Financial fragility of the game

[adamkungl]

Yep I’m a sad f**k

Didn't need to go further than here

 

[sensesmaybenumbed]

Perth red finds a new reason to complain.

 

[simmo05]

Unfortunately if the comp shuts down, the players shouldn't get paid. Not an easy decision, I would not like to make it, but why should they be different to every other poor merkin who is about to be royally f**ked in the next few months.

 

[simmo05]

Working list of positions that need gone:

1. Head of football
2. Trainers
3. Player agents
4. ...

4. Bunker
5. Wrestling coach

 

[Generalzod]

Didn't need to go further than here

It hits the spot

 

[adamkungl]

Unfortunately if the comp shuts down, the players shouldn't get paid. Not an easy decision, I would not like to make it, but why should they be different to every other poor merkin who is about to be royally f**ked in the next few months.

The NRL is likely trumpeting worst case scenarios so that the unpalatable steps they are forced to take to avoid the worst case go down a bit easier later.
If the competition is forced into shutdown:

First, NRL and clubs will go into coast saving and skeleton crew modes.
Most Non-playing personnel will be asked to take unpaid level or made redundant after their entitlements are used up.
Upper management will take paycuts and any costs that can be cut will be cut.

Second, they will seek to reduce playing contracts payout while keeping them valid for next year. They have mentioned these clauses do exist.
If clauses legally exist to terminate contracts when the game can't be played, clubs would seek to release their fringe players while keeping a core of playing talent onboard so they have a base to rebuild from next year.

Third, they will negotiate with the broadcasters to keep paying through a portion of this year to keep the comp and clubs afloat on skeleton crews so that all can resume next year. Negotiations will naturally come at a price - it could be a reduction on the next deal in return for paying for a reduced competition this year. The next broadcast deal will likely suffer here, future cap increases will be put on hold and club funding may be reduced from the previously agreed 130%.

Some clubs will probably find themselves in significant financial strife due to this disaster. It will interesting to see how the NRL reacts. Pro-expansion though I am, I would not blame them if they decide to save any club that hits strife through no fault of their own. BUT it may turn out that the funds simply aren't there to do so. The comp falling to 14 teams is a distinct possibility.

Government assistance will mean less job losses across the sport. Not for players, but the 1000+ employees under the NRL, NSWRL, QRL, and the first grade, second grade and womens profesional clubs. As well as the thousands of people indirectly employed by the game being on - journalists, physios, stadium staff, etc etc etc.
I would ask anyone criticising the NRL for mentioning government assistance to consider the above. Sport may be considered non-essential (strong disagree, personally) but ultimately the NRL is a business that employs a significant number of Australians directly and indirectly, 95% who are not wealthy footballers, and should be given the same fair considerations as any other.

Also, IF YOU CAN AFFORD IT don't ask for a refund from your club for this years membership. Clubs will do it tough. Lots of people will. If you're fortunate enough to spare the cash, don't increase the strain on your club by asking for money back.

 

[Perth Red]

Yes but they are not asking for same considerations, he is asking for $200-500mill! Show me one company with 1000 employees who is going to have any chance of receiving that sort of bail out package. Flight centre has 20,000 staff, I doubt they are getting bailed out.

Not uncommonly the NRL and clubs have just pssed away all the extra revenue they have earned year on year since 2013. Is the game any bigger and better now than in 2013 after spending close to $2.5billion? Are clubs any more financially secure, better supported or more professionally operated now they spend $25-30million a year compared to spending 1/2 that a few years ago? Like I said before I hope this is a big wake up call to the game and they reign it in and start to seriously develop assets and reserves for rainy days. Football cap operations are capped at $16million. Maybe set an annual expenditure base of $22million for every club as a start point?

 

[bad boy bubby]

So with the likelihoods of Leagues Clubs not being able to support the Football Clubs this year, as much as other years, due to low patronage, isnt it lucky for The Sharks that their development is going to help them a lot due to those circumsatnces.
The building company is giving the Sharks 1.8m (or something like that, maybe more) per year to cover for the loss of revenue.
As long as they dont go bust we'll be sweet.
New target please.

