User:Downie/Limited News Involvement is the Best Thing for Rugby League
The National Rugby League looks set to establish an independent commission to run the sport on November 1. Currently co-owned by media giant News Ltd and the Australian Rugby League (ARL), there is substantial criticism over alleged poor governance of the competition. As it stands, the ARL, the New South Wales Rugby League (NSWRL), the Queensland Rugby League (QRL) and the National Rugby League (NRL) all have some say in how the sport is run, making it a complicated and time-consuming process. The independent commission looks to unify the roles and responsibilities relating to the administration of the league which will hopefully bring upon a more efficient and transparent method of decision-making.
News Ltd, in addition to their 50% stake in the game, also own over two-thirds of the Brisbane Broncos and 100% of the Melbourne Storm. This leads to many questions of fairness and a conflict of interest, which will be removed as the new administrators will be independent of the clubs. These issues, such as the Melbourne Storm salary cap drama, again point to poor management which will hopefully be addressed come November 1.
Examples of why News Ltd should no longer be involved as owners of the game:
- Melbourne Storm salary cap scandal – News Ltd owned team breaking laws of the game for several years, players signing several contracts
- The recent Manly/Melbourne brawl – both teams fined $50k, Melbourne’s fine paid by News Ltd company to News Ltd company
- TV broadcast deal and publishing rights – conflict of interest, not enough money going in
- Will always be a question of fairness when the two News Ltd teams have been two of the most successful in last five years
- Their departure will result in a more efficient administration structure
The National Rugby League (NRL) is one of Australia's premier sporting competitions. With fifteen teams along the densely-populated east coast of Australia, as well as one in New Zealand, it constantly receives ever improving crowd figures as well as featuring strongly in both free-to-air and pay TV (where they dominated with 74 of the top 100 programs) ratings. It celebrated its centenary in 2008 and looks set for a strong future as one of the dominant sports in Australia.
However, the NRL has a history of political troubles, with its inception being the product of a turbulent off-field war between the Australian Rugby League (ARL) and News Ltd's Super League. The end result was a unified competition with the powers shared between ARL board members and the News Limited Corporation, with each having three seats on the NRL partnership committee. The unification was only in name though as the two entities have remained at loggerheads for much of the competitions history, with several conflicts of interest (over such things as league expansion, media scheduling and payments, and the two News Ltd owned clubs) meaning the progress of the game as a business has slowed dramatically.
This is why the announcement of a new NRL Independent Commission, a not-for-profit body run by eight neutral administrators who will be charged with making decisions in the best interests of the game, has been so well received. It will see the withdrawal of News Ltd from any administration of the league as well as seeing the cessation of the ARL, with their other duties (such as junior development) to revert to the state bodies. However, at the time of writing this essay on November 1, the planned establishment date of the Independent Commission, the new body still looks no closer to taking control of the game due to the ongoing conflicts between News Ltd and the ARL.
NRL structural overview
To understand why the behind-the-scenes situation is a bureaucratic nightmare, it is important to be aware of the current administrative structure. At the top of the management chain is a Partnership Executive Committee, which consists of three representatives from News Ltd and three from the ARL, the main role of which is to govern the agreement between the two and make major financial decisions. This body in turn commissions the National Rugby League Board who administers the competition, which again has three officials from each organisation. The National Rugby League itself is another organisation with approximately forty staff members at their headquarters dealing with issues such as football operations, strategy and special projects, salary cap and registration, marketing, media and finance. Below them are the state bodies, the Queensland Rugby League (QRL) and New South Wales Rugby League (NSWRL) who run the state competitions. As it stands, junior rugby league development is handled by the ARL.
Therefore, from top to bottom there are seven boards or organisations involved in running the game of rugby league in Australia. The introduction of the Independent Commission will reduce this number to four – the Independent Commission as a neutral governing body, the National Rugby League to administer the national competition and the two main state bodies to manage state affairs and junior development. As a result the whole political system will be much more streamlined and hopefully result in less conflicts of interest and more beneficial advancements to the league.
Problems with News Ltd's role
As previously mentioned, this system has brought about several issues for the NRL, especially in relation to the goals and motives of the two organisations involved. News Ltd in particular have come under fire for their involvement in seemingly all financial aspects of the game – the overall administration of the NRL, being a major shareholder in two different clubs and their ownership of TV rights holder Foxtel, as well as publishing several major newspapers including the Daily Telegraph, the Australian, the Courier Mail and the Herald Sun, all of which run stories on the NRL and can influence consumer behaviour. All of this means that News Ltd has a substantial say in the growth of rugby league as a sport and can be seen as a reason why clubs have been getting disgruntled at the lack of money coming their way.
