The Journal of Sport and Exercise Studies/Business, Politics and Sport 2011/The changing landscape of Rugby League in Australia

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Josh O'Brien, 2011
Original copy

Presentation on Youtube


The idea to have an independent commission run the NRL first came from a Chief Executives conference in May 2008, with Gold Coast Titans CEO Michael Searle selected to head a sub-committee given the job of exploring the idea with NRL clubs and stakeholders. Under the current structure, Rugby League in Australia is a tangle of various boards and partnerships, with the NRL a 50/50 partnership between the ARL and News Ltd. 8 Commissioners have been selected to form the Independent Commission: John Grant, Catherine Harris, Ian Elliot, Peter Gregg, Gary Pemberton, Jeremy Sutcliffe, Wayne Pearce and Chris Sarra. The Independent Commission will be involved in negotiating a new TV rights deal, expected to be worth around $1billion which will secure the financial future of the game for the next few years. They will also be involved into the research and development of expansion clubs, making the NRL a truly national game.

Introduction[edit]

The topic of the changing landscape of Rugby League in Australia was chosen because of the unique position the game is currently in. While it has been successful for many years, the biggest happening since the Super League war of the 90s is set to change the game. An Independent Commission has been set up to take over the running of the game from the Australian Rugby League and News Limited, removing conflicts of interest that have hampered rugby league for over a decade. This essay will look at how the Independent Commission came to be formed, who the commissioners will be and what it will mean for rugby league in this country. It will also look into a couple of issues the Commission will be involved in; the new TV rights deal and the expansion of the game.

The Independent Commission[edit]

The idea to have an independent commission run the NRL first came from a Chief Executives conference in May 2008, with Gold Coast Titans CEO Michael Searle selected to head a sub-committee given the job of exploring the idea with NRL clubs and stakeholders. Under the current structure, Rugby League in Australia is a tangle of various boards and partnerships. The NRL is a 50/50 partnership between the Australian Rugby League (ARL) and News Limited, and is responsible for the Telstra Premiership, Toyota Cup and other main revenue streams. The NRL Board is made up of 6 members, 3 from the ARL and 3 from News Ltd. There is also the NRL Partnership Executive Committee that oversees the key financial areas of the partnership agreement between the ARL and News Ltd. Both sides take it in turns every 12 months to appoint the chairman of each of these boards (NRL 2011). While each of these boards and committees have many experts in their field responsible for running them, there is currently no single group of people that plan and implement strategies across the game. The main objective of the Independent Commission when they take over is to make the game more efficient by centralising funding, development and control. It will do this by dissolving and replacing the ARL, NRL Partnership and NRL Boards.

8 Commissioners have been selected to form the Independent Commission. They were selected by a committee including an ARL, News Ltd, Queensland Rugby League and NRL club representative. They then had to be approved by the 16 NRL clubs. The 8 Commissioners are:

  • John Grant (Chairman)-Managing Director Data#3
  • Catherine Harris-Chairperson of Harris Farm Markets
  • Ian Elliot-Former Chairman of George Patterson Bates
  • Peter Gregg-CFO Leighton Holdings
  • Gary Pemberton-Former Chairman of Qantas
  • Jeremy Sutcliffe-CSR Chairman
  • Wayne Pearce-Australian Representative and Fox Sports Commentator
  • Chris Sarra-Executive Director of Queensland Technology’s Stronger Smarter Institute

(Staff Writers Fox Sports 2011)

Concerns have been raised that the Commission will be a ‘puppet’ for the 16 NRL clubs to get what they want, while grassroots and regional rugby league will be an afterthought. The reasoning for these concerns is that the idea for the Independent Commission came from an NRL CEO’s meeting, and now the Commissioners selected had to be ratified by the clubs. This questions the claim that having the Independent Commission will remove the conflicts of interest in the NRL. For example, the clubs have already 'threatened' the Commission, demanding nearly double the current annual grant to be handed out from next year. The threat of a breakaway league, similar to what the Super League was, could be the consequences should the clubs not get what they want (AAP 2011).

