Private equity argument swaying on TV revenue
Wayne Smith | August 17, 2009
Article from: The Australian
THE Australian Rugby Union's rationale for introducing private equity into its Super rugby teams could be undermined if rumours of it gaining a significant boost from its cut of the sale of SANZAR broadcast rights prove correct.
Informed sources have told The Australian that the ARU's income from television rights could increase by anywhere from 25-50 per cent on what it took away from the 2005 broadcast deal.
The bullish estimates arise not just as a result of SANZAR's decision to expand Super rugby to a 15-team competition in 2011, which will mean not just 33 per cent more product but more product of a highly desirable nature, with two derbies to be played each weekend of the conference phase of the tournament.
But, for the first time, Fox Sports could be facing a serious challenge from a free-to-air network, with Ten apparently keen to grab the Super 15 rights for its high definition sports channel.
The channel is aggressively pursuing top-line sport, having already secured the rights to the 2010 Delhi and 2014 Glasgow Commonwealth Games, Formula One motor racing, the Indian Premier League
Twenty20cricket as well as to swimming and netball.
At the end of June, the SANZAR partners, Australia, South Africa and New Zealand, submitted their broadcast proposal to News Corporation (publisher of The Australian), which has 60 days in which to respond. The deadline is less than a fortnight away.
It is understood that if News significantly increases its offer from the $US323million it paid under the last broadcast deal, the ARU - which received 28 per cent of the total then but stands to take one-third of the new agreement after South Africa struck a separate deal for the sale of its Currie Cup and June inbound Tests - will stick with its current broadcast partners.
But if the offer at the end of the month falls short of expectations, the ARU now has the option of going to the market and exploiting the competitive tension between Fox and One HD.
Neither Fox spokesman Tony Sinclair nor his Ten/One counterpart, Jeanette McLoughlin, would discuss the Super rugby TV rights issue.
If the broadcast deal does deliver a windfall to the ARU, the union's argument for introducing private equity would lose much of its strength. Certainly, it would encounter real resistance from the states if it attempts to force them down the private equity route by cutting off entirely or even scaling down its current annual $4.3m allocations to the Waratahs, Reds, Brumbies and Western Force.
Reportedly, the ARU's cut of TV rights last year amounted to $22.8m, with a further $2.2m earned by hedging on the exchange rates, the contract having been settled in US dollars.
Even a modest 20 per cent rise in broadcast income would amount to an extra $5m, which would allow the ARU to pay its annual allocations to the existing Super teams as well as to the new Melbourne franchise and still have $3.5m in reserve.
The more revenue generated by the sale of broadcast rights, the less sway the ARU would have as it attempts to sell the private equity idea to the already reluctant states.
http://www.theaustralian.news.com.au...015651,00.html
