the sport. Arguably crucial to the financial state of rugby league, the reform will also have implications on federal politics and businesses in the hospitality industry.
Application to Business, Politics and Sport
Up to five million Australians are affected by problem gambling each year. These include the gamblers themselves, their families, their friends and their employers (Macklin, 2011). Independent MP Andrew Wilkie wants to fast-track action on the issue. “Problem gamblers routinely lose everything-including their jobs, homes and sometimes even their lives. About 95,000 Australians are poker machine problem gamblers and another 95,000 are at risk of becoming so”, he told the Southern Courier. Wilkie aims to introduce mandatory pre-commitment technology into all poker machines around the country. He is planning to come to an agreement with the Government before June 2012. Players would be required to register and set a bet limit in order to play high intensity machines. They could only lose $120 per hour under the scheme. That is a dramatic decrease from the staggering $1200 per hour they can lose now (Costello, 2011). Recreational gamblers would not need to register to play on low intensity machines ($1 bet maximum). The Labor Government promised Wilkie that it could achieve mandatory pre-commitment reform. He has threatened to withdraw his support for Julia Gillard if the promise is not met. With his independent vote, Wilkie has the political leverage to decide which party gains power.
There is no question that the pokie reforms will hurt businesses like clubs and hotels. But to what extent and for what benefit? Clubs Australia believes that mandatory pre-commitment will ‘directly attack the ability of clubs to support rugby league teams’. The organisation claims that the technology will cost the pokie industry $3 billion (The Age, 2011) However, that figure is relatively insignificant in comparison to the revenue problem gamblers generate. The Productivity Commission-Australia’s leading economic research body-found that problem gamblers lose about $5 billion per year. A whopping 40-60% of total club revenue comes from these people. Although problem gamblers are present everywhere--in casinos and betting outlets, not just in clubs. Carissa Simons from Clubs NSW knows pre-commitment technology will be an expensive exercise. She says that anything less than a proven system would not justify cutting jobs and spending money on upgrading machines (Mooney, 2011). Clubs Australia CEO Anthony Ball agrees. “It’s common sense that a problem gambler will be first in line for a licence and will set unrealistically high limits. Now Andrew Wilkie admits that anyone living near a state border will be able to get around his $3 billion technology by simply crossing over.”, he said (Clubs Australia, 2011)
Feasibility of the Reforms
Mandatory pre-commitment is still untested in Australia. Norway is the only country in the world to adopt the system. Less than 3,000 machines are networked and monitored by a central database. When players register, they must show their Government ID card. Individual account information is then stored onto a server. The rate of severe problem gambling in Norway rose from 1.3% in 2007 to 2.1% in 2010. It is fair to say that the system has not worked at all. Pre-commitment on poker machines would have the potential to regulate 55% of all Australian gamblers (AGS, 2010).
Possible Impact on Rugby League
Rugby League has been played in it's heartlands of New South Wales and Queensland since the early 1900's. The game has catered for players of all standards at junior and senior levels. The first licenced leagues clubs opened their doors in the 1950's. The clubs were small, older buildings donated by supporters of the sport (Turnbull, 2009). The clubs shared one vision: "To propogate the game of Rugby League at junior and senior levels and to generally support the community" (Turnbull, pg 2, 2009).Leagues clubs were given licences to operate gaming machines and sell liquor to help them to achieve that objective.
The registered NSW Leagues Clubs later joined with the Queensland Leagues Clubs to form an association, now called Leagues Clubs Australia. Thus, the clubs were able to gain stronger representation in government and industry forums (Turnbull, 2009). Rugby League has continued to grow and develop in the way that the clubs planned six decades ago. In 2011, the Bulldogs and Storm faced off in Adelaide and Western Australia are currently bidding for a Perth NRL side. Rugby League is an integral part of NSW and QLD state culture, just as the AFL is in Victoria. The NRL has tremendous pulling power and very passionate audiences:
-More than 3.2 million people across Australia watched the 2011 NRL Grand Final live on free-to-air.
-State of Origin is a 'must watch' program for 20.3% of Australians, more than any program in other sporting codes.
-The NRL provides employment for 20,500 people in the management, administration and operation of Rugby League. (Roy Morgan Research, 2009-2010).
Leagues clubs play a key role in operating the NRL. Each club employs a large number of staff in administration, coaching, medical, marketing, event management, security and food and beverage catering (Peatling, 2011). St George Leagues Club has warned that they will cut all funding to the Dragons NRL team by 2014 if pre-commitment is successful (Hildebrand, 2011). The leagues club ran at slight loss last financial year due to high taxes (SBS Insight, 1 Nov 2011). St George Leagues injects $650,000 per year into the 'Dragons Community' program. The program involves players from the NRL squad visiting communities to encourage youths to make positive choices in regards to health and education. Club facilities also provide the community with a comfortable and affordable places to drink and eat at. Sadly, some clubs can invest as little as 2.7% of their profits back into the community (SBS Insight, 1 Nov 2011).
