Today a very interesting story has appeared in the Sydney Morning Herald, titled 'Moneyball' which is all about the continuing financial viability of our NRL clubs.
In an environment where winning is the ultimate goal for most football teams, it is often forgotten that ultimately our clubs are businesses. In my piece on Raelene Castle last week, you can have a read here, I included comments that Raelene made about the tension between winning and making commerical decisions. Ultimately, commerical decisions involve more than just ensuring that a football team is winning on the park. A club must also be able to meet its financial obligations.
The story in the SMH confirms what most NRL fans already knew - that the majority of clubs operate in an environment where 14 of the 16 clubs are operating at a financial loss in 2013, being the Brisbane Broncos and the North Queensland Cowboys. The Brisbane Broncos generated $32 million in revenue last year - far more than any other NRL club. These are the only two teams in the current NRL competition that are able to be self-sufficient based on merchandise sales, sponsorship and entrance into the games. The other 14 clubs need support from third parties like leagues club and wealthy backers.
It is interesting to note that the two clubs who are able to be self-sufficent are two teams which are not in the overcrowded Sydney market and have almost a monopoly of support in their geographical location in Queensland.
As an NRL fan who wants to see the game continue to prosper and move from strength to strength, this is concerning. It is especially concerning for a couple of clubs in particular.
The Cronulla Sharks have always been a team that has struggled financially. As late as last year, former chief executive of the club Peter Gow suggested that if the $200 million redevelopment plan for the surrounding area of Toyota Park did not go ahead, the club would need to investigate other opportunities. This was in the midst of a club who was operating on a small budget, depended on the Australian Rugby League Commission for early hand out of its grant and a club that has at time struggled with crowd attendance and membership numbers.
Fortunately for the Sharks, the redevelopment was announced to be going ahead at the beginning of the year. However, in the wake of the ASADA investigations, doubt from sponsors and fans, the financially viability of the club has been and will continue to be seriously questioned over the coming months. It is likely that if the fall out from the ASADA investigation results in penalties even close to that suffered by the Essendon Bombers, that the Cronulla Sharks will be unable to survive.
The Tigers are another