‘We’re always negotiating’: The NRL approach to media deal-making
Edmund Tadros and
Mark Di Stefano
Oct 2, 2022 – 3.51pm
The NRL will be forced to offer an enhanced product if it wants more money from pay-TV broadcast partner Foxtel, with National Rugby League chairman Peter V’landys confirming that the record-breaking AFL deal would not translate to any upward revision to the current rugby league deal.
Senior sources at News Corp and Foxtel have confirmed that no additional payments will be made to the NRL under the existing contract, which is set to run until 2027. The AFL’s new deal runs from 2025 to 2031.
Mr V’landys said the NRL was working to make the league’s product more valuable to rights holders. He is confident the code will be able to take advantage of the new financial benchmarks set by the AFL’s media deal when the next formal round of NRL rights negotiations begins.
Mr V’landys also denied the NRL sought tens of millions in extra payments from broadcast partner Foxtel to bring its existing rights deal closer in value to the one recently inked by the AFL.
Panthers’ Nathan Cleary attends the 2022 NRL grand final media conference. Cameron Spencer/Getty Images
“That’s a misunderstanding because we never asked for a retrospective payment. As I said, we have other things [we are developing] that I cannot discuss,” Mr V’landys said before Sunday’s
NRL grand final between the Paramatta Eels and the Penrith Panthers.
Peter V’landys thinks the NRL will be well placed when the next formal round of media rights negotiations begins. Kate Geraghty
A report in the
Sydney Morning Herald from mid-September claimed that some NRL clubs were under the impression the code would seek “tens of millions of dollars in compensation” from Foxtel after details of the new higher-value AFL deal were announced.
Estimates from multiple media reports about the difference in the cash value of the deal, that is income that can be distributed to clubs, begin at $100 million a year and go upwards. The rights deals between the codes only cross over between 2025 and 2027.
Mr V’landys said that media rights deals were always being varied, but confirmed the NRL would not seek specific compensation because of the AFL deal.
“Rights are pretty well dynamic. Even though you’re in a five-year term, there’s variations that can happen, which has already happened with some of our content,” he said.
“We introduced a 17th team, for example, which increased our media rights from some of the broadcasters. So even though it’s a five-year term, there’s things that will happen in that five-year term that will also affect the media rights.
“So basically, we’re never out of negotiations. You’re negotiating at all times and we’re negotiating many things now. This thing about the AFL and all their media rights from ’27 isn’t quite accurate, because it’s a dynamic situation so no one will know what the difference between us and [the AFL in] ’27 will be because they’re not finalised.”
In October 2021, the NRL announced it would expand its competition with a 17th team, the Brisbane-based Dolphins. The extra team increased the value of the code’s media deal by a reported $100 million. It is this kind of value-adding enhancement that Mr V’landys is focused on pursuing.
Nine Entertainment, the publisher of
The Australian Financial Review, signed a
$650 million, five-year deal with the NRL in December.
The AFL, Seven, Nine, News Corp and Foxtel would not comment on their deals.
The deal struck by the
AFL’s departing CEO, Gillon McLachlan, between the game, Foxtel, Telstra and Channel Seven last month continues to be the centre of attention in sporting and media circles.
Mr McLachlan and the AFL were able to get a significant increase in payments from the media companies by having multiple bidders in a dramatic final auction for the rights.
AFL CEO Gillon McLachlan negotiated a record deal for the league’s media rights. Justin McManus
That AFL deal – the biggest in Australian sporting history – has heaped pressure on the NRL. It has raised questions about the decision from Mr V’landys to extend its broadcast partnerships with Channel Nine and Foxtel during the COVID pandemic without putting them out to a competitive tender process.
Tries vs goals
The deals between the two codes and their respective media partners are difficult to compare.
In December,
the NRL reported inking a record-breaking five-year media rights deal, from 2023 to 2027, with Nine, Fox Sports and Sky TV New Zealand that would be worth $2 billion, or $400 million a year.
Last month, the
AFL responded by revealing its own record-breaking deal. The AFL said the seven-year deal, from 2025-2031, with Seven, Foxtel and Telstra was worth $4.5 billion, or $643 million a year.
NRL officials are convinced the AFL deal includes a large amount of contra, or non-cash benefits, such as free TV advertising. The
Herald has also reported that the new AFL deal includes money from Telstra for the AFL-owned Marvel Stadium.
The NRL typically does not share as many details about its deals, but a senior insider said its announcements typically focused on the cash components of the deal.
Mr V’landys said the “figures are hard to reconcile because there’s a lot of contra. So we don’t know what the cash element is [in the AFL deal] so it’s hard to compare.”
The chairman said he was taking a long-term view of the rights negotiation and clearly believed that the noise around the AFL deal would quieten down once the NRL began negotiation for its 2028 and onwards media rights.
“What I’m basically saying now is we’ve got these things coming up that will change the landscape. But at the moment, unfortunately, we can’t say or do anything and just have to cop the promotion of how much the AFL have got,” Mr V’landys said.
“And in saying that, look, I congratulate the AFL in getting what they got, but we’re not finalised. So they can’t compare us at the moment until we actually finalise [our next deal].
“You’ve got to remember also, [the AFL deal goes] to 2031. So there’s also that period, with some people telling us that we will get more than the AFL when we’re in that [future] period.”
Mr V’landys is also keenly aware of the need to make a deal that provides value to the league and its media partners.
“Our mantra is everyone has to be viable, and we want to make the broadcasters viable,” he said.
“So the one thing that nobody’s understanding here is the AFL is saying all these amounts, but what if something happens, and they don’t get them? Like if the businesses become unviable?
“So what our mantra is, yes, we want to maximise our rights fees and get more than what the AFL have got. But at the same time, we want to make sure that the business model is sustainable. Otherwise, all sports will suffer.”
Edmund Tadros owns shares in Nine Entertainment and News Corp.
Edmund Tadros reports about the media and marketing sector. He previously led our coverage of the professional services sector. He is based in our Sydney newsroom. Connect with Edmund on
Twitter. Email Edmund at
edmundtadros@afr.com.au
Mark Di Stefano is the media and tech correspondent at The Australian Financial Review. Connect with Mark on
Twitter. Email Mark at
mark.distefano@afr.com
https://www.afr.com/companies/media...approach-to-media-deal-making-20220929-p5bm2s
The very last line by V'Landys
“So what our mantra is, yes, we want to maximise our rights fees and get more than what the AFL have got. But at the same time, we want to make sure that the business model is sustainable. Otherwise, all sports will suffer.” is what concerns me. I have a horrible feeling that he is concerned that the other sport(s) he is worried about is Racing NSW. If V'Landys is afraid to either do a great deal for the next rights deal or even leave Fox because it may impact on Racing NSW then he has a conflict of interest and must be removed before any future negotiations are done on the next deal.
It also makes me wonder if this concern for Racing NSW was why V'Landys thought it was a good idea to negotiate the last deal during the pandemic and without an open tender process like the AFL just did? Again a conflict of interest and grounds for immediate removal from the ARLC if true. At the minimum the clubs and states should be giving V'Landys an ultimatum. It's full time or nothing with the ARLC and he steps down from Racing NSW as the last deal disaster shows that a part time chairman just isn't working and also removes the suspicion of a conflict of interest.