ARU to open Super rugby to private investment

[KenyaQuin]

ARU to open Super rugby to private investment
ARU to open Super rugby to private investment The Roar - Your Sports Opinion

Australian Rugby Union announced today that they will explore the potential for private investment in domestic Super Rugby teams.

The report from the ARU, where they announced a number of major strategic initiatives is provided below. The initiatives include supporting a dramatic transformation of Super Rugby and additional competition opportunities for Australian teams.

The ARU is also determined to tackle development challenges facing the code, with participation figures falling last year for the first time in a decade.

An injection of capital from the private sector at Super Rugby level – under tightly controlled conditions – is viewed as an essential next step in the game’s evolution.

The ARU “Strategic Imperatives”, endorsed by the Board on March 26, were detailed at the Annual General Meeting where a loss of $8.4 million was reported for the year ending 31 December 2007.

A reduced Tri-Nations series and a match program not as strong as the previous year contributed to a $4.8m downturn in gate takings, corporate hospitality and licensing.

Net broadcasting revenue was also down by $2.5m on 2006 due to a contracted schedule forced by the 2007 Rugby World Cup.

The major increase in expenditure was $5.5 million on the Australian Rugby Championships.

ARU chairman Peter McGrath said the Board was now committed to looking forward and growing the game at all levels.

“If we want Rugby to have a greater footprint in Australia, if we want to have a stronger competitive position against the other major football codes, then we need to advance,” he said.

“We need to push for an expansion of Super Rugby and explore the introduction of private equity, which has not previously been permissible under ARU policy.

“Private equity is not a dirty word. When managed correctly, it has been a major contributor to the success of various sports around the world.

“We are now a mature professional sport. It is time to look at embracing it.”

ARU Managing Director and CEO John O’Neill said the strategies to improve Australian Rugby’s standing both nationally and internationally had been extensively researched and discussed – starting with an internal three-day planning conference in January.

“Doing a bit better than we are at present is not enough,” he said.

“We have to do more than tinker. The challenges we face as a game have been outlined previously and with Rugby in a position to control its own destiny, doing nothing is not an option.

“We need transformation at the professional level, and that can be achieved through the injection of capital from alternative sources that have an affinity and affection for the game.

“Private equity, however, will need to be tightly controlled and controlled nationally to ensure enduring benefit for the code while also recognising the interests of equity partners.

“The ARU Board has unanimously endorsed these principles. ARU will now set up collaborative working parties with key stakeholders within the game to progress the process.

“There will be clarity as we move forward about the rules and the potential opportunities for Australian Rugby and its partners.

“ARU also has a Management working party considering possibilities for future competitions.

“Clearly, any changes to Super 14 require the agreement of our SANZAR partners and inevitably they will have their own ideas for change.

“We look forward to sharing an exchange of views.”

Mr O’Neill said an introduction of private equity, and the ensuing boost to the Australian Rugby economy, would assist all levels of the game not only the professional arm.

“We view this as an exciting opportunity for Rugby,” he said.

“Meaningful gains in youth participation and development right across Community Rugby can be achieved if the game overall has a broader financial base.”

[Thequeerone]

Heavy on sentiment - short on detail - people putting monies in will want dividends - in money

[tragic]

Let's take a wild assumption that this is mainly for the benefit of NSW rugby. How good does NSW rugby look as an investment? A big company wouldn't put its money there unless it could take some control, not be controlled by an administration which has not performed.

[NTT]

as long as its for the good of the game. if private equity was to be introduced, the investors are going to want to see a return obviously but also a greater say in how the franchises operate and this is where im concerned. if the investors aren't seeing a monetary return what happens then? does their return mean that money is stripped from the franchises support of club rugby, do behind the scenes peopl start losing their jobs, is money stripped from player payments, support programs and services? what if the franchise gets to the point of being put up for sale and no-ones interested in buying? who steps in then? on the plus side, private equity could help with a new stadium

[NTT]

or have i misunderstood the concept

[TOCC]

as long as its for the good of the game. if private equity was to be introduced, the investors are going to want to see a return obviously but also a greater say in how the franchises operate and this is where im concerned. if the investors aren't seeing a monetary return what happens then? does their return mean that money is stripped from the franchises support of club rugby, do behind the scenes peopl start losing their jobs, is money stripped from player payments, support programs and services? what if the franchise gets to the point of being put up for sale and no-ones interested in buying? who steps in then? on the plus side, private equity could help with a new stadium

private equity has worked with sporting franchises all over the world, there are cases where it has being a bad move especially if the owner suffers financially(just look at the Brisbane Bullets in the NBL).