Since the NRL was formed in 1998 after the Super League War, conflicts of interest have been deeply seeded in the game. As mentioned previously, the ARL and News Ltd have a 50/50 partnership in the NRL. News Ltd is also the owner of the Melbourne Storm, is a major shareholder in the Brisbane Broncos, a 25% owner of Foxtel and is the publisher of the official newspapers of the NRL (Hadassin 2010). The Independent Commission will remove these conflicts of interest by taking News Ltd out of running the game, meaning it wouldn’t have to deal with entities it had an interest in. It is thought that some sort of conflict of interest/corruption might return to the game with the Commission, as the NRL clubs have a vote to have a commissioner ejected if they are not happy with them. This opens up the question that, what if the clubs keep churning through commissioners until they find 8 that will do what the clubs want? For the good of the game at all levels, the commissioners will have to stay true to their purpose and run the game with no influence from external parties.

TV Rights Deal[edit]

A TV rights deal is an agreement made between a television network/s and the NRL over what time and days games will be played, whether live or delayed, and how much the network will pay for the rights to broadcast the games. The current NRL TV rights deal was negotiated in 2005 and started in 2007, worth $500million over 6 years from Channel 9 and Fox Sports (ABC 2005). With this deal expiring at the end of 2012, a new deal to commence in 2013 is currently being negotiated and is expected to be in the vicinity of $1billion. The expectations for the NRL’s next TV deal is set high due to the recent deal the Australian Football League (AFL) negotiated with Channel 7, Foxtel and Telstra which will start in 2012, worth $1.25billion (Witham 2011).

State of Origin II 2009. State of Origin games are usually in the highest rating programs on TV every year. Image by Pierre Roudier.

Being the top 2 football codes in the country, the NRL and AFL are often compared in their activities, with their TV deals being no exception. After the announcement of the AFL’s new deal being worth $1.25billion, many immediately expected the NRL’s deal to be worth a similar amount. The major issue with these expectations are however, that despite both being popular sports, they are 2 differing products. The main reason a TV network will pay so much for the rights to broadcast games is because of the potential revenue they can generate by selling advertising time during the games. The AFL has an advantage over the NRL in that the game has more natural breaks in play for ads to be shown. These natural breaks are created by the actual game being longer, it is played in quarters (meaning there is time between quarters to show ads), and a quick ad can be shown after every goal before play restarts (O'Connell 2011). On top of this, a broadcaster can take advantage of these breaks but continue to show the game live, a huge bonus for fans. The NRL is disadvantaged by the chance that there will be very few chances during a live broadcast to have an ad break, hence why games are often on a delayed broadcast. This can upset fans trying to enjoy the game on delay, as results can easily be accidentally found out in the current world of Facebook, Twitter or even a text or call from a friend who was at the game.

The NRL clubs and their players are the main beneficiaries of a large TV rights deal. The money that the NRL gets from the deal is mostly put back into the clubs, by the means of the annual grants it gives out. The revenue generated from the deal is also directly related to how much the salary cap is worth each season. The more that the NRL can give to clubs in the annual grant, the higher the salary cap can be. This isn’t only a benefit for players, but also for the fans. Over the past few seasons fans have had to see some of their favourite players such as Mark Gasnier and Sonny Bill Williams leave the game in Australia to take up higher paying contracts overseas. A new TV deal and a raised salary cap will allow clubs to pay these marquee players what they deserve. With the new Independent Commission in charge of negotiating the deal with networks, any conflict of interest regarding News Ltd and Fox Sports is erased. In the last deal negotiated which involved those 2 organisations, many thought that the deal could’ve been worth a lot more, however News Ltd didn’t want to sell the rights for too much to the network they have a share in. What this meant was that Fox Sports and News Ltd got a better deal by getting the game cheaper, while the NRL was left with a deal far under what was reasonable.

