The introduction of a new Queensland NRL team would generate between $15.5 million and $33.7 million, not enough money to offset the negative impacts on existing clubs, according to a report.
Twelve of the 16 NRL clubs were sufficiently concerned about the potential impacts of a new franchise that they stumped up about $7000 each to commission a report into the matter. While there would be some benefits to the game as a whole – in the form of additional games and revenue – the research by consultancy company GEMBA found it wasn’t sufficient to offset the damage to existing clubs, particularly those in Queensland.
A 17th club would bring in between $13 million and $25 million in additional broadcast funding, while non-broadcast revenue would increase by $2.5 million to $8.7 million. However, several clubs the
Herald has spoken to believe that the status quo should remain unless there is a guarantee that an extra $30 million to $40 million is there to be distributed.
For a new club to be sustainable, it would cost $23.6 million to run and would need to make $10 million a year. It would also require what GEMBA describes as 148,000 “fanatical” supporters, as well as 10,000 members, to be viable. In order to do so, the new franchise would likely need to take fans from existing clubs, while there will be further competition for sponsors, players and other human talent.
The findings are of particular concern to the Broncos, Titans and Cowboys, who are already struggling on the field. The research states that existing clubs could lose up to three players from their roster if a 17th team is given the green light, further diluting talent and adversely affecting the quality of matches.
While Queensland players make up 25 per cent of all NRL players, a fourth Queensland team would directly compete for those wishing to remain in the state, amplifying the pressure on the existing sides.
So concerned are some club bosses, that there have been discussions about engaging legal assistance to review the ARL Commission constitution with a view to finding a lever to block expansion. The
Herald has been told the existing clubs don’t have veto power over the issue, but they could seek to introduce it via a special general meeting, at which amendments to the constitution can be introduced. However, such a development would require the 16 clubs and two state bodies to be in alignment, which is an unlikely outcome.
The upsides to expansion include an increase in viewing numbers of between 3 per cent and 10 per cent, a projected 5 per cent increase in match-day attendances and a boost of between 4 per cent and 7 per cent in television audiences.
However, the report concludes that the extra costs and risks don’t make it an appealing enough proposition.
“It’s been an extensive piece of work, more than 200 pages that speaks to a 17th team with a retweaked draw for an extra 12 games each year,” said Titans chief executive Steve Mitchell, who played a key role in commissioning the report.
“Out of that there is an opportunity to extract some commercial upside from the broadcast and non-broadcast revenue from sponsorship and wagering revenue.
“However, the total of that revenue, we have fears it doesn’t underpin the risks around the cannibalisation of fans in Queensland in particular and the impost on clubs.
“You’ve got to bring in 34 new players into the competition, there’s the dilution of the current playing group. We’re already at an unusual time in the game with increasing blowouts, so there’s risk there. And then you have inflationary [pressures], we’ve already got managers pausing player retention conversations because they want to see what this other team is doing.
“There are a lot of things we need to look at before we move forward.
“This piece is about testing assumptions, the ability to look at two pieces of work and really digging into what this means to the game and the current shareholders. Because it will be hard to change it once we move forward.”
The GEMBA report has been forwarded to the NRL and the clubs expect the governing body to make its own findings available to them.
A report commissioned by 12 NRL clubs has found that the addition of a 17th NRL franchise will do more harm than good to the competition.
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