 

[Perth Red]

So with the likelihoods of Leagues Clubs not being able to support the Football Clubs this year, as much as other years, due to low patronage, isnt it lucky for The Sharks that their development is going to help them a lot due to those circumsatnces.
The building company is giving the Sharks 1.8m (or something like that, maybe more) per year to cover for the loss of revenue.
As long as they dont go bust we'll be sweet.
New target please.

I wouldn't be gloating over the other clubs. Its actually $1.95million over two years. Given you just posted a $3.2million loss for last year I wouldn't be so excited! Your memberships are down and you have two major sponsors on your jersey not sold this year. Of all the money you have had from your development you are only actually carrying $4million in cash reserve. Better than some clubs but given how you are travelling financially this on top will eat through that pretty quickly.

 

[bad boy bubby]

I wouldn't be gloating over the other clubs. Its actually $1.95million over two years. Given you just posted a $3.2million loss for last year I wouldn't be so excited! Your memberships are down and you have two major sponsors on your jersey not sold this year. Of all the money you have had from your development you are only actually carrying $4million in cash reserve. Better than some clubs but given how you are travelling financially this on top will eat through that pretty quickly.

Yeah but we're used to running on nothing, others aren't. We definitely will not be the worst off at the end of it all. Other clubs rely a great deal on Leagues Clubs grants and you know this.

 

[Perth Red]

Yeah but we're used to running on nothing, others aren't. We definitely will not be the worst off at the end of it all. Other clubs rely a great deal on Leagues Clubs grants and you know this.

They do, Parra $5mill, Roosters $2mill as examples from last year.
I dont think any club is going to be sitting comfortably at this point in time. Merch, membership and hopefully most of sponsorship should be reasonably ok, gate and match day corporate revenue will be down and the biggie is NRL grant and we just dont know what that will look like yet.
Some clubs have decent assets that in worse case scenario they could use or borrow against to keep the doors open but some others would be sweating pretty hard.

 

[Quicksilver]

Not many businesses can afford not to operate for a year.

In fact it would be viewed as a bad use of capital to have those funds just sitting around.

the government bails things out all the time. They might not get it but they may as well ask.

 

[Hello, I'm The Doctor]

There is certainly an irony when Gould and the others were some of the loudest voices calling for NRL to spend its money on clubs and grassroots in 2013 and lambasting Smith for wanting to set up a $200mill future fund.


Gus Gould has questioned NRL’s bosses after Todd Greenberg and ARLC chairman Peter V’landys said the game would be in dire straights if the NRL season is cancelled due to the coronavirus.
But Gould has blasted the NRL after pointing out the game was supposed to be saving money for a ‘rainy day’.
“When the ARL Commission was first formed in 2012, Commission member Gary Pemberton stressed to all that $50m per year should be banked in a future fund, for a rainy day,” he tweeted.
“By 2020 we should have at least $450m in reserve. It’s now pouring rain. How much is there in the future fund?”
Australian Prime Minister Scott Morrison issued a gloomy response when asked about V’landys’ plea on Monday.

“Obviously the NRL is not high on the list at the moment,” Morrison said.

Already the NRL has dipped into its 'distress fund' to the tune of $6.8 million, allocating $425,000 to each of the 16 clubs to assist with the financial pressure of closing games to fans from round two.

However, this is a meagre sum compared to the losses clubs are faced with from next weekend.

There were also suggestions the NRL could lower the competition's salary cap, effectively cutting the wage of players as part of the collective bargaining agreement with the Rugby League Players Association.

Gould then expanded on the Today show on Monday after claiming the NRL needed to shut down the game and reflect on why the code is so vulnerable.

“The fact that it could cause such financial hardship to our clubs and to our game, I don’t think is an excuse enough to be separated from what the rest of society is doing,” he said.

“It’s going to have them look at the whole financial model and philosophy of the governing body in our code,” he added.

