ARTICLE: NZRU faces financial disaster

[Electric_Eels]

Having a look around on different news lines and found this one.



NZRU faces financial disaster
30 May 2004
By CHRIS MIRAMS

Sanzar is staring at a crippling 50 per cent hit in broadcasting revenue because of rugby's failure to generate pay TV subscriptions in Australia.


The three-nation collective - South Africa, Australia, New Zealand - is expected to announce this week its approach to negotiations with News Corporation.

It will also confirm Sydney-based Ian Frykberg as its negotiator. Frykberg was a key player for News Corp in the original contract and now represents the Australian Rugby Union.

Broadcasting fees produce nearly 60 per cent of the NZRU's revenue. So the big hit looming will be a disaster for New Zealand rugby. It will impact significantly on player retention and development programmes and on all levels of the game.

Many had expected Sanzar to receive about 20 per cent less than the $555m it got from News Corp in 1995 for the original 10-year-deal. But dark clouds now loom for Sanzar with authoritative Australian sources telling the Star-Times the coalition can expect about only half the old deal.

Australian broadcasting expert Barry O'Brien said New Zealand and South Africa had performed well but the Australian market had been a disaster. Anti-siphoning laws make test matches free-to-air there and compound the problem.

"(News Corp) needed to get it in 1995 to launch their platforms (in the Sanzar countries). But the value of the product now is totally different," said O'Brien, chief executive of leading media agency Total Advertising and Communication.

The situation may also cause friction within Sanzar over how the contract will be split. Currently South Africa gets the largest slice, then New Zealand with Australia last.

From a population five times that of New Zealand, Murdoch's Australian pay TV service Foxtel has generated only 700,000 subscribers compared to the 550,000 SKY TV has here. This is despite Foxtel being the dominant player in the market.

It's also anticipated England and France will provide increased revenues to Murdoch. If they exceed what Australia delivers, they will further erode Sanzar's value to News Corp.

"We have to wait and see what any broadcaster is prepared to pay," New Zealand Rugby Union chief executive Chris Moller said.

"But there is an issue within Sanzar of splitting that revenue. If there was a dramatic change then one issue that may well be on the table is whether the revenue share as currently negotiated should be amended."

In 1995 rugby league imploded with the ARL-Super League war that pitched Foxtel in a cut-throat battle with Optus to rule Australian pay TV.

Foxtel then banked on Super 12 delivering a weekly audience to fill the hole left by the Super League. But it didn't.

Now rugby league has recaptured its audience, Australian Rules is so popular it has a dedicated channel. Without being able to leverage test matches, the value of rugby to Australian pay TV has diminished greatly.

And with Optus gone there is no alternative cash-rich broadcaster for Sanzar to turn to in Australia.

The NZRU is also trying to clarify its position with its broadcasting adviser - London based Octagon CSI. It has recently restructured amid marketplace speculation of financial instability.

The company was forced to withdraw its bid to secure the English premier league's broadcast rights in the Middle East when its parent company, Interpublic Group, refused to honour a guarantee. Octagon's motorsport division has lost millions of dollars and Octagon's value was written down by more than $US200 million ($320m) late last year. Chief executive Karl Bistany has been replaced in a major shake-up after 15 years with the company.

Bistany oversaw the NZRU account and was in New Zealand just a fortnight ago.

Moller confirmed the NZRU had sought clarification of what had happened at Octagon CSI and how it might be affected. The previous NZRU administration signed a multi-year deal with the company.

Moller confirmed that, with Bistany gone, it was reviewing the contract and if there might be an opportunity to exit.

"It's not clear-cut one way or the other, and furthermore we have to contemplate whether we want to do that," Moller said.

"We are in a mode of trying to find out what the situation is, what the impact on us is and what actions as a consequence we can take. That will dictate whether the current arrangement stays in place or something changes."

http://www.stuff.co.nz/stuff/0,2106,2924089a10295,00.html

 

[Dr Crane]

If it reached such a situation, the All Blacks would play at home more and the Intl players would return to the NPC.

 

[russ13]

From the SMH:

News is not good for Super 12 TV coverage
By Spiro Zavos
Tuesday, June 1, 2004


According to New Zealand media reports, SANZAR faces a "crippling" 50 per cent loss in revenue when the new broadcasting agreement with News Corp is finalised.

We are clearly well into the silly season of leaks and counter-leaks as SANZAR and News Corp begin their public and private negotiations for the television rights to the Super 12 and Tri Nations competition from 2006.

News Corp began its campaign to belittle the value of the present television regime some time ago. It did its best, for instance, to ensure that there were no live Super 12 matches on the free-to-air television channels this season. This was justified as trying to shore up the pay television franchise. But it is a well-known fact of sports broadcasting that some exposure on free-to-air generates a greater audience for the pay television coverage.

