Journal of Sport and Exercise Studies/Business, Politics and Sport 2011/The Introduction of Change to National Rugby League

SamN90, 2011
Original copy

Presentation on Youtube

The NRL has taken various approaches to its administrative side of the game, whether it is expansion of the game, negotiating broadcast rights, player misbehaviour and misconduct and various other issues in the game. Issues that use to be decided among a string of members from separate boards, the Australian Rugby League (ARL), and News Ltd, will now be decided by a new Independent Commission.

Under the current structure, the game is governed 50/50 by its owners, News Ltd and the ARL. News is transferring its half-share of the game to the ARL, which is being restructured under a new constitution as the Australian Rugby League Commission, aligning the eight commissioners, the NSWRL, the QRL, CRL and the 16 NRL clubs as new members under one roof.

The introduction of the new Independent Commission was suppose to occur on November 1, possibly a little later, with a variety of issues still to be resolved between the stakeholders ARL, QRL, NSWRL and News Ltd.

So, how will the commission benefit Rugby League when resolving some of its major issues?

Firstly, it will negotiate the upcoming T.V broadcast rights, followed by expansion of the League, a rise in the salary cap, progression of grass roots footy and the rescheduling of rep games.

All of these areas are a major focus for the Commission, and if handled right, could lead Rugby League into a very successful future.

Introduction - The NRL in Recent Years

Since the super league war, Rugby League has been going through a very slow rebuilding process. With the expansion of the league, the introduction of a U/20’s competition and various junior development programs implemented at grass roots level, Rugby League is still producing a very talented and sellable product.

However, much of this has been un-done by recent player misbehaviour involving drinking, drugs, assaults, rape allegations, DUI and even match fixing. These series of off-field mishaps have given the media and the general public every chance to further tarnish the brand of Rugby League. All of these factors, along with the global financial crisis, have given League a wakeup call to their drop in crowd attendances and membership sales.

The recent relocation of many Sydney team's (League heartland) home games from local grounds, to the bigger ANZ stadium at Olympic Park has taken its tole. The large stadium lacks a great deal of atmosphere as seats are to far away from the game with the long traveling distances being a continuous talking point with fans throughout the season.

Recently the NRL has tried to push its membership sales. Although it has worked with South Sydney almost doubling membership sales this year to the tune of 20,000+ , League has nowhere near the same numbers as its rival the AFL, where the majority of clubs sit around the 60,000+ mark. Although membership sales have long been an integral part of the AFL’s structure, it has only been a recent development to the game of league as more and more fans begin to realise how important these sales are to the progression of their club. It was only a matter of time until League had to follow suite.

So, following these issues and with the new T.V rights deal coming up next year, many across the game agreed an independent commission was the only way forward, similar to the AFL’s 93’ restructure. The commissioners are to be handed control of the game, from a grass roots to a national level. Their job is to lead the game in a direction that does not benefit any personal or club interest, but the progression of the Rugby League in Australia.

Who is on the New Commission?

The commission will be made up of 8 members with one selected as chairman to direct proceedings. Each member has been specifically chosen for their field of expertise and the benefits they will bring to the table. It was selected and approved by all the current stake holders and a Board of Directors.

The members of the new independent commission are;

• John Grant, Chairman – Former QLD international and managing director in internet technology company Data3

• Catherine Harris – Chairperson of Harris Farm Markets

• Ian Elliot - Brand strategist and former chairman and managing director of George Patterson Bates

• Peter Gregg - Executive director and chief financial officer of Leighton Holdings

• Gary Pemberton - Former chairman of QANTAS and SOCOG

• Jeremy Sutcliffe – CSR chairman

• Wayne Pearce - Balmain Tigers, NSW and Australian legend, commentator and first professional rugby league player.

• Chris Sarra - Executive director of Queensland Technology’s Stronger Smarter Institute, Aboriginal Educator

Each member has either business or sporting experience, with the majority having detailed experience in overseeing/running a complex organisation. It is only now we are seeing a political reform in terms of structure that will benefit the game from a grass roots level, right through to the National competition and State of Origin.