“We’ve got to learn from what we’ve done in the past and ask ourselves why we are so vulnerable as a code right at the moment because we have to close down for a season. It shouldn’t be that way.”

https://au.news.yahoo.com/phil-gould-blasts-nrl-bosses-financial-chaos-warning-051435285.html

F*ck you gus, why werent the CLUBS preparing for a rainy day?? ya dickhead.

F*ck me, im sick of the whinging from the clubs...

Im starting to think that the ARLC should lock their bank account, let the clubs survive or die as they do and rebuild later.

If any of the Sydney warlords fall over, send the license somewhere that can sustain a club.

 

[Quicksilver]

F*ck you gus, why werent the CLUBS preparing for a rainy day?? ya dickhead.

F*ck me, im sick of the whinging from the clubs...

Im starting to think that the ARLC should lock their bank account, let the clubs survive or die as they do and rebuild later.

If any of the Sydney warlords fall over, send the license somewhere that can sustain a club.

Right. Because there’ll be a stack of new frontier locations throwing money at a professional rugby league team in a recession/depression.

Some of you guys live in fairy land.

 

[flippikat]

F*ck you gus, why werent the CLUBS preparing for a rainy day?? ya dickhead.

F*ck me, im sick of the whinging from the clubs...

Im starting to think that the ARLC should lock their bank account, let the clubs survive or die as they do and rebuild later.

If any of the Sydney warlords fall over, send the license somewhere that can sustain a club.

While I wouldn't go as far as the "let 'em burn" sentiment you've been advancing recently, there is the possibility that the revenue squeeze may encourage some long-avoided rationalisation decisions to be made... and as a long believer that Sydney still has a few too many clubs, I think there could be gains out of this pain if weakened clubs think outside the box.

Things like relocation, secondary markets (playing x number of home games somewhere else) or even new joint ventures/mergers. Sure, the NRL have said in the past couple of years that they don't forsee those things happening, but (to quote Lou Reed) "those were different times...".

 

[Perth Red]

Right. Because there’ll be a stack of new frontier locations throwing money at a professional rugby league team in a recession/depression.

Some of you guys live in fairy land.

Well our prospective owner owns Cash Converters and they do very well in a recession

 

[Hello, I'm The Doctor]

On the phone, so it will be a nasty cut

Can anyone post this article please?

https://www.themercury.com.au/subscribe/news/1/?sourceCode=TMWEB_WRE170_a_GGL&dest=https://www.themercury.com.au/sport/manly-chairman-scott-penns-plea-for-federal-government-to-provide-financial-assistance-for-nrl-clubs/news-story/18204f0418810748a973e8e37a0984d7&memtype=anonymous&mode=premium

Manly chairman Scott Penn’s plea for federal government to provide financial assistance for NRL clubs
Manly Sea Eagles chairman Scott Penn has revealed his fears of “all clubs going under” without federal government assistance as all 16 NRL clubs’ financial health is revealed. READ IT HERE.

Dean Ritchie, The Daily Telegraph
Subscriber only
|
March 17, 2020 12:42pm

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Manly chairman and majority shareholder Scott Penn has urged the federal government to bail out financially stricken NRL clubs or face the possibility “all clubs would go under”.

Penn told The Daily Telegraph teams being forced to play in empty stadiums, or having the NRL season cancelled or postponed because of coronavirus, would have dire financial consequences for all clubs.

Penn was adamant the government should help the game for community purposes, declaring: “It’s a passion for so many people. It’s an element of hope every week.”

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Scott Penn knows the pressure clubs are under. Photo: Mark Evans/Getty Images
The Daily Telegraph revealed on Monday that clubs may only survive for eight to 12 weeks if games were cancelled and sponsorship, gate takings, membership and the $14 million weekly broadcast grant to clubs stopped.

“If we can’t play in front of crowds, then there are lines of revenue in our PNL (profit and loss) that we just cannot deliver,” Penn said. “Yet if we have the same cost base, because we have player salaries meeting the cap, we’ve got staff with jobs … it’s an imbalance that can’t be rectified.

“So the reality is if that continued all clubs would go under unless they had significant reserves they could tap into or funding. It’s crucial that we find funding. The league is definitely going to need assistance to continue if we are unable to generate crowds.

