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Financial fragility of the game

Discussion in 'NRL' started by Perth Red, Mar 17, 2020.

  1. Perth Red

    Perth Red Immortal

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    At a time when the game has never had so much money coming in it seems that it continues to be very open to ongoing financial stresses. Yes this pandemic is unprecedented and u expected so you can forgive the clubs and nrl’s inability to financially be prepared for it but it is t just this scenario. Looking at clubs financial performances we still have clubs losing millions of $’s a year in their football club operations despite the nrl grant being twice what it was a few years ago and $3million more than cap.

    most clubs have a revenue of around $25-28million before any LC or owner top up. With a cap of $10mill and a FCof $5.9mill how can clubs be spending an additional $12-15mill plus on other activities? How much are they paying the ceo and social media person for goodness sake?

    if we learn anything from our current predicament it is hopefully that the game needs to reign itself in and have a much stronger financial sustainability model.
     
  2. Perth Red

    Perth Red Immortal

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    2019 annual reports

    Cronulla Sharks
    football revenue
    NRL Grant $13.5mill
    Sponsors and Box sales $5.6mill
    Memberships $1.9mill
    Gate sales $919.5k
    Merch $356k
    Total $22.275mill
    $3.2 mill loss
    https://www.sharks.com.au/siteasset...cronulla-sutherland-leagues-club-limited_.pdf

    Roosters
    football revenue
    NRL Grant $13.3miill
    Sponsors and Box sales $8.9mill
    Memberships $1.8mill
    Gate sales $1.9mill
    Merch $723k
    Total $26.6mill (+$2.1mill LC Grant & $1mill other revenue) FC operating costs $29.7mill
    https://www.roosters.com.au/siteassets/2020/documents/sr2019-annualreport-spreads_opt.pdf

    Eels
    football revenue
    NRL Grant $12.7mill
    Sponsors and Box sales $6.8mill
    Memberships & Gate sales $5.6mill
    Merch $700k
    Total $25.7mill
    FC Loss for the year $5.2million
    https://www.parraleagues.com.au/content/uploads/2020/01/2019-Eels-annual-report.pdf

    Cowboys
    FC profit of $400k, FC and LC $1.4million profit for year
    https://cowboysleagues.com.au/wp-content/uploads/2020/02/CLC-Annual-Report-2019-WEB-1.pdf
     
  3. Perth Red

    Perth Red Immortal

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    Football executives across the AFL and NRL have begun to share their fears for the competitions and clubs over just how much money they will lose due to the coronavirus outbreak.

    Canberra Raiders chief executive Don Furner said hosting fans at Friday’s NRL home game had still affected their bottom line, with far worse to come.


    That (crowd of 10,000) would have hurt us financially because we were tracking for 15,000 with our pre-sales,” he said.

    “If we were having a home ground next week with zero crowd that’s a massive drop. We’ve got the Dragons in two weeks and that’s a really big draw for us so it’s going to be financially troubling.”

    He said with no ticket sales, refunds to members and corporate hospitality, they will be in the red up to $400,000 per game.

    “If we have no crowds for one game, no crowds for another game - all of a sudden it’s up to a million bucks roughly,” Furner said.

    He said that club bosses had been in ongoing crisis talks with the NRL about assistance packages but couldn’t see how that could stretch to 16 clubs if the entire season was called off.

    “As far as I know insurance doesn’t cover it so three or four weeks maybe but can’t imagine they could cover a season,” Furner said.

    “They can’t save 16 clubs. The costs aren’t there without crowds but neither is the revenue. We still have to pay the players, still have to pay the staff - it’s hard to fathom.”

    While playing behind closed doors is hurting clubs, one line of thought is that postponing the seasons before it becomes necessary could cost the leagues and clubs double.

    In addition to empty stadiums, failing to fit some of the fixtured games into the calendar upon resumption would lead to lost TV revenue from their billion-dollar deals.

    https://7news.com.au/sport/afl/afl-...ating-financial-cost-of-fan-lockouts-c-745088
     
  4. adamkungl

    adamkungl Immortal

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    1 - there would be very few business financially prepared to weather a 1 year cease in all revenue generating operations. It's not a fair standard to hold the league to.

    2 - head office is being criticised by the clubs and media for not having a future fund. The same clubs and media who continually push for every spare cent to go to the clubs and players, while at the same time criticising the NRL for perceived lacks in professionalism and lack of grassroots investment.

    Gus Gould is, as usual, asking how this could be, conveniently forgetting that he was front and centre of pressuring John Grant into guaranteeing the clubs 130% of the cap central funding.
    Seems like his solution is for the NRL to be run like a local pub league with no employees, no digital content, no social programs, etc. Certainly no expansion, definitely no investment in streaming.
    All so the clubs can continue operating on bloated budgets and players can get constant pay increases while whining about how much football they have to play and how unfair it is that they have to be 'role models' aka can't root schoolgirls on official visits.
     
  5. TheDalek079

    TheDalek079 Bench

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    It in times like these I think we are all glad that there is no franchise losing money out in the RL deadland of Western Australia
     
    Haffa, _snafu_, taipan and 1 other person like this.
  6. bileduct

    bileduct Coach

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    From the ashes of the NRL a new Perth based competition will arise.
     
  7. T-Boon

    T-Boon Coach

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    Exactly. How much did his utterly pointless job cost Penrith in the last 5 years? He is the face of waste in the game if you ask me.
    Head of Football should be the first job cut.
     
    THE CHAMP likes this.
  8. Generalzod

    Generalzod Referee

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    f**k no
     
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  9. T-Boon

    T-Boon Coach

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    Working list of positions that need gone:

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

    Generalzod Referee

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    No team in Perth
     
  11. Quicksilver

    Quicksilver Juniors

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    I don't know what the question is here but the answer is going to be Perth.
     
  12. Perth Red

    Perth Red Immortal

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    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
     
  13. adamkungl

    adamkungl Immortal

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    lol you're all sad merkins
    seek help
     
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  14. Quicksilver

    Quicksilver Juniors

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    Not if the clubs used it to build assets and alternative revenue streams.
     
  15. Perth Red

    Perth Red Immortal

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    Talking of which:


    South Sydney have a $4m cash reserve stashed away for a “rainy day.” And thanks to coronavirus, it’s pouring down.

    The war chest gives Souths a greater chance of survival if the NRL is forced to shut down or suspend the competition in coming weeks.

    Rabbitohs co-owners Russell Crowe and James Packer could have pocketed the profits, but they haven’t.

    NRL clubs are scrambling for cash fearing a cancelled competition would mean funding from the broadcast deal, sponsorship, gate takings, merchandise and membership would dry up.

    Souths have gradually built the fund through prudent savings.

    Concerned about the plight, some Souths fans have asked to pay early membership for 2021 to help the club financially. A majority of the $4m has come from South Sydney’s strong membership drive that currently has the Rabbitohs at 29,000 members.

    South Sydney’s $4m fighting fund would ensure the club safely navigates through the 2020 season.

    Manly aren’t so lucky with Sea Eagles chairman and majority shareholder Scott Penn admitting his club lives “hand to mouth.”

    “There are no reserves,” Penn said.

    Manly has become one of the lesser wealthy clubs of the NRL, a club with limited resources and a modest budget.

    “In real terms, we continue to put our reserves in on an annual basis. There are no reserves. The money comes from the pockets of private owners. The notion of having a reserve isn’t the case. We very much do live hand to mouth and therefore we have to manage accordingly,” Penn said.

    https://www.theaustralian.com.au/sp...s/news-story/aa2c39cdaf6b36bfa753ffacb68cf102
     
    Hello, I'm The Doctor likes this.
  16. Perth Red

    Perth Red Immortal

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    Players will have to get realistic.


    St George Illawarra veteran James Graham has backed every NRL player to take a pay cut, with the coronavirus crisis set to place the league's finances under severe strain.

    Hours before NRL CEO Todd Greenberg said there would be the "potential" for players to take pay cuts, Graham - one of the game's most outspoken players - predicted there would be no resistance from those who put on the show behind closed doors from this weekend.



    Rather than hit the 480 players across 16 NRL clubs in the hip pocket initially, money is likely to be pulled from the $3 million injury hardship fund, the $1.5 million set aside for marketing, and even the $12,750 each player in the top 30 receives for their retirement fund.

    Player payments will cost clubs around $90 million for the remaining seven months of the pay cycle, so any tightening of the belt will be welcomed by league's powerbrokers.


    "We're not talking about it, but you don't have to be very good at maths to figure something might have to change," Graham said on Monday.

    "We might not have a choice. What do you do, get paid all your money and the game goes bust? I can't imagine any player having that sort of attitude.

    "In times of crisis and difficult times, you only have to look back as far as the bushfires when the communities came together and helped each other out, and we're all in it together. If that was the case [here], you have to take pay cuts. What do you do, say no?"

    Graham was unsure of the best way to decide what amount to trim from each player's salary, but maintained it was unfair to make it a percentage of their income given some earned in excess of $1 million a year and others were on the $75,000 minimum wage.


    "The people who make the calls, it's crunch time for them, and that's why they get paid a lot of money to administer the game," Graham said. "Nothing has been discussed as of yet, but if we get there, I can't speak for everyone, but I'd guess the players will look to look after each other - we'd want to look after each other."

    RLPA general manager Clint Newton said that under the current collective bargaining agreement, the players were committed to returning to the table with the NRL for "good-faith discussions' if there was a significant reduction in revenue caused by an event like the coronavirus crisis.

    "And there are other areas within the players' share of revenue we'd look to explore before we looked at players taking actual pay cuts," Newton said.

    "There are player benefits such as the retirement fund and injury hardship fund. We met with the NRL again on Monday to commence discussions regarding potential scenarios."

    Whatever money the players potentially gave up would be considered over the remaining two years of the current CBA, said Newton.


    https://www.smh.com.au/sport/nrl/gr...ow-pay-cuts-to-save-game-20200316-p54an4.html
     
  17. Generalzod

    Generalzod Referee

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    Yep I’m a sad f**k,the bloke rubbishes Cronulla all the time...I couldn’t care less about a Perth team
     
    Haffa, _snafu_, txta2 and 2 others like this.
  18. Perth Red

    Perth Red Immortal

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  19. Perth Red

    Perth Red Immortal

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    n the time of COVID-19, to discuss anything short of global catastrophe is to risk being accused of trivialising the greatest social disruption since World War II.

    But as well as a potentially deadly virus, sports fans also have a lot of time on our hands.

    So we continue to obsess about sport and the not insubstantial matter of how locked gates or abandonments will disrupt now-fragile sporting economies.

    Which in turn raises a delicate question — will it be the fans or the participants who will shoulder the financial burden?

    Let's start with those fans who have bought club memberships that promised admission to games that will be played without us, or quite possibly not at all.

    These memberships represent money in the bank for sports whose coffers are about to be emptied, especially if matches are abandoned and media rights revenue vanishes.

    So do those who have bought their memberships ask for a refund? Or will they write off their loss as they might a non-refundable holiday booking, or even view it as a gratuity to their club for lifelong service?

    The answer might provide an indication of the emotional attachment fans have to their clubs, which is in many cases stronger than for the game itself.

    Although, in relying on this goodwill, clubs would do well to tread lightly if they are to make appeals to fans to accept less value for the same money this season.

    nstead you can only hope when the time comes, clubs and leagues will not try to hug at heartstrings to keep money paid for nothing, and present a cogent economic argument.

    This message should include an honest economic case about how the return of membership might impact the ability of clubs to keep functioning at their usual levels, and an explanation of the sacrifices other vested interests are making.

    This in turn leads to the second emotional button that the AFL, NRL and other leagues might be inclined to push if they are to endure this crisis.

    If fans are expected to make a financial sacrifice, surely so too will be the administrators, club officials and — most publicly — the players.

    The buzz phrase of contemporary collective bargaining in sport is "revenue share". It is now taken for granted that players will gain a substantial proportion of the revenue their game generates.

    So as sport bleeds money, does revenue share also apply when the money pile collapses — a question some had been pondering before COVID-19, given the possibility media rights deals have peaked.

    Most pertinently, would players with guaranteed contracts accept pay cuts based on the substantially reduced revenue figures that are inevitable this season, and likely for several seasons to come?

    Then again, if Smith's plea is ignored, players compelled to honour their contracts, play in empty stadiums and take the risks that interstate travel and locker room congregation present might deserve a bonus rather than a pay cut.

    In such uncertain times one reality will inevitably emerge: Even wealthy sports are going to take a massive hit and someone will have to pay.

    https://www.abc.net.au/news/2020-03-17/richard-hinds-coronavirus-cost/12062036
     
  20. Perth Red

    Perth Red Immortal

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    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)
     

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