Arbitration hearing - Western Force v ARU - 31.07.2017

[chibi]

You know, I've been harping on about WA fancifully playing in another comp, like the Currie Cup or Japan Top-League. With Stokes on board, I wonder if we could get our away games on free-to-air? Be a good way for TVW7 to re-establish itself as"WA's Channel" like it was back in the 80s and 90s. Ha! Get old Dennis Cometti out of retirement to commentate!

(Thinking out loud in a hypothetical manner)

[blueandblack]

I thought Pulver had said that he would resign once a replacement had been found.

so there hasn't been an announcement of a new CEO - he is still in the job, for the moment.

I hear Steve Bannon is just about out of a job at the White House. He's a "tear it down and start again" kind of guy. Maybe he could be CEO.

[Tonkar]

Donald trump looks to be impeached maybe he wants a new start in life and a new sport to play with

[Alison]

Donald trump looks to be impeached maybe he wants a new start in life and a new sport to play with

Ha! There is nothing I would not do to save my beloved Force, except allow that bigoted piece of rubbish anywhere near them!!

[jargan83]

Donald trump looks to be impeached maybe he wants a new start in life and a new sport to play with

Will never happen with a Republican Congress and a Republican Senate.

Anyhoo very much off track!

[lou]

Just out of interest, does anyone know what school the arbitrator went to?

[blueandblack]

http://whrl.pl/ReYxw6

"Well it took multiple Google searches and reading of various online sources but I wanted to get as much "facts" as possible to take the raw emotion out of this topic. I was considering writing this as my first article for GAGR but still not sure how to do it so sharing it with my rugby buddies here first.

I've collated a timeline of events and developments from published online reports, leading up to the ARU's announcement last Friday that the Western Force would be cut from Super rugby.

Initially this was to satisfy my own curiosity and question about how did this come to pass? and so quickly? I've drawn my own conclusions after conducting my research, you're free to do the same.

On October 3, 2013 the Western Force announced the loss of their multi-million dollar sponsorship with Emirates. Emirates had been the club’s major sponsor since their inception. In 2012 the Western Force had posted a loss of $271,000 after recording a $402,000 profit in the 2011 season. The deficit was largely contributed to by the club’s coach and player recruitment as well as the upgrading of their rugby program.

In September 2015 SANZAR announce their proposed new expansion and competition format for the 2016 season.

Expansion was forced by some extent by the SA government’s demand for the Southern Kings inclusion in Super rugby and SARU’s refusal to cut one of their five existing teams as well as the lobbying by Augustin Pichot for the Jaguares to be included in Super rugby. The decision to expand into Japan was financial as well as politically strategic with their upcoming hosting of the 2019 Rugby World Cup.

On December 15, 2015 ARU CEO Bill Pulver proudly announced the ARU would receive a record revenue boost of $285 Million over 5 years, from the new SANZAR broadcasting agreement. A 148% increase on revenue from the previous deal.

Pulver also pledged a payment of $10Million per annum to Australia’s Super rugby clubs, but none of that could be spent on player payments.

For the first time in several years, the ARU were in rude financial health.

In February 2016, the ARU acquired the intellectual property rights of the Western Force for $800,000 to assist them financially, which included their Super rugby license. The ARU already owned the IP rights of the Melbourne Rebels as part of their private ownership deal with the Imperium Group. Force CEO Mark Sinderberry at the time denied it was a financial bailout saying the deal may be a temporary measure “because we have the option to buy back at any time"

In April 28, 2016, the halfway point in the Super competition, concerns were raised by SANZAAR as some TV markets were flat and some in decline – but worryingly none were growing and TV ratings for the new competition were down.

On May 18 in a wide ranging interview, SANZAAR CEO Andy Marinos stated that they would engage with a yet-to-be-announced consulting company to map out its strategic vision for the next ten years. A major part of that process will involve a critical look at conference style structures and that everything from expansion into new territories to a reduction of teams in some countries are all options on the table.

On June 3, the ARU and Western Force signed an alliance agreement handing over control of the running of the club to the ARU.

The Western Force applied to the ARU for a loan as they had recorded operating losses for the past five years. In record time (a week) the ARU responded that they would help but instead of lending the money for it to be repaid, the ARU sold them the idea that the Western Force would instead become their endorsement and advertisement for their centralisation campaign by purchasing their intellectual property and relocating administration to Sydney.

The players and professional club staff would all be paid employees of the ARU. The rugbyWA board would continue to be responsible for the local community game and the pathway to professional rugby through its “Future Force” program. The Western Force rugby program would be integrated into the High Performance Unit at the ARU.

