$90m NRL sponsor in jeopardy

[nqboy]

LINK

Exclusive by Rebecca Wilson (Does this mean it has no cred?)
May 04, 2007 12:00


THE $90 million Telstra sponsorship of the NRL is in jeopardy with revelations the telco has failed to make a weeks-overdue payment believed to worth $5 million.

The naming rights contract, signed by both parties last month, stipulates that Telstra must make regular payments in instalments to the NRL. The NRL relies on the major sponsorship money to pay the costs of the day-to-day running of the game. The Daily Telegraph has learned the NRL will commence immediate legal proceedings against Telstra.

Telstra, the NRL and part owner News Limited were in court recently in a fight over internet and mobile phone rights. The NRL has continued to use Telstra in all of its advertising of the compeition, despite the company's refusal to pay.

It will be a logistical nightmare for the game if the sponsorship deal collapses. The company's logo is featured on all NRL merchandise, including footballs, jerseys and ground signage.

A statement released just after 5pm stated the National Rugby League had today initiated proceedings in the Commercial Division of the Supreme Court against Telstra. It said the application was for payment of substantial monies overdue for payment to the NRL under the terms of its current sponsorship and new media rights agreement. These payments were currently being withheld, the NRL said. The action does not affect the NRL's decision to support Telstra as an applicant in its proceedings against News Digital Media and Fox Sports regarding the online use of NRL footage.

"Telstra's case is against News Digital Media and Fox Sports," NRL Chief Executive David Gallop said. "Not only is there no action against the NRL, but we are supporting Telstra. Indeed we have previously had assurances from Telstra that the case against News Digital Media and Fox Sports would not impinge on our current agreement."

"All our new media rights agreements with Telstra have been negotiated subject to fair dealing provisions and both ourselves and Telstra are well aware of the effect of those provisions. here can be no reason to withhold payments to the NRL. Telstra's decision to withhold payment is highly disappointing and quite unreasonable; it is without any basis at law or otherwise."

 

[East Coast Tiger]

Very strange

 

[S.S.T.I.D]

Heard that on the news earlier so I believe that Ms Wilson may be on the ball with this one.

 

[Nook]

I'm (allegedly) studying IP and I've got absolutely NFI what's going on there.

Hopefully someone at the NRL does... *supresses gut instinct*

 

[McCrud]

Great.

We are f**ked.

 

[Dutchy]

yay for no money for a futher growing sport...

 

[Timmah]

Is it just me or are Telstra, PBL and Fox Sports and the like all behaving like petulent children - with NRL the out-of-sorts parent who exercises no control?

 

[Frederick]

Another article that doesn't have HER name attached

NRL in $90m black hole

Andrew Webster and Jacquelin Magnay | May 5, 2007

THE NRL faces the prospect of a $10 million black hole annually for six years after beginning legal action against naming rights and new media sponsor Telstra.

In a worrying development for the game, it emerged yesterday that Telstra had not paid a cent of its $90 million deal because it believes it is being undermined by News Ltd over the use of NRL footage on the Fox Sports website.

The NRL cannot afford a cashflow crisis as it has not budgeted for a surplus for the next six years and has not generated any significant revenue in recent seasons.

For now, the NRL competition will still be known as the Telstra Premiership and signage will be present at matches this weekend.

"We will continue to honour obligations under the sponsorship agreement at this stage," NRL chief executive David Gallop told the Herald last night. Of greater concern is what any shortfall could mean for the game.

The NRL started proceedings yesterday in the Supreme Court against Telstra for withholding "substantial monies" under its six-year agreement.

Telstra is paying the NRL $6 million a year for internet and telephony rights under a deal signed in March. It also agreed to pay the NRL $4m a year to be the major naming rights sponsor. The final $30m exists in contra advertising.

Telstra believes its new NRL deal has been undermined by rival websites and telcos for using extensive footage in their news reports free of charge and last month started proceedings against News Digital Media and Fox Sports.

The NRL took sides with Telstra and said the action would not affect it supporting it as an applicant in its proceedings against News Digital Media and Fox Sports regarding the online use of NRL footage.