Locking out fans or ending the season would be catastrophic. Photo: Brett Costello
“The reality is all clubs survive on a combination of the monthly (broadcast) grant, gate receipts, membership, merchandise and sponsorship. There are really only five or six key lines of revenue and the fact is, they are all contingent on us playing games and putting brands out in the market.

“If that is unable to occur then that would have a dramatic impact – unlike anything that has ever been seen before. It’s unprecedented. These are dramatic times.

“That is what everyone is working on right now as we speak. It’s a weekly update. Are we able to play? Are we able to give members and sponsors value for money? We would have to give pro rata refunds to members if they are unable to attend games. That would have a significant impact on every club.”

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The game is dependent on the fans. Photo: Jane Dempster
Manly are one of the less wealthy clubs with limited resources and a modest budget.

Penn believes the game must continue being played to soothe a worried and concerned community.

“Having the benefit of being in a market where all professional sports have been currently suspended, it’s actually not good, I don’t think, for the population to not have sport,” Penn said.

“Certainly in Australia where sport is the absolute fabric of our culture. It’s what we talk about at the pub, many people participate in tipping competitions, fantasy league. To not have it would be a disaster.


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“I would implore the government to find some form of an assistance package because it actually has community benefit as long as the players’ health and safety aren’t at risk.

“There are tough times for a multitude of companies but we aren’t just another business – we do provide a level of weekly interest and hope that not many other companies do. It’s a passion for so many people.

“It’s an element of hope every week and it’s fun. I can watch my team – to not have that and focus on the catastrophic headlines isn’t what anyone wants.”

Penn said he was “impressed” with the leadership of ARL Commission chairman, Peter V’landys.

“He and the League are keeping communication high and are getting on the front foot, which we have to,” Penn said. “We are all in the same situation and we have to work together to find a solution.”

 

[Hello, I'm The Doctor]

Cont.

Wests Tigers are in a decent position for now. Photo: Brett Hemmings/Getty Images
NRL CLUBS’ FINANCES

TIGERS: Don’t carry any debt but the club would be severely impacted by the season being postponed. Wests Ashfield Leagues Club has a healthy net asset balance of $60 million but it too is feeling the impact of the coronavirus. Any consideration given to using the assets of Wests Ashfield to ensure the survival of the Tigers would be a last resort.

RAIDERS: Owned by the powerful Queanbeyan Leagues Club that runs six licenced clubs with a new $20 million asset in the recently opened high performance facility. But it is important to note that the Raiders are run separately and would be in a world of hurt within two to three months without the broadcast money.

BULLDOGS: Are the controlling entity of the Canterbury Leagues Club with a conservative worth of well over $200 million that also consists of six houses and blocks of land. Like all NRL clubs rely heavily on the broadcasting cash for the day-to-day running of the football club. Still, would be in a pretty solid position if things get ugly in the coming months.

Does Cronulla have a plan B? Photo: AAP Image/Dean Lewins
SHARKS: According to their annual report, the Sharks have $16 million in the bank as a result of $25 million in property sales from their Woolooware development site. Loans have been reduced from $4 million to $500,000. They also own their own home ground, the leagues club and Kareela golf club. However income will be affected over the next two years while the Leagues club is closed and the team is playing out of Kogarah.

WARRIORS: Owned by Autex Industries, a New Zealand-based manufacturing and product development company specialising in textiles and advanced fibre technology that has a staff of around 500 employees.

The Warriors are in an even more precarious situation than the rest at this point given the travel restrictions in place between Australia and New Zealand. If the Warriors players decide they won’t continue after round two expect this situation to become very tense if the owners were to miss out on their share of the broadcast revenue.

The Knights are confident about their future. Photo: Ashley Feder/Getty Images
KNIGHTS: Knights CEO Phil Gardner has declared the club financially “secure”, even if the NRL season is temporarily halted because of coronavirus. “The Knights are in the fortunate position of being one of the most financially stable clubs in the NRL,” Gardner said of his franchise, which is owned by The Wests Group.