Foxtel, though, has made it clear that it wanted the live coverage of Super 12 matches to be only on its pay channels.

Perhaps this is drawing a long bow but it seems to me, as an avid watcher of sports on Foxtel, that the promotion of rugby league matches, particularly, and AFL matches, has been far more extensive than the promotion of the Super 12 matches.


The New Zealand reports quote "authoritative Australian sources" as saying the Australian rugby market has been a "disaster". The implication is that Super 12 fails to attract rugby supporters to take subscriptions on Foxtel. But is this the case?

One would like to see a transparent breakdown of the figures.

How does the anti-rugby argument square up with the assertion some years ago from News Corp officials that rugby league provided very few subscribers to Foxtel and that rugby supporters made up the core of the subscriber base? And how does it square with the superb viewing figures achieved by Channel Seven during the 2003 Rugby World Cup tournament and for the Tri Nations Tests? Or the assertion from the ARU that the Super 12 finals recorded the highest pay television ratings for a rugby match? Or the fact that the sell-on rights from the Super 12 and the Tri Nations series creates a profit for Foxtel?

Do rugby league sell-on rights come anywhere near the price Foxtel paid for the matches?

The ARU must challenge the disinformation from News Corp effectively and publicly. It has to ensure, too, that Australia gets a fourth team in the Super 12 tournament, which would increase its rugby product and, therefore, its share of the revenues. Australia's case for a fourth team is as emphatic as the ACT Brumbies victory in this year's Super 12. But in recent months the ARU has been silent on this matter and a host of other rugby issues.

In the days of John O'Neill, the ARU was the leader and main driver of innovative ideas from SANZAR. It seems content now to let NZRU chief executive Chris Moller take the leadership role.

The NZRU interests are not necessarily the interests of the ARU. More assertiveness is needed from the ARU.

Silence is rarely golden in these matters.


This story was found at: http://rugbyheaven.smh.com.au/articles/2004/05/31/1085855497124.html

 

[bazza]

This guy seems to say thing almost the complete opposite from what I have heard.

Perhaps this is drawing a long bow but it seems to me, as an avid watcher of sports on Foxtel, that the promotion of rugby league matches, particularly, and AFL matches, has been far more extensive than the promotion of the Super 12 matches.

As a rugby league fan I seem to think that there is more advertising of union. However, there isn't that much advertising lately - probably because there isn't any Super 12s on. I did see an ad for an All Blacks trial game though.

How does the anti-rugby argument square up with the assertion some years ago from News Corp officials that rugby league provided very few subscribers to Foxtel and that rugby supporters made up the core of the subscriber base?

I have never heard that - perhaps he has rugby union confused with rugby league.

And how does it square with the superb viewing figures achieved by Channel Seven during the 2003 Rugby World Cup tournament and for the Tri Nations Tests?

In the World Cup - the high rating matches were the Final, Opening match and semis. Other games with Australia were OK.
Most other matches were off the radar as far as ratings went. The review program they had was a ratings disaster.

Or the assertion from the ARU that the Super 12 finals recorded the highest pay television ratings for a rugby match?

I don't know about the final - but I read that the "blockbuster" match between NSW and ACT got ratings that were half that of an average NRL match.

I think Foxtel paid too much for Super 12 rights in Australia - and it is now showing. In NZ it appears to have been popular though - it is a shame for the NZRU that they are being dragged down by the ARU

 

[SpaceMonkey]

If this is a disaster for the NZRFU I hate to think how much sh*t the ARU are going to be in. The NZRFU at least has NPC rights and gate takings to earn some $$ off, the ARU has NOTHING after S12 and internationals, I can't see Sydney club rugby being any sort of money spinner.

 

[Mr Angry]

:lol:
But the RWC would prove to be a boom for the ARU.........................
:lol:

 

[ruggabugga]

Wait till the deal is done. At the moment it is all hype. The Mungo code will feel the pay TV wrath in the near future. We have all been deluded by the devil. At least Rugby has a world wide cult to delude. What does Mungo rugby fall back on.Think about it mungoes!!!!!!!!!!
Cheers.

 

[gaterooze]

"World Wide cult?"

The two biggest nations for RU are Australia and England (NZ is too small population-wise to make a difference) -- and League's domestic comps beat it soundly in both countries.

As the World Cup proved, your "world game" is almost as big a joke as League's. Not much to crow about there.

 

[Te Kaha]

"World Wide cult?"

The two biggest nations for RU are Australia and England (NZ is too small population-wise to make a difference) -- and League's domestic comps beat it soundly in both countries.