RugbyWA would still need to repay the outstanding debt of $1.1 Million of a $2.4 Million interest free loan from the state government to help develop NIB stadium.

Aside from the financial support the ARU would also assist the Western Force by identifying players from other states for recruitment, encouraging returning players to Australia to relocate in WA and provide greater access to junior players in the national U20 program.

As a final sweetener to the arrangement the alliance agreement guaranteed the Western Force’s location in Perth and participation in Super rugby until the end of the current broadcasting agreement in 2020.

The ARU signed the agreement after performing their due diligence on the Western Force accounts and having full disclosure of their financial position – risks, liabilities, assets and lifted their $3 Million debt.

Note that date again – June 3, 2016.

On August 26, 2016 CEO Bill Pulver admitted he was not sure how many Australian Super rugby teams would exist beyond next season. SANZAAR had engaged management consulting firm Accenture to conduct an independent strategic review of the structure of the Super rugby competition.

Pulver confirmed that a 16 team model had already been discussed by the ARU board but conceded he wasn’t sure if there was any proposed structure the ARU would rule out. With all the speculation there was considerable uncertainty about the ARU’s preferred model for Super rugby.

It spoke volumes, if not widely appreciated that Pulver refused to offer any assurances that Australia would not lose a team. SMH rugby correspondent Georgina Robinson reported at the time that "the ARU’s prevarication raised the possibility it would be prepared to accept a recommendation of a reduced Australian presence in a future competition structure if SANZAAR guaranteed no financial disadvantage."

On September 13, 2016 SANZAAR conducted an EXCO (executive committee) meeting and season review in Sydney hosting over 80 stakeholder representatives. SANZAAR and Accenture also provided a progress report to its partners on its strategic review, presenting a workshop on outcomes of various discussions held with each set of stakeholders. The final report was planned to be presented at the end of the year.

While there was speculation around changing the competition format and reducing the number of teams, SANZAAR CEO Andy Marinos stated then that any structural changes wouldn’t happen until 2018.

The NZRU also lobbied SANZAAR unsuccessfully to make changes to the finals format for the 2017 season. The NZRU wanted a straight top eight finalists but SARU and the ARU believed that four NZ teams contesting the 2016 finals was just an aberration and it was unlikely NZ would ever have four teams in the finals again.

Super Rugby’s expansion had caused much confusion and frustration for fans and South Africa were particularly concerned after being divided in two conferences. The Australian’s rugby correspondent Brett Harris reported at the time that sources close to SANZAAR told him South Africa would prefer to revert to a 15 team competition without Argentina, Japan and even one of their own franchises. Brett Harris also understood that the ARU were open to the idea of a reduction in the number of their teams but didn’t yet have a firm position.

On January 18, 2017 Andy Marinos answered questions about changes to Super rugby structure that the strategic review was still ongoing.

In an interview on February 13 ARU chairman Cameron Clyne wouldn’t reveal specific details but stated that the board had discussed and settled on ‘multiple options’ for the competition format in 2018.

Clyne couldn’t guarantee a decision would be made at the SANZAAR meeting in London, on March 9-10 but conceded, “We've agreed on what we think our preferences are and what's best for Australian rugby and we'll just wait until we've had a chance to talk to our SANZAAR partners about those options”

It’s understood that those options include cutting one Australian team as well as retaining all five teams.

At the SANZAAR meeting in March reports emerged the NZRU had argued strongly for a reduction to a 15 team competition.

While South Africa and Australian both had the power of veto to reject the NZRU’s proposal, both chose not to.

We know what happened next more clearly but after piecing this together there's enough to suggest that the ARU were already working to an agenda when they agreed to assist the Force last year.

Speculation is growing that the Western Force had unknowingly played into the ARU’s hands by accepting their offer of buying their IP and signing over control of the club. When you follow the timeline of events and developments it’s no coincidence that the only two clubs on the chopping block were the only two who had signed over their IP to the ARU.

Nor is it a coincidence that the Force were firmly in the ARU’s sights ahead of the Rebels.

The financial reasons offered by Pulver and Clyne explaining their decision to cull the Force don’t add up.

The ARU could have agreed to a standard loan transaction with the Force when they asked, but instead they wanted to take over ownership – why?

The ARU willingly took on the Force’s $3 Million debt after signing their alliance agreement and yet use it as an example of their fiscal mismanagement against them and why they have to go.

What happened to the $10 Million annual pledge for each Australian Super club Bill?

Did the ARU ever receive an offer from the Force to buy back their IP following the SANZAAR meeting in March?

SANZAAR may have provided the bullets but the ARU had already decided long ago who their sacrificial lamb would be if they had to pull the trigger.

