O'Neill plays down talk of crisis in state ranks

[travelling_gerry]

Greg Growden Chief Rugby Correspondent | July 14, 2009


AUSTRALIAN Rugby Union chief John O'Neill has played down speculation that today's gathering of the leading officials from the four provinces will degenerate into a "crisis meeting" over the future of the game.

In recent days, there have been claims that some provincial officials are angry with the ARU, particularly O'Neill's control of the game, and fears that a major rift has developed between some Super 14 organisations and the national body.

The provinces are "demanding answers" from the ARU on several issues, including the location of the fifth Australian Super team, where the new franchise's players will come from, and what the provinces will receive from the new SANZAR broadcasting contract talks.

The chief executives and chairmen of the Waratahs, Reds, Western Force and Brumbies will meet O'Neill and other ARU officials in Sydney today. Last night, O'Neill said he was "bemused" by the threat of it turning into a "crisis meeting".

"I'm scratching my head to understand why the tag 'crisis meeting' has been attached to what is really a routine meeting," he said. "What is the crisis? In terms of the ARU, whilst we are operating in very challenging times, we are not looking at a crisis."

O'Neill said the provinces wanted an update on SANZAR's broadcasting negotiations, and "they will be given that".

"We put our offer in before News Limited and SuperSport [South Africa] on June 30, and they have 60 days to respond," he said. "There is still 47 days to go.
"They want a report on what our expectations are in terms of broadcast revenue.
We have some idea, but at the end of the day it's like selling a house. You never know until the day of the auction.

"Until the broadcast deal is done, we can't indicate what the funding arrangements are. We have to get the deal done first, and then we will understand what the size of the cake is."

On the contentious issue of the location of the fifth Australian team, which will involve private equity, in an expanded Super 15 tournament from 2011, O'Neill said it was premature to
provide an answer. In Queensland, there are concerns the new team will be based on the Gold Coast, which Reds officials believe would fragment their market. There are similar concerns at the Waratahs over the possibility of the team being based in western Sydney.

"There are demands that there shouldn't be due process and that the franchise should just be located in Melbourne," O'Neill said. "My belief is that competitive tension will more than likely bring a much better outcome. How do you know until you go to the market place that there mightn't be a significant interest and funding from other locations?


"This is not to diminish Melbourne's attraction, but there is also a new stadium on the Gold Coast, and a very good stadium in western Sydney. Australian rugby only gets a chance now and again to expand its footprint. We had one in 2005 and went to Perth. We have another one now, and there were some real lessons to learn from Perth.

"The Western Force did a lot of good things, but equally there were aspects in how they operated, particularly around uncontrolled third-party payments, that are not good for the game.

"The fear tactic that has been spread is that the ARU is going to own this fifth franchise. No, we're not. Our involvement may be a 10 or 20 per cent shareholding if it's necessary to get the franchise up and running. When the Western Force was established, the ARU had a completely hands-off role. And because we had a hands-off role and didn't control the movement of players, the ARU abrogated its responsibilities.

"Now we're trying to position ourselves to control the flow of players, whereby we can avoid the impact and damage on the four teams, through a 10 to 20 per cent shareholding, and we are getting criticised for that. We are in a no-win situation. People want absolute precision at this meeting about where the team is going to go, and what's the ownership model. These things are still evolving."

Concerns that players for the fifth side would be lured from the other four Australian teams were also misguided. O'Neill said the squad was likely to comprise Australian players now overseas, rugby league recruits and players from the Pacific Islands and Japan.

"Can we put together a good team which doesn't detract from the other four? I believe we can," he said.

http://www.rugbyheaven.com.au/news/n...e#contentSwap1

[Burgs]

"Australian rugby only gets a chance now and again to expand its footprint. We had one in 2005..."
Had one in 2007 too...

[GIGS20]

You could both be talking about the same chance Burgs, the decision making for the Force happened in 2005

[jargan83]

I think he is referring more to the ARC in 2007

[AndyS]

Agree on the comment regarding Super rugby not being the only footprint they should be focusing on. If you look at bang for buck, there would have to be so much more scope in developing and marketing a proper domestic competition done well than there is in just adding one more Super team. And had they not been so quick to put a bullet in the back of its head first time around, how much easier would this exercise be now? I wonder how much the ARU will end up spending on attracting players back from overseas, seeking out and bringing in outside players etc compared with the $3M they would have spent to keep the ARC going.

But that aside, nice at least to see an article with some quotes. Interesting ones too...

"The Western Force did a lot of good things, but equally there were aspects in how they operated, particularly around uncontrolled third-party payments, that are not good for the game. (...which the established teams were the first to bitch about - nice petard work to start.)

"The fear tactic that has been spread is that the ARU is going to own this fifth franchise. No, we're not." (...except sort of, in that...)

Our involvement may be a 10 or 20 per cent shareholding if it's necessary to get the franchise up and running. (...but note the use of the word "shareholding" - they may put capital or equity in, but will be looking to get it back. I wonder if there will be any suggestion by the other SANZAR partners that an ARU involvement will mean that they have to recuse themselves from the selection process?)

When the Western Force was established, the ARU had a completely hands-off role. And because we had a hands-off role and didn't control the movement of players, the ARU abrogated its responsibilities." (...so this time, just like was squealed in outrage last time, the ARU will get involved. For good or bad, this time the ARU will take an active role in deciding which players are "available".)

"Now we're trying to position ourselves to control the flow of players, whereby we can avoid the impact and damage on the four teams, through a 10 to 20 per cent shareholding,... (...by their definition of "impact" and "damage" to the teams, and perhaps relative to the value of their shareholding? And note the repetition of the shareholding idea, but this time not "if necessary" - now they are positioning themselves for it.)

...and we are getting criticised for that. (but the only criticism around is regarding Melbourne - perhaps an insight into the bone of contention with Gary Gray and their apparent comfort with O'Neill's old soccer mates?)

We are in a no-win situation. People want absolute precision at this meeting about where the team is going to go, and what's the ownership model. These things are still evolving." (Hell yeah! Lot's of politics yet to come!!)

"Can we put together a good team which doesn't detract from the other four? I believe we can," he said. (...but if it turns out to be harder than believed, once a firm commitment has been made to create the team, what is the contingency plan and who is it that will get the shaft?)

[Burgs]

Pretty rubbery figures I know, but a back of an envelope working comes up with an example of the kind of gross profits possible in a fully supported and developed national comp.

8 Teams 1 Round:

4 matches x 9 weeks x 10,000 av attendence x $30 av ticket = $10.8m
3 finals x 20,000 av attendence x $35 av ticket = $2.1m
= $12.9m GP

8 Teams 2 Rounds Home & Away:

4 matches x 18 weeks x 10,000 av attendence x $30 av ticket = $21.6m
3 finals x 20,000 av attendence x $35 av ticket = $2.1m
= $23.7m GP

10 Teams 1 Round:

5 matches x 9 weeks x 10,000 av attendence x $30 av ticket = $13.5m
3 finals x 20,000 av attendence x $35 av ticket = $2.1m
= $15.6m GP

10 Teams 2 Rounds Home & Away:

5 matches x 18 weeks x 10,000 av attendence x $30 av ticket = $27.0m
3 finals x 20,000 av attendence x $35 av ticket = $2.1m
= $29.1m GP

12 Teams 1 Round:

6 matches x 9 weeks x 10,000 av attendence x $30 av ticket = $16.2m
3 finals x 20,000 av attendence x $35 av ticket = $2.1m
= $18.3m GP

12 Teams 2 Rounds Home & Away:

6 matches x 18 weeks x 10,000 av attendence x $30 av ticket = $32.4m
3 finals x 20,000 av attendence x $35 av ticket = $2.1m
= $34.5m GP

If the ARU couldn't make a profit out of those kind of scenarios then perhaps they should be looking for a new Management and Board.
Let alone the extra exposure for our playing stocks.

Non S14 Required to make a 30 man Squad:
(Currently 120 S14 - 30 Wallabies = 90)

8 teams = 150 players
10 teams = 210 players
12 teams = 270 players

Total Players in 22 Man Squads:

8 teams = 176 players
10 teams = 220 players
12 teams = 264 players

Total Players in 30 Man Squads:

8 teams = 240 players
10 teams = 300 players
12 teams = 360 players

Total Players in 35 man squads:

8 teams = 280 players
10 teams = 350 players
12 teams = 420 players

But hey, "Australian rugby only gets a chance now and again to expand its footprint"...

[jargan83]

are those attendance figures your using per team or for the whole competition for a weekend?

[Burgs]

Per match "in a fully supported and developed national comp".
That is, don't picture the ARC or Year 1, 2 or even 3, as you will get bogged down.
This is for a comp that is well established and embraced by grass roots etc etc, answering all the previous perceived "issues".

I know they are optimistic figures at this point but you need to have an end game in site or it will never ever float based on first year returns.

Half the crowd at all matches for 8 teams one round still comes out at around $6m.

[AndyS]

Last time:
Forecast revenue year one = $6.816M
Actual revenue achieved = $4.258M

Forecast loss year one = $3.837M
Actual loss = $5.146M
=> overrun = $1.309M (of which $1M was the Melbourne Rebels)

http://www.stuff.co.nz/sport/rugby/news/184010

[Burgs]

The other factor is that this is just on gate sales, the cream.
The bread and butter coin comes from sponsorship and media rights which were totally underplayed in the previous attempt.

[jargan83]

As far as I was aware the ARU last time didn't even tender for broadcasters, they just paid the ABC to do it, or was the ABC after a failed tender process?

[AndyS]

I suspect it was a quick phone around (maybe), then use the same arrangement as Sydney club rugby...

[Burgs]

Yeah, not sure which now, but either way it was mismanaged.
Simply the act of giving it to the ABC majorly devalued the sponsorship potential due to their limitations on advertising etc. No offence to the ABC either, I think they did a great job on the coverage of each match and unveiled the talents of Amanda Shalalalalalalala!
You would think that they would now think of a figure, double it, and go straight to Ten to try their luck.

[AndyS]

To be fair, I'd bet they were met with an avalanche of apathy from the commercial channels. The only one I would have thought might have shown some interest was SBS, but failing that the ABC is at least broadcast all over and still beats giving it to Access 31. But how nice would it have been to have had a established product ready to go the following year when HD went looking for product? Instead, we are back at square one and any future attempt will have to try and elbow its way onto our screens...

[Thequeerone]

Having chewed the fat on the whole arc thing this winter the conclusion was it failed because the actual clubs were to closely aligned to existing franchises rather than independent business franchises - with each existing franchise looking to offload existing expenditure onto the ARC team - because of the model.

If independent business's could operate an ARC type franchise then clubs such as Randwick would have the opportunity to bid without the overhead of say the Tahs (not a tah bashing thread but you get the drift am sure thems over east are equally enamoured with RugbyWa especially their P&L)

Then each S14 would be encouraged to release their non wallaby players to whichever franchise the player wanted - the franchise may bid for a player and the S14 and player take 50:50 - not much money for the S14 franchise but gives them some control over where the player goes.

Could also allow Pacific Islanders and Georgians into the country for the competition period.

The point being each franchaise generates it's own budget, marketing and venue - the ARU (it's comp main sponser) arranges flights, hotels and refs.

Each franchaise could bid on percentage of gate, or something else.