"There can be no reason to withhold payments to the NRL," Gallop said in a press release. "Telstra's decision to withhold payment is highly disappointing and quite unreasonable. It is without any basis at law or otherwise.

"We have been left with no alternative but to resort to court to get the money owed to us."

A spokesman for Telstra last night said the company was "surprised and disappointed at the NRL's actions".

"We need to consider our position under the new media rights agreement as a result of News' conduct in using excessive amounts of NRL footage, which in our view is unlawful," a Telstra spokesman said.

It is not known how long it could take for the new matter to get before a Supreme Court judge. The dispute between Telstra and Fox Sports is set down to be heard by the Federal Court on September 2.

A delay in receiving sponsorship and new media money for the whole season would be a disaster for the game. It could have an impact on future grants to clubs and any expected increase in the salary cap.

There is no major sponsor waiting in the wings.

The NRL believes it is caught in the middle of a fight between two of the country's major companies. It is clear Telstra is withholding the much-needed cash in retribution for News Ltd's websites undermining its online rights deal by showing extended highlights footage of games. Telstra hopes News Ltd is forced to step in and use its own cash to keep the NRL running day-to-day.

Telstra and News Ltd are partners in Foxtel but the relationship is clearly in freefall.

Gallop is believed to have taken the matter to court without informing all the directors of the NRL partnership committee.

The Herald first reported a breakdown in the negotiations in February but the NRL denied there was a serious problem.

Gallop claimed at the time that the only sticking point in discussions had been about who owned the right to technology that did not exist yet.

It is now clear the dispute is over who has the right to show footage from the games and how much of the footage on websites.

Telstra has claimed websites owned by News Ltd and Fox Sports ambushed its rights as soon as they had all left the negotiating table.

The $90 million deal also included Telstra managing the NRL website and paying for production costs.

LINK

 

[Dutchy]

f**k

 

[Timmah]

If only Richard Branson purchased and sponsored the NRL. The Virgin Premiership wouldn't be so f*cked then

 

[Dutchy]

If only Richard Branson purchased and sponsored the NRL. The Virgin Premiership wouldn't be so f*cked then

Sharks can be the poster team!!!

 

[Misanthrope]

Sharks can be the poster team!!!

Glad somebody said it :lol:

 

[Azkatro]

This will probably get worse before it gets better.

 

[Dakink]

If only thew NRL had brains and balls.

 

[Cumberland Throw]

Glad to see this forum is still running banner ads for Telstra, seeing they are royally screwing the NRL at the moment,??

 

[dallymessenger]

what telstra are doing is wrong, but the real bad guy is news ltd.

as someone who owns the game, you would think they would want to do things that increase the value of their shareholding. what they are doing is the opposite.

also on moral grounds, they already make plenty of money off RL via PMG sports, $10 million dividend from sale of NRL merchandise and ownership of Big League and Rugby League Week. so its not as if they need to get more from the game in this way.

they also were responsible for the SL war which almost killed us.

throw in a TV rights deal for AFL which pays double per game despite league being the number one ratings sport on the network, and it all looks very sorry.

telstra have been put in a tough position by news ltd actions.

the day rupert murdoch decided he needed RL to make his Pay TV network get established in australia was the worst thing that ever happened to the game.

 

[ocko]

rugby league week is owned by pbl

 

[KalgoorlieRed]

So whats going to happen then?

 

[ibeme]

So whats going to happen then?

Hopefully Telstra's legal advice is in line with the NRL's and they resume the payments.

If not, I can only imagine that they will try to use the relationship between News and the NRL to justify their refusal to pay the NRL. What I know about the legal aspects of all of this is next to nothing, but I can't see any other way that Telstra can deny the NRL payments because of their dispute with News.

 

[slaytera]

Do we really need a naming rights sponsor?
I don't think the NFL have one. I understand that they are a bigger sport, but don't they have a lot of smaller sponsors. Wouldn't a lot of second tier sponsor's be better than just 1? Couldn't we have that!