The Force had no chance.

Here's an executive summary of the significant events.

December 15, 2015 – Record revenue deal announced by the ARU.

February 17, 2016 – ARU acquires the intellectual property rights of the Western Force.

June 3, 2016 – ARU signs alliance agreement with the Western Force providing them financial stability and taking ownership of the club.

August 2016 – Accenture engaged to conduct strategic review of Super rugby competition and map out 10 year strategic plan.

September 2016 – Accenture provide progress report

February 2017 – Accenture’s recommendations revealed which includes a change of structure and a reduction in the number of teams

March 2017 – SANZAAR meeting discusses recommendations but no decision announced.

April 2017 – SANZAAR announces that only four South African and Australian teams will be competing in the 2018 competition, but not who.

August 2017 – ARU wins arbitration hearing and announces the Western Force will be cut."


summarised as "the Force had no chance. ARU had their number from the start."

[valzc]

WOW - looks even more damning when the timeline is listed like that! Of special interest is:
Force CEO Mark Sinderberry at the time denied it was a financial bailout saying the deal may be a temporary measure “because we have the option to buy back at any time"
When Twiggy offered to buy back the licence - how could the ARU be allowed to refuse?

Pulver also pledged a payment of $10Million per annum to Australia’s Super rugby clubs, but none of that could be spent on player payments.
Did the Force not receive the $10mill as promised? - that could have helped wipe the debt.

The ARU willingly took on the Force’s $3 Million debt after signing their alliance agreement and yet use it as an example of their fiscal mismanagement against them and why they have to go.

What happened to the $10 Million annual pledge for each Australian Super club Bill?
The ARU have been completely 2 faced in taking over the debt & then using it against the Force.

[valzc]

I'll say again - what does it take to get an official inquiry/commission to examine these crooks?

[shasta]

B&B; with Kerry Stokes now on board OTF do you think maybe you signature needs a little editing?

[Massimo]

I'll say again - what does it take to get an official inquiry/commission to examine these crooks?

There is so much evidence that suggests the ARU did not act in good faith, that we only need to hope our legal team is smart enough to piece it all together and win the SC case and then sue the crooks for damages! Up yours ARU!

[jono]

Yeah this person should paste it on GAGR.

[shasta]

B&B; with Kerry Stokes now on board OTF do you think maybe you signature needs a little editing?

I wonder what "The Smoking Gun" referred to on the Neddies website is referring to. Hopefully proof that the ARU knew about the cull when they rushed to Rugby WA's aid just over a year ago and therefore did not act "In Good Faith"

Under common law, good faith requires parties to an agreement to exercise their powers reasonably and not arbitrarily or for some irrelevant purpose. Certain conduct may lack good faith if one party acts dishonestly, or fails to have regard to the legitimate interests of the other party.

Australian courts have found business dealings to be not in good faith when they involve one party acting for some ulterior motive, or in a way that undermines or denies the other party the benefits of a contract.

The Code outlines certain matters that a court may consider when determining whether a party has acted in good faith. These matters are whether the party:

acted honestly and not arbitrarily
cooperated to achieve the purposes of the agreement.
A court can also take into account other matters it considers relevant.

[sack & crac]

Yeah i got that, i just had lots of words in my brain trying to escape ....

The other part that makes no sense is the grassroots investment argument from the ARU. For $6.9 million a year, in WA we have 15000 juniors exposed to pathway from club to the Wallabies. This has now been ripped apart so the ARU can save $6.7 million, we keep the $200 000 a year grassroots funding. The ARU will reinvest $6 million into Qld and NSW. The net increase in rugby players from both those states will not increase by 15 000. The best the ARU can hope for is about 1000 new juniors per state. So to increase their grassroots numbers by 2 or 3000, they are simultaneously cutting off 15000, for a net reduction of 10 - 12000 juniors exposed to the pathways.

To "save" grassroots, the ARU wants to reduce the number of juniors exposed to the pathways. Get your head around that. Really, we know grassroots means that the Shute Shield clubs will get extra money just to poach players from each other.

You're not suggesting there are 15000 junior players in Western Australia are you? WA is around 3500 juniors. Is 15000 all of Australia?

[G_Beard]

If the competition agreement has changed so much more (as per ARU) so that the Force could be cut - and not just a minor variation (as per RugbyWA).

How much does this affect all sponsorship agreements per all teams throughout Australia and does this then give all the sponsors of all the teams the option of seeking a new agreement, withdrawal or reduction based on the ARUs insistence that it has enough to render all previous agreements no longer valid.

It terms of money "saved" - could amount to millions more lost.