As the World Cup proved, your "world game" is almost as big a joke as League's. Not much to crow about there.

Wrong. South Africa and Japan both have bigger domestic comps then England and Australia. And it is debateable whether the England RL comp beats the Rugby one.

 

[Anonymous]

Englands RU comp dominated their RL one......

 

[gaterooze]

Wrong, Timbo -- RL crowds in UK have been higher this year than their RU equivalent, and this is even after winning the WC.

Re: SA and Japan, you may be right -- I forget about them because neither are really competitive internationally.

 

[bayrep]

Its funny how some league fans jump on the media when they write beat up stories that have a detrimental effect on league but are very quick to jump on the band wagon and believe the stories when it has something to do with another code.

I have heard a radio interview with head of the NZRU 2 days before these articles came out and they stated that there would be no real indication of a deal as SANZA was still trying to finalise what they wanted for the next 5 years.

So the question is how can there be an indication that the NZRU is looking at a financial ruin when a deal hasn't even been put forward ? also when they have stated that they are looking at an 80 million profit for the 2003-2004 financial year ?

 

[ripper]

Wrong, Timbo -- RL crowds in UK have been higher this year than their RU equivalent, and this is even after winning the WC.

Not really, last I checked it was very, very even

 

[ripper]

"World Wide cult?"

The two biggest nations for RU are Australia and England (NZ is too small population-wise to make a difference) -- and League's domestic comps beat it soundly in both countries.

As the World Cup proved, your "world game" is almost as big a joke as League's. Not much to crow about there.

Not really

ATM there are 4 teams capable of winning the RWC - Frogs, Kiwis, Aussies and the Poms

Then theirs the 2nd tier who on their day, are capable of knocking down the big 4

Wales, Ireland, Argies, Sth Africa, Possibly Samoa e.t.c

Then theres the teams that are showing extreme promise or the 3rd tier so too speak, who on there day can knock the 2nd tier around

Japs, Fiji, Scotland e.t.c

While league has 1 team capable of winning the WC - Australia and thats where it ends

 

[Crusader]

It's pretty funny that the powers that be have tried to encourage people to have pay tv and it's bitten them on the arse.
IMO S12 is the best Sthern Hemisphere Rugby Comp going and it's disgusting that it can't be seen on Aus free-to-air, especially when an Aus team has now won it twice :roll:

 

[Polynesian Warrior]

Wrong, Timbo -- RL crowds in UK have been higher this year than their RU equivalent, and this is even after winning the WC.

Not really, last I checked it was very, very even

If the SL and ZP domestic comp are even or even if league is ahead by a whisker then the Pom's rugby union internationals should give the nod to union .
When was the last time a England league team played in front of 75,000 and was televise live in UK ?

NZRFU will always survive and if the deal is cut by 50% there's always money coming from NPC and S12 plus test matches .
Didn't the NZRFU sign a 10 year deal Adidas ?

 

[Polynesian Warrior]

From the SMH:

News is not good for Super 12 TV coverage
By Spiro Zavos
Tuesday, June 1, 2004


According to New Zealand media reports, SANZAR faces a "crippling" 50 per cent loss in revenue when the new broadcasting agreement with News Corp is finalised.

We are clearly well into the silly season of leaks and counter-leaks as SANZAR and News Corp begin their public and private negotiations for the television rights to the Super 12 and Tri Nations competition from 2006.

News Corp began its campaign to belittle the value of the present television regime some time ago. It did its best, for instance, to ensure that there were no live Super 12 matches on the free-to-air television channels this season. This was justified as trying to shore up the pay television franchise. But it is a well-known fact of sports broadcasting that some exposure on free-to-air generates a greater audience for the pay television coverage.

Foxtel, though, has made it clear that it wanted the live coverage of Super 12 matches to be only on its pay channels.

Perhaps this is drawing a long bow but it seems to me, as an avid watcher of sports on Foxtel, that the promotion of rugby league matches, particularly, and AFL matches, has been far more extensive than the promotion of the Super 12 matches.


The New Zealand reports quote "authoritative Australian sources" as saying the Australian rugby market has been a "disaster". The implication is that Super 12 fails to attract rugby supporters to take subscriptions on Foxtel. But is this the case?

One would like to see a transparent breakdown of the figures.

How does the anti-rugby argument square up with the assertion some years ago from News Corp officials that rugby league provided very few subscribers to Foxtel and that rugby supporters made up the core of the subscriber base? And how does it square with the superb viewing figures achieved by Channel Seven during the 2003 Rugby World Cup tournament and for the Tri Nations Tests? Or the assertion from the ARU that the Super 12 finals recorded the highest pay television ratings for a rugby match? Or the fact that the sell-on rights from the Super 12 and the Tri Nations series creates a profit for Foxtel?