DRAGONS: The Dragons are solid financially thanks to being partially privatised by WIN Corporation, whose owner Bruce Gordon boasts a listed net worth of $702 million. WIN owns a 50 per cent stake in the joint-venture club, with the other half owned by St George District Rugby League Club.

EELS: While the Eels boast financial backing from Parramatta Leagues Club, it has been publicly reported that the footy club lost $10 million in 2017 and then $4 million the following year.

Contrary to some media reports, the Eels have not yet spoken definitively about the impact of any potential pay cuts as they still await further information from the RLPA and NRL.

SEA EAGLES: Live hand to mouth, according to majority shareholder Scott Penn. There simply isn’t a cash reserve to cover financial hardship. Each year the shareholders, primarily the Penn family, inject around $1 million to balance the books. The club dealt with an outstanding $2m tax bill last year. Have a modest budget and battle through financially every year. Rejected an offer for the club last year said to be worth $18m.

PANTHERS: Panthers Group owns five licenced clubs so have stable financial support. The club lost nearly $6 million in 2018 but did spend $2.5 million on junior league. Last year, Panthers recorded a $2 million profit from membership and ticket sales. Would survive longer than most other Sydney clubs suffering financial hardship.

RABBITOHS: As safe as any club is at present. Have the financial clout of Russell Crowe and James Packer behind them. The Rabbitohs have been prudent in recent years resulting in a $4m cash reserve. Most of that money has come through the club’s 29,000 members. Crowe and Packer own 37.5 per cent of the club, the remaining 25 per cent owned by South Sydney Members Rugby League Football Club.

STORM: Backed by the strong ownership group of Gerry Ryan, Bart Campbell and Matthew Tripp, Melbourne was recently independently valued in excess of $30 million after the Storm’s owners agreed to allow prominent Victorian businessman Brett Ralph on board. Storm boss Dave Donaghy has called for a measured approach to the coronavirus situation.

“It’s unprecedented times. It’s going to require everyone pulling in the same direction with cool and calm heads,“ said Storm boss Dave Donaghy said.


ROOSTERS: The Eastern Suburbs Leagues Club, which pays the football club an annual grant, recorded a very healthy net asset position of almost $129 million for the year ending October, 2019. On top of a financially successful leagues club, the Roosters have the backing of Nick Politis, who made a fortune selling cars.

BRONCOS: The powerhouse Queensland club reportedly has around $15 million in the bank and could survive for several months if the NRL is postponed. The Broncos reported a $3 million profit in 2019, well ahead of their NRL rivals.

COWBOYS: The club has been pretty profitable in the past two years but could be affected if the NRL season is postponed.

TITANS: The privately-owned Titans will be affected if the season is postponed. Owners Darryl Kelly and Rebecca Frizelle will likely have to top up their own cash to keep the club going.

 

[Hello, I'm The Doctor]

Im just reading Gus’s tweets. He is such a moron...

Forgetting that he was the leader of the band telling HQ to just hand the money to the clubs, he clearly has no idea how investments work.

Sure, the ARLC could have put $450mil away, but that wouldnt just be sitting in the bank, they would have bought assets that produce dividends. Do you really think those assets are currently worth anything near what they were a year ago? The market is crashing, those assets could be worth half if they sell now or any time soon

 

[Wily Ole Dog]

Where the money went

2019 (in brackets for comparison of spend increase is first year of when NRL started to get decent revenue from TV in 2013)

NRL Revenue $528,491,000 ($303,375,000)

Expenditure
Event, game and sponsorship (cost of putting on the big events etc) $103mill ($44.4mill)
Football (cost of running the comp) $25mill ($9.5mill)
Community and player welfare $17mill ($14.4mill)
Integrity Unit $3.3mill ($2.2mill)
Admin $20.3mill ($15.5mill)
Insurance and finance $12.7mill ($2.3mill)

Clubs $228.1mill ($132.2mill)
States $$47.9mill ($16.3mill)
Development $40.4mill ($20.7mill)

Surplus $30.1mill (surplus $45.3mill)

3.3 mill to the integrity unit....fmd