Rugby League Expansion[edit]

In the quest to become a truly ‘national’ competition, the NRL will need to expand and add teams from all across Australia. When compared to the AFL, it is a very isolated competition. All of the teams are from the eastern states with very few games played in states without NRL teams, while the AFL has teams across nearly all states, with a couple of teams with agreements to play in states which don’t have teams every season. On top of this, the AFL has recently expanded into traditional rugby league playing areas, with the Gold Coast Suns playing their inaugural season in 2011 and the Greater Western Sydney Giants to join the competition in 2012. This is a threat to the NRL not only by the setting up of new teams in rugby league areas, but also by the clinics and ‘Auskick’ programs that the AFL is also setting up in these areas to entice juniors to come and give Aussie Rules a try. The development of sport starts with juniors and grassroots programs; with the right implementation of these programs and with enough participants the current generation of juniors could soon favour Aussie Rules over Rugby League, leaving the NRL to play catch up to the AFL for years to come.

The NRL has been looking at expanding the competition the admission of a new team, or teams, in 2015. While this date does seem far away, it is estimated that it will take approximately 2 years to set up a new, fully functioning club. Plus with the new TV rights deal to be negotiated and commenced in 2013, the league is hesitant to act too quickly before the financial future of the game is clear and secure. Among the possible teams to be added to the NRL are teams based in Brisbane, Central Coast, Central Queensland, Fiji , Papua New Guinea, South Australia, Sunshine Coast, Perth and Wellington (McDonald 2011). Recently NRL CEO David Gallop commented that he expects two new teams to be added to the competition, saying ‘I anticipate it would involve two teams so that we would be able to have a ninth broadcast slot’ (Fox Sports 2011). As explained before, a huge amount of the NRL’s revenue comes from TV networks broadcasting games, and adding 2 new teams’ means creating 1 extra game every week, which would generate more money for the NRL.

Conclusion[edit]

The Independent Commission is set to bring to rugby league what has been missing for over a decade: freedom. The formation of the Commission will free the control of the game from the hands of the ARL and News Limited. Instead of looking after their own interests as the former directors of the game have done, the Commission's duty will be to do what is best for rugby league in Australia. This will include getting the most out of a new TV deal, expanding the game effectively to increase the profile of rugby league and managing the image of the game. Rugby league in this country is about to enter an exciting time, and with the Independent Commission in control is set to flourish.

References[edit]

AAP (2011). NRL clubs threaten Independent Commission, viewed 13 October 2011, http://rlcm.com.au/latest-news/13103-rugby-league

ABC (2005). NRL secures $500m rights deal, viewed 19 October 2011, http://www.abc.net.au/news/2005-07-01/nrl-secures-500m-rights-deal/2050082

Fox Sports (2011). NRL boss David Gallop says Central Coast, Perth or Brisbane will have until 2015 for NRL expansion, viewed 24 October 2011, http://www.foxsports.com.au/league/nrl-premiership/nrl-boss-david-gallop-says-central-coast-perth-or-brisbane-will-have-until-2015-for-nrl-expansion/story-fn2mcuj6-1226174148168

Hadassin, J (2010). Storm in a premiership teacup-corporate governance conflicts in sport, viewed 23 October 2011, http://www.swaab.com.au/publications/Keeping_Good_Companies_August10_Swaab.pdf

McDonald, M (2011). NRL expansion bidders demand to know who is in and who is out, viewed 30 October 2011, http://www.theaustralian.com.au/news/sport/nrl-expansion-bidders-demand-to-know-who-is-in-and-who-is-out/story-e6frg7mf-1226078819053

O'Connell, R (2011). How the NRL can match the AFL’s TV rights deal, viewed 19 October 2011, http://www.theroar.com.au/2011/08/09/how-the-nrl-can-match-the-afls-tv-rights-deal/

NRL (2011). NRL Mailbox: What is the new commission?, viewed 18 October 2011, http://www.nrl.com/nrl-mailbox-what-is-the-new-commission/tabid/10874/newsid/62104/default.aspx

Staff Writers Fox Sports (2011). NRL releases list of eight who have been invited to join rugby league's independent commission, viewed 18 October 2011, http://www.foxsports.com.au/league/nrl-releases-list-of-eight-who-have-been-invited-to-join-rugby-leagues-independent-commission/story-e6frf3ou-1226099211793

Witham, J (2011). AFL's $1.25 billion broadcast deal, viewed 23 October 2011, http://www.afl.com.au/news/newsarticle/tabid/208/newsid/112560/default.aspx