Do rugby league sell-on rights come anywhere near the price Foxtel paid for the matches?

The ARU must challenge the disinformation from News Corp effectively and publicly. It has to ensure, too, that Australia gets a fourth team in the Super 12 tournament, which would increase its rugby product and, therefore, its share of the revenues. Australia's case for a fourth team is as emphatic as the ACT Brumbies victory in this year's Super 12. But in recent months the ARU has been silent on this matter and a host of other rugby issues.

In the days of John O'Neill, the ARU was the leader and main driver of innovative ideas from SANZAR. It seems content now to let NZRU chief executive Chris Moller take the leadership role.

The NZRU interests are not necessarily the interests of the ARU. More assertiveness is needed from the ARU.

Silence is rarely golden in these matters.


This story was found at: http://rugbyheaven.smh.com.au/articles/2004/05/31/1085855497124.html

Record income for NZRU

A record income, significant achievements on the field, and the undertaking of several important projects were the highlights of the 2003 year for the New Zealand Rugby Union.

The 2003 Annual Report was released on Wednesday by NZRU Chairman Jock Hobbs, with the Chairman saying there was a lot to be proud of, despite the All Blacks not winning the Rugby World Cup.

“It is not possible to look back over 2003 without immediately acknowledging the shadow that was cast over the year because we did not win the Rugby World Cup. This was a disappointment for everybody and none more so than for the All Blacks management and team.

“But to solely judge the performance of New Zealand rugby on one 80-minute match of rugby would be too harsh and would ignore the many on and off the field achievements by New Zealand rugby in 2003,” he said.

Mr Hobbs said the NZRU’s income for the year ended 31 December 2003 was a record $93.6 million, up from $91.2 million in 2002.

“Of this we returned $11.8 million directly to provincial unions. This included $7.9 million in direct general financial distributions, $1.1 million in professional coach payments, $900,000 in referee education officer grants, $600,000 in non-Rebel Sport Super 12 division one payments, and $1.3 million in minimum player payments for non-Rebel Sport Super 12 players.

In addition, $11.1m ($9.8m in 2002) went into the NZRU reserves, which at year-end stood at $37.2m ($26.1m).

On the playing field the All Blacks won the Philips Tri-Nations Series and the Bledisloe Cup, the New Zealand Sevens team were crowned World Champions for the fourth year in a row, New Zealand Maori and the Black Ferns had significant victories, New Zealand Under 21 won the World Championship and New Zealand Under 19 were close runners-up in their World Championship final. The New Zealand Divisional XV also played two hard-fought matches.

The Blues won the xtra Super 12 competition with three New Zealand teams playing in the semifinals and the Air New Zealand NPC was a success yet again, while the Lion Foundation Cup continued to increase in stature.

Jock Hobbs said the Board had agreed six priorities for 2004:

- finalise the Community Rugby Plan and implement budgeted initiatives;
- initiate and significantly advance broadcast contract negotiations;
- plan the implementation of the Competitions Review;
- improve player management including renegotiation of the collective agreements;
- undertake modelling and analysis of potential revenue opportunities; and consequently
- ensure the All Blacks are a winning team.

He said the Community Rugby Plan was one of the most important projects of the year with $1.8 million dollars budgeted for new initiatives this year.

“Together with our principal partner adidas, we want to make rugby the game of choice for children; we are aiming to retain teenage players in the game, improve club health and develop a plan for Greater Auckland.

A comprehensive marketing campaign was launched earlier this year encouraging under 13-year-olds to sign up for rugby and this week provincial unions will be taking delivery of a new easy, fun game for kids called Rippa Rugby. These kits complete with instructional videos will be distributed to 1500 primary schools over the coming weeks.

“We believe the key to ensuring rugby in New Zealand is healthy, strong, vibrant and enduring, lies within community rugby, principally in clubs and schools,” Mr Hobbs said.

Mr Hobbs said the NZRU was undertaking further consultation with provincial unions and other stakeholders on the Competitions Review.

“One thing on which we all agree is the aim of the Review – which is to ensure that New Zealand’s rugby competitions provide the best possible platform for sustaining a winning All Blacks team and maintaining rugby as a game accessible and attractive to all New Zealanders.

“There is still a lot of work to do and consultation is still underway and we need to work together to reach the desired outcomes,” he said.

Jock Hobbs said the NZRU’s 2003 Balanced Scoreboard – which the organisation uses to measure its performance – was pleasing. He said the NZRU had lifted its overall performance significantly from a rating of 47.5 percent in 2002 to 63 percent in 2003.

Date published: 28 April 2004

 

[Crusader]

Thanks for that positive article PW ;-)