Leagues Clubs with Highest Financial Risk (Clubs Australia, 2011)
1. Canterbury (Bulldogs Leagues Club) Installation: 9,540,000 Annual Income Reduction: 27,419,368
2. Parramatta Leagues Club Installation: 7,080,000 Annual Income Reduction: 20,930,094
3. Penrith Rugby League Club Installation: 10,650,000 Annual Income Reduction: 15,525,766
4. St George Leagues Club Installation: 6,180,000 Annual Income Reduction: 14,732,885
5. Broncos Leagues Club Installation: 4,200,000 Annual Income Reduction: 5,201,200
More than 400,000 players across NSW and QLD pull on their teams colours and play the game of Rugby League (Turnbull, 2009). Leagues clubs play a major role in the entire competition structure. An NRL club consists of a number of teams: an Under 20 team in the Toyota Cup, a feeder team from the NSW or QLD Cup and junior rep teams in SG Ball and the Harold Matthews Cup. Therefore, all of these tiers rely on the funding from the leagues clubs to the NRL clubs. The lack of funding would impact people playing in the elite, professional, youth and junior ranks. The Toyota Cup is the first national youth competition in any Australian sport. Young atheletes are presented with a fantastic opportunity to catapult themselves into NRL stardom. Josh Dugan and Jharal Yow Yeh both played Toyota Cup in 2008 before playing State of Origin in 2011. About 34% of Toyota Cup players were employed in 2009 along with 35% completing traineeships and 28% doing full-time study (Turner, 2009). Leagues clubs help to promote employment whilst playing rugby league. They offer various casual bar and administration jobs which are obviously very easy to get into for the players.
Leagues clubs help to facilitate the grassroots sector of the sport. They are vital to the strength of rugby league in NSW and QLD as well as expansion into other areas of Australia. Examples of the goods and services leagues clubs provide are:
- Junior league playing gear, insurance, trophies, medical kits, grants to clubs, administration.
- Travel and accommodation for junior representative teams.
- Referee outfits, fees, training, insurance.
- Community coaching clinics.
- School funding.
- Educational and sporting scholarships.
- Development liasion officers.
- Ground improvements at senior and junior levels.
The benefits to communities include increased participation for locals, reducing obesity and higher use of local sports facilities (Turner, 2009). The investments made by leagues clubs ensure that players of different calibres can participate in competitive Rugby League. Beyond all else, they ensure that people of any age can enjoy the sport.
Solutions for NRL Clubs
Private ownership is the world trend (Lewis, 2010). It will buy a club the best of the best- top coaching staff, world class facilities and a highly talented group of players. Private ownership arrived in the NRL with Russell Crowe's acquisition of South Sydney and more recently, mining magnate Nathan Tinkler purchasing the Newcastle Knights. Tinkler will turn a debt-ridden club into one of the richest in the NRL. He has provided one of the best ever coaches, international Darius Boyd $20 million bank guarentee and paid off $6 million in liabilities. Often synonymous with success on and off the field, private ownership is criticised for it's lack of community input. Will it be the new revenue source for NRL teams?
While entrepreneurs can improve the performance of clubs, their control means the average supporter can't have a say in the running of the team or the organisation that controls it (Lewis, 2010). On the other hand, Tinkler is a local Novocastrian who the members of the club whole-heartedly voted for to takeover. He has said that the club's traditional values will stay the same (Hooper, 2011). The concept still involves having one person in charge. If Tinkler was to then suffer from financial stress or decide he was no longer having fun, who would pick up the pieces? (Lewis, 2010).
Manchester City is a positive advertisement for the success of the concept. The English Premier League club has experienced success like never due to private ownership. South Sydney has endured a less positive result. Having a plethora of funds to make high-profile signings does not always lead to success. South Sydney have only made the finals once since Crowe bought the club in 2006.
Private ownership will become a far more attractive option if the pokie reform is introduced. NRL clubs should look at the structure of the Green Bay Packers NFL franchise. The business model for the Packers is centred on non-profit community ownership. No single owner is able to own more than 30% of shares in the team, leaving the power with the community (Treacy, 2011). Unlike NRL clubs, the Packers have never had to consider relocating despite representing a small population of 100,000 (Treacy, 2011). The Packers are one of the most successful NFL teams and every one of their home games is sold out. Community funding from a large number of parties would secure the future of an NRL club amidst the threat of pokie reforms. The funds would be allocated to community iniatives that leagues clubs could no longer afford to invest into.
Memberships are a strong source of revenue for NRL clubs. With exception of the Titans, each club has had a decline in member numbers over the last year. NRL clubs must improve the benefits available to members. As a fan of the game, there are many suggestions that could make membership better for the supporters.
- Interacting with players and fans online.
- Outdoor cinema evenings for members to watch classic past matches.
- Drinks at the stadium before the game.
- Material from the players e.g. voicemail message with players voice.
- Own personal club email address e.g Jack@mightytigers.com.
These ideas all give club membership a community feel which is what is needed to get them on the rise.
Mandatory pre-commitment is not a convincing policy based on current evidence from overseas. There is no doubt that setting limits on such a popular form of gambling could bring positive results in Australia. It comes down to whether the impact on problem gambling is worth the damage the reforms will do to rugby league.The loss of funding from leagues clubs would have a disastrous impact on the sport at all levels. Private ownership and memberships will lead to financial prosperity and high community involvement if the right structures are put in place. For better or for worse, the NRL clubs won't be the same in the coming years.
Finally uploaded for me http://www.youtube.com/watch?v=MDlQO7zBZTY
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