Politics on choosing a Commission

The ARL and News Ltd have been involved in discussions for over 2 years on an independent commission with arguments varying from how they will serve the game, who is apart of it, when it will take over, and how much control they will be given.

However a variety of issues in recent weeks has put a hold to the November 1st introduction. With the new T.V deals next year, clubs are yet to renew their licences for next season until they either receive some advanced funding, or see how much the new deal is worth.

After announcing their exit and an independent commission would replace them, News Ltd met with the ARL as a part of a 4 man panel in unity with international recruitment agency Spencer Stuart. The 4 man board consisted of ARL chairman John Chalk, News Limited chief operating officer Peter Macourt, QRL director Terry Mackenroth and Rabbitohs chairman Nick Pappas (representing the 16 clubs). They were given a list of 130 people identified by Spencer Stuart, all of whom were sought to have the right business, sport and political mind to progress rugby league in a way that benefits the game.

It was up to the 4 man panel decide who would direct the games future. The commission was eventually finalised before a meeting between the games powerbrokers; QRL, NSWRL, CRL and the clubs.

"The 16 clubs wanted change, the states wanted change, News Limited wanted change ... it gives the game a fantastic opportunity to prosper," - Independent Commission Chairman, John Grant.

How has the Independent Commission been introduced?

Firstly, a deed of dissolution has been drawn up in which the existing News Ltd and ARL board members are to finalise business and political control and standings, all of which should allow for continued funding from sponsorship in order to enable marketing and business plans under the control of one body.

Although it has been a long a drawn out process of implementing an independent commission, they are expected to take over on November 1st. Recent talks between the NRL and clubs over funding issues has pointed to another delay in proceedings. However, Chairman John Grant says plans are already underway behind the scenes for the TV rights deal. According to Grant, he wants the commission to hit the ground running regardless of when they start, with their main priority trying to reach the $1.4 billion mark for the game.

There has never been more proof that Rugby League needs its independence than the 2010 season where the Melbourne Storm scandal brought about accusations of conflicts of interest from both the NRL executive and News Limited.

What will it do to the game?

The NRL Grand Final 2006

The independent commission will make a variety of decisions in order to steer the game with as much control and direction as possible. This all starts with the up coming T.V rights negotiations. It has already been stated that the commission has already met to discuss this situation before the hand over, which shows how vital the security of a big money deal is to the game. From there areas of focus will be; expansion of the league, raising the salary cap, rechuduling the representative structure, player welfare and grassroots football.

Negotiating a T.V deal

Once the commission takes over, it will begin negotiations for a new T.V broadcasting rights deal. The deal, which commences in the 2013 season will see an outrageous bidding war between Australia’s top dog media moguls and stations.

The deal is expected to bring in a large amount of money, with the rights going to the highest bidder in an auction like sale. It is expected that either Channel 9 or Channel 7 will go head to head with Foxtel for either the sole rights to the game or a split of the games, similarly to the AFL’s deal.

However, Channel 9 CEO David Gyngell raised the point that Rugby League may have to adapt a different flow in game play to accommodate the expensive price tag jump ofr 500 million for the 07-12 deal to more than double for the next deal. For example, introducing 15 second game breaks before scrums and drop outs or changing the structure from halves to quarters. Both of these options allow for more lucrative commercial space for advertisers. Therefore, allowing increased revenue for broadcasters and more reason to fork out big dollars for the next deal.

As you can see this an issue of commodification. By taking something that is already in existence- the competition, and trying to make more money by expanding the amount of sell-able market place space.

Colin Smith, an analyist from Melbourne company LEK, said the NRL was on track to secure a T.V deal possibly higher than the AFL’s.

"In television audience, it is. Foxtel's pay television for NRL is up 20 per cent. And then you look at State of Origin, just under 11 million viewers (for the series)."

Assuming the game snares a deal worth this figure, it will benefit the clubs immensely with 14 of the 16 running with substantial debts.

Not only will club grants increase, but so will the salary cap.