The current annual grant to NRL clubs is valued at $3.65 million, but the executives of all sixteen clubs have been united through their desire to almost double this. They are arguing that the current media rights deal is significantly undervalued at only $90 million a year, especially considering the fact NRL broadcasts are nationally more watched than those of the AFL (as seen in the ratings outlined in the introduction), who recently signed a $1.25 billion TV rights package. An increase in the NRL TV rights deal to a level similar to that of the AFL will allow the NRL to listen to the clubs executives and increase their annual grant, but this may only occur when News Ltd are removed from administration of the game.
This is due to the fact that as it stands, News Ltd will not find such a deal viable for them as they will not be willing to spend substantial money on something they already own and they would not accept a valued deal from competitors Channel Nine, who also have broadcast rights for some of the games.
This conflict of interest is also evident in News Ltd’s ownership of the Melbourne Storm (100% ownership) and the Brisbane Broncos (67%), two of the most successful teams over the last decade. The Melbourne Storm case is the most interesting, especially as the club was found to have significantly rorted the salary cap for several years with News Ltd directors apparently having no knowledge of the transgressions until they were made public. Would they have got away with it for so long (or at all) if they were not News Ltd owned?
Rugby league commentator and analyst Phil Gould also makes a good point regarding the potential signing of Greg Inglis from the Melbourne Storm to the Brisbane Broncos – one News Ltd owned team to another (though the deal then fell through after the player changed his mind). He states that it was routinely unfair on the other clubs in the competition that private talks between the two News Ltd owned teams were able to take place, and that it was a conflict of interest to allow it to happen. He argued that there should have been complete transparency of the deal, especially following the Melbourne Storm salary cap scandal.
Another point brought forward is that the Broncos have a monopoly on the Brisbane market. The population of Brisbane is just over two million, approximately half that of Sydney. Yet they are home to only one NRL team whereas Sydney have nine. This imbalance and the lack of any real push by the NRL to fix it has again raised questions over the motives of the NRL administration. By allowing the Broncos to dominate the Brisbane market it gives them greater marketing opportunities to a wider audience, which is reflected in their number of appearances in the Friday night free-to-air timeslot, the one which attracts the most viewers each week (this is seen in figure 1.1 below).
When considering the fortunes of Melbourne and Brisbane, it is important to also recognise the other side of the spectrum. Clubs such as the Cronulla Sharks, North Queensland Cowboys and South Sydney Rabbitohs have either never won a Premiership or, in Souths case, have been trophyless for the past forty years. They struggle every year to make ends meet and are given none of the advantages that the Storm or Broncos receive. How should they feel when such conflicts of interests benefit these clubs?
Until the NRL disentangles itself from News Ltd, its decision-making and ethical standing will continue to be compromised.
Positives of News Ltd involvement
With all this being said, it would be unfair not to mention the benefits News Ltd brings to the game – just not in a position of absolute authority. Without their involvement, the Melbourne Storm would almost certainly cease to exist and the NRL would lose out on a huge potential target market. Also, through their Pay TV company Foxtel, millions around Australia are able to watch live games that otherwise would not be available to them. This article is not stating News Ltd should be removed completely from the sport; far from it in fact. They still have a lot to offer the National Rugby League, they should just be well away from having any control over how the game is run.
Benefits of the Independent Commission
Apart from removing News Ltd’s influence over the management of the game, the new Independent Commission will bring its own benefits to the sport. A much more streamlined management chain, as pointed out earlier, will allow a much more effective decision making process, encompassing all areas from the national league through to the state bodies and grassroots development. This improvement in corporate governance will bring rugby league more into line with other businesses and industries, and hopefully bring its business system into the 21st Century.
To make a comparison, the Australian Football League (AFL) has had an independent commission in place since 1993, which also has eight commissioners on its board. The NRLs ideal model will follow that of the AFLs, which is completely independent from the clubs allowing it to make decisions in the best interests of the game, rather than individual stakeholders.
This will also allow the NRL to put its focus back on the game itself, rather than backroom politics. Issues regarding the sport such as determining of fixtures, the finals format, video referee and referee performance, and various rule interpretations have had inconsistencies and controversy surrounding them for several years now but have not been acted upon due to the complex and inefficient management structure. The Independent Commission will be able to see to these problems and increase the selling power of rugby league as a form of entertainment. As loyal and passionate as sporting, and rugby league in particular, fans are, the political nightmare that is hindering the games progression may most definitely lead to supporters leaving the sport if the problem is not fixed sooner rather than later.
The date this essay was finalised coincided with the date of the planned handing over of control of the game from the ARL and News Ltd to the Independent Commission. As it still has not yet occurred, it further highlights the issues the games current governance structure is having and why changes need to be made. Problems relating to the proposed television rights deal in particular have been blamed for delays which demonstrates again the conflict of interest of having a major media organisation co-owning the sport. The sooner rugby league is in neutral hands the earlier it will be able to make the advancements needed to move the business structure into the 21st Century.