Rugby Australia (RA) has recorded a net deficit of $27.1 million for 2020 due to the COVID-19 pandemic, with the governing body losing so much money it even considered reverting to amateur status.
- Rugby Australia experienced a $45.7 million reduction in revenue in 2020
- New Zealand Rugby has approved a historic private equity deal, with Rugby Australia looking to follow suit
- Rugby Australia says it “openly talked about the game potentially becoming amateur” amid its financial woes
The $45.7 million reduction in revenue was the key factor behind the huge loss, which was somewhat offset by $31.2 million in drastic cost-cutting measures.
Staff costs were reduced by $9.9 million (down 46 per cent), a $7.7 million reduction in player costs (down 45 per cent), an $8.1 million reduction in Member Union funding (down 28 per cent), and other costs were reduced by $5.5 million.
Rugby Australia chairman Hamish McLennan said the organisation was “shaken to its core” by the impact of the global pandemic.
And the size of the financial loss led to serious conversations about the football code once again becoming amateur in Australia.
“We were very nervous,” McLennan said on Thursday afternoon after RA’s annual general meeting (AGM).
“When I came on board in June, July, had we not been able to get cost out of the business and get some certainty into some of our revenue numbers, we openly talked about the game potentially becoming amateur.
“We knew it was going to be brutal, so it’s not really a surprise. I’m proud of the fact that the team here has kept the game alive and professional.”
New Zealand Rugby (NZR) approved a historic private equity deal at its AGM on Thursday, with a 12.5 per cent stake set to be sold to US equity firm Silver Lake for $361 million.
McLennan indicated RA would follow suit.
“We have absolute alignment,” he said.
“I can’t see us giving more than 15 per cent away. It will be between 10 to 15 per cent. Probably 12.5 per cent.
“In a perfect world you wouldn’t have to do it. There’s an extra stakeholder we’ll have to deal with.
“But I don’t fear it. The more diverse range of skill sets we get around the table is a good thing.
“Rugby deserves to make a lot of money which we can reinvest back into the community game.”
McLennan said he felt RA had weathered the worst part of the financial storm, with a string of international series set to inject much-needed money into the game.
RA is confident the proposed three-Test series against France during the middle of the year will go ahead.
‘The game has to change’
In New Zealand, the 26 provincial unions voted unanimously in favour of the proposed private equity deal to sell a stake to Silver Lake.
The only remaining obstacle to the private equity deal is the New Zealand Rugby Players’ Association (NZRPA).
The union representing professional players has expressed concern about several aspects of the sale, including the possible commercialisation of traditional and cultural symbols such as the silver fern and the All Blacks’ haka.
Talks between the NZRPA and NZR, conducted with a mediators, have not so far allayed those concerns.
The Silver Lake deal will represent a more momentous change for the All Blacks than rugby’s move to professionalism in 1995.
For the first time the New Zealand national team — known as the All Blacks since 1905 and the most successful team in world rugby — will not wholly belong to New Zealanders.
NZR chairman Brent Impey said the Silver Lake deal represented a major turning point for rugby in New Zealand, though fans would not notice any changes once the deal goes through.
He told the provinces, “what you just did was incredibly significant”.
“The game has to change and Silver Lake’s capital injection would allow us to re-imagine rugby and invest in the areas of the community game that need it most, particularly teenage and women’s rugby and to create better and more engaging experiences for our fans,” Impey said.
“We hope the NZRPA will realize the significance of the opportunity in front of us and will continue to work toward an agreement in coming weeks.”
NZR chief executive Mark Robinson said his organisation believed the proposal would “benefit everyone in the game”.
Robinson refuted suggestions the deal would see the history and tradition of the All Blacks sold to “faceless billionaires”.