Increase in the Salary Cap

Assuming the new T.V deal reaches a record amount, the salary cap is set to rise significantly. Already criticized across the world for having a low and hard cap whilst overseas competitions have a much higher cap, or do not have one at all. This has caused a serious movement from players moving to England pre-retirement to play in the cashed up Super League. This can be seen as good in some cases as all clubs are given an equal chance at winning – 9 different winners in past 12 years. However, not only does Rugby League have a low salary cap, its rival competitors here in Australia have much higher limitations to their player expenditure. This has also lead to a recent shift of players to cross-code rivals such as AFL who have a salary cap of around 8 million.

However, the future is looking bright for League players with the new broadcast rights deal up for grabs next year. It is hoped that the deal will increase revenue, providing greater funding and assistance to clubs, therefore allowing clubs to have a higher salary cap. The new deal could increase the salary cap from $3.7 million in 2011 to around $7 million, assuming the broadcast rights fetch their expected price.

Representative Level

Sam Thaiday scuffles with Beau Scott in this years State of Origin series

For years there has been constant bickering between fans, clubs, players, coaches, sponsors and the games hierarchy over the schedule of representative games. Both players and coaches have specifically stated there is not enough turnaround between Wednesday night origin games.

Talks have been underway with retiring Broncos, Queensland and Australian Captain Darren Lockyer, along with experienced club, origin and national coach Wayne Bennet to create a schedule that will benefit the player recovery but also maximise T.V ratings and sponsorship deals. The commission is set to move the Wednesday night Origin matches to Mondays, allowing a longer turn-around for players.

The annual Anzac Test and City vs Country matches have also specifically been targeted as a weekend not needed due to players being called up from club duties, therefore providing a round of B-grade players. This in turn will create fewer injuries throughout the season. Both series are set to be scrapped in 2013.

Although it has yet to be confirmed, it’s expected Monday night games will be turfed to a Sunday afternoon twilight game after mounting pressure from clubs. They claim the Monday night games attract poor attendances and leave them with a shorter turn around before the next weekend. However it is a viable selling space for broadcasters, with the Monday night market claiming a large majority of the top rating games last year - 39 of the top 50 programs on Australian subscription TV last year were Rugby League matches.

Competition Expansion

Central Coast Bears Logo

A key topic within Rugby League circles has been the expansion of the competition with a variety of options at hand. The league is planning to add two new teams by 2015; however it is yet to be decided whether these two teams will compromise of an entirely new franchise, or an existing club being relocated.

The NRL is attempting to take the sport to a national level, similarly to the AFL. Nothing is pushing this idea more, than the expansion of the AFL into Western Sydney and the Gold Coast, two of Leagues stronghold states (NSW and QLD).

An array of locations has been suggested with another Brisbane/Central QLD or Central Coast team most likely to receive approval for the competition. Other areas being looked into include; Sunshine Coast (QLD), Ipswich, Perth, Adelaide, Fiji, Paupa New Guinea and Wellington.

At this stage, relocation seems to be the best option for a variety of Sydney clubs who are struggling to make ends meet. However, NRL CEO David Gallop says it would be better to settle the T.V rights deal, allowing clubs to become financially stable, rather than adding or relocating teams to early.

Grassroots

Steeden Rugby League Football

With a new rugby league headquarters to begin construction soon, all parties in Rugby League are to be brought under one roof. This will align the commission with the NSWRL and CRL, helping to streamline funding and junior development strategies to the areas where it is needed most.

The recent expansion of the AFL into western Sydney (well known as Leagues heartland) has caused a serious stir amongst the ranks of clubs in the west. They fear their once stock piled junior ranks could start to bleed to the Greater Western Sydney team, especially since signing star League player Israel Folau.

Therefor it will be up to the commission to combat this expansion. This will be seen by providing better development programs to schools and community teams in regional areas. A good example is the recent weight-for-age-division style competitions being introduced at school boy level. It allows kids who may not be as big as come of their team-mates, to grow with the game whilst still developing their skills, rather than them leaving the sport because they are to small and getting hurt, something which has always been an issue with parents having their kids playing League. Accessing pathways to state and national competition will be also be clearer with educational opportunities involved.

Conclusion

As you can see, the game is in a very fragile state financially whilst being in a very unique stage politically. Hopefully the introduction of the Independent Commission will free up the business side of things for the game, allowing itself to focus on a goal of expanding and developing youth whilst reaping the benefits financially from the commodification of the new T.V rights deal.