ARLC eyes $40m surplus to invest in game’s future
John Stensholt
The Australian Rugby League Commission is set to record a financial surplus of up to $40 million this year, much of which will be diverted into the sport’s investment or future fund.
ARLC chief executive Dave Smith told The Australian Financial Review the forecast result would be in sharp contrast to 2012 when the organisation recorded a $3.5 million loss after impairments and other adjustments.
“The sport will finally have money in the bank,” Smith says. “Last year we made a loss and basically the business had no assets. So it is a big change.”
It has been a baptism of fire of sorts for the former Lloyds International CEO since he started at the ARLC on February 1.
He has faced criticism from radio host Ray Hadley and Sydney newspapers, as well as having had to deal with an investigation into rugby league, which focused on National Rugby League club Cronulla, by the Australian Sports Anti-Doping Authority literally from his first day on the job.
Yet Smith is enjoying his role though he is reluctant to give credence to some of the criticism he has faced, including being inaccessible to the media.
“I’ll accept the feedback and move on,” he says. However, Smith points out that crowds are up 6.5 per cent in 2013 compared to last year and that ratings on Nine Network have improved by seven per cent. There was also impressive growth in visitors to NRL.com and viewers of NRL matches on digital platforms.
To top it off, the NRL is in the first year of a five-year broadcast deal with Nine, Fox Sports and Telstra worth a combined $1.2 billion.
Smith moved last week to restructure his executive team, including appointing highly regarded Canterbury chief executive Todd Greenberg as his head of football and creating seven divisions that will report to him.
Strategic goals
Although he is reluctant to say the organisation was lacking a proper structure when he arrived in February, Smith does say his revamp is necessary for the ARLC to fulfil its strategic plan aims, including having $225 million in its investment fund by 2017, doubling non-broadcast revenue and achieving increases in crowd, TV ratings, membership and participation numbers.
“There’s no doubt with the structure in place when I got here, we would not be able to reach the goals in our strategic plan.
“The restructure is about giving people responsibility and decision-making powers that will enable the organisation to grow. Make no mistake, there is plenty of growth to come for rugby league.”
Many of the strategies that he will be applying, including the new organisational structure, have been gleaned from what he learnt at his previous role at Lloyds.
“There is a lot of similarities between running a large and complex company to a federated sport such as rugby league, which is also complex but is more publicly facing”.
At Lloyds he had to cut the company’s exposure to risk commercial real estate to focus on its core businesses of asset finance and commercial banking.
“One of the reasons I got the (ARLC) job is my organisational capabilities. In my previous job I took over a distressed business, had to restructure the balance sheet, cut costs, de-risk the business and improve the governance.
“But at the same time there was a lot of dealing with small businesses and consumers, and that sort of customer experience is something that can be applied to rugby league.”
Smith insists rugby league’s future is bright, and says the investment fund will be a big part of ensuring the sport’s financial viability. He says the fund will be used prudently and seek to make decent returns on its investments.
Boost clubs’ financial health
Possible targets include stadium joint ventures, ticketing assets, new technology ventures and the possibility of a dedicated NRL television channel.
“I think, in particular, the digital area offers a lot of potential for us,” he says.
“We already have a lot of assets in that area, we have a films business for example, and it is a growing area that offers a lot of potential for us.”
Smith says another key component of the strategic plan is ensuring the financial health of the 16 NRL clubs. The Brisbane Broncos and South Sydney are the only clubs that make profits, a situation Smith wants to change.
He says the ARLC will make available more funding to clubs, including upgrading facilities or membership services, albeit with strict conditions.
“We want to help the clubs on the business side. The annual grant has increased (to $7 million) but if clubs have revenue-generating plans then we would be quite willing to help with that.”
Smith is also investigating greater shared services arrangements across the clubs, including in membership and finance and other back-office operations.