Yet, on the other hand, there have being many cases where it has being a massive success, in one extreme case, look at Chelsea in the English Premier League, Roman has injects hundreds of millions into the club to boost its premiership chances.

I doubt money will be stripped from club rugby considering that is controlled by the state unions, if the S14 teams are sold the state unions will still retain control of club rugby.

I think if this does happen, it should be in the mould that only 51% of the team can be sold, with the respective unions retaining a 49% stake in the team. This way they will still have decent amount of control whilst not having to burden the financial costs of the team.

[James]

I don't know what to think about this. But I am concerned that too much money being pumped in too quickly will make a mess of everything.

[waratahjesus]

the way i see it is there is already a heap of private investment going on, i dont know if the companys that topped up gits contract get a good look in on game day, but vodafone here in sydney, (while they are sleeve sponsers) top up lotes contract and get more signage and support than hsbc.

it just takes it out of the back rooms and into the open if you ask me.

[gustafsl]

Heavy on sentiment - short on detail - people putting monies in will want dividends - in money

Not necessarily. Around the world a lot of professional teams are owned by billionaires who just want to own a sports team. A lot of them can write off any loss against one of their other businesses. For a lot of the people that might buy the teams a loss of 5 or 10 million isn't even that much money.

[shasta]

it just takes it out of the back rooms and into the open if you ask me.

There's a massive difference between sponsorship and ownership. Don't kid yourself there's not.

[James]

the way i see it is there is already a heap of private investment going on, i dont know if the companys that topped up gits contract get a good look in on game day, but vodafone here in sydney, (while they are sleeve sponsers) top up lotes contract and get more signage and support than hsbc.

it just takes it out of the back rooms and into the open if you ask me.

Yeah but if its suddenly all out in the open and there are less strings whats to prevent everyone just throwing money at players left, right and centre? Then all you are left with is a bunch of overpaid players and none of the money goes anywhere useful. If they do privatise things they definitely need a salary cap.

[waratahjesus]

a salary cap wouldnt work, we would lose to many players to europe.
i know there is a difference between sponsorship and ownership, im just saying i think there is alot of ownership at the moment, its just in a backroom, with the nsw board saying you pay these players and we will sort you out. its not clear sponsorship, the sponsor owns the player if that makes sense!

private ownership is fine as long as there is rules in place to prevent teams from moving or being rename/rebranded!

[shasta]

Not necessarily. Around the world a lot of professional teams are owned by billionaires who just want to own a sports team. A lot of them can write off any loss against one of their other businesses. For a lot of the people that might buy the teams a loss of 5 or 10 million isn't even that much money.

That's fine if you can attract those type of owners who want a rugby franchise. But how many of those are there in Australia or NZ?. Russell Crowe and Peter Holmes a'Court are doing similar things at South Sydney. They have said they don't want a return on their investment and will sell the club back to the members for a dollar when the time is right. After years of pouring money in and having to watch incompetent boards squandering it, they asked to be able to turn things around for Souths but demanded control of how their cash injections were spent.

The big question is, what happens if things go pear shaped? The owners still have control and can do as they please, that's what. I'm not completely opposed, just wary of selling controlling interest.

[BLR]

Yet, on the other hand, there have being many cases where it has being a massive success, in one extreme case, look at Chelsea in the English Premier League, Roman has injects hundreds of millions into the club to boost its premiership chances.

Chelsea are not the best example, they may have plenty of cash but no soul anymore...one thing we need to protect in our game...I'd rather have a bad team with true supporters then a brilliant team with a bunch of bandwagoners...

[James]

I agree BLR. I also don't want a team of which less than 90-95% qualifies for the Wallabies. One or two marquee players in a team is all well and good but there is no point in having a team in Perth if we can't start pumping out star players a few years down the line.