How NRL dug itself into a hole
Phil Gould
February 16, 2007
AFTER nine years and hundreds of millions of dollars being pumped into the NRL through so-called record broadcast-rights deals, how much money does the NRL have in the bank? I am reliably told next to nothing.
OK, then. After signing its latest broadcast-rights deals and (hopefully) a new naming-rights contract with Telstra, how much does the NRL plan to have in the bank in five years? Same answer.
By way of comparison, the highly impressive AFL Futures document not only gives us 100 per cent transparency on revenue and expenditure, it also displays budgets for retained revenue in future planning accounts for hundreds of millions of dollars.
And get this: the AFL also plans to own the Telstra Dome in Melbourne by 2025. How does it do that when it provides only a handful of the top-100 pay-TV shows each year compared to the NRL, which provides 73 of the top 100?
Why is the AFL deal so much better than the NRL deal? Because the NRL is kept on an intravenous drip. It gets enough to cover expenditure and little more.
The NRL is earning far less than it should be from pay-TV, internet and mobile-phone rights. The fact the game is half-owned and almost totally controlled by News Ltd has created a huge conflict of interest when it comes to the NRL's ability to maximise revenue from all-important broadcasting assets.
The magnitude of the new AFL pay-TV rights deal announced this week has finally delivered the knock-out blow; it puts the NRL deal to shame.
In the past two weeks, Herald columnists Roy Masters and Andrew Stevenson have revealed startling facts about the finances and workings of the NRL that should have grabbed everyone's attention.
These revelations have not only highlighted the conflict of interest created by having a media company such as News Ltd half-own the NRL, but the fact that the current NRL management is either reluctant, or perhaps even powerless, to challenge it.
News Ltd clearly has the superior negotiators when it comes to formulating important contracts but there's no doubt this is also to the detriment of the game and all other participants.
News Ltd knows how much money the NRL needs to cover the cost of running its competition. News Ltd also knows there's little likelihood a rival pay-TV offer would ever be accepted. So the NRL can only ever hope to negotiate enough money to cover its operating costs plus a small profit, which is then later divided between needy recipients.
If News Ltd didn't own half the game, would the NRL be able to negotiate better deals for its broadcasting rights? News Ltd doesn't own the AFL, and the AFL pay-TV deal has smacked the NRL deal for six.
Further, the growth of subscribers to Foxtel and Austar has been significantly driven by rugby league viewers in all states of Australia. So why does the NRL get the lesser deal?
One month from the kick off to the 2007 season, the NRL hasn't finalised a naming-rights contract with Telstra because of a massive bungle over ownership of the game's intellectual property assets.
The NRL is sweating on some good news from Telstra so it can put this mess behind it. However, the new deal will be nowhere near as great as it is reported to be.
The magical figure of $90 million being touted by the NRL will also include a huge amount of contra advertising and production costs to broadcasters rather than actual money to the NRL.
I found it hypocritical for the NRL to cast aspersions on the AFL pay-TV deal by saying the AFL figure included significant advertising and production costs when the NRL itself failed to mention its own deals are constructed the same way.
The NRL is struggling to save face. The rugby league public, and many of its stakeholders, are going to take far more convincing that an administration with such conflicting interests can adequately ensure the game's potential revenues are not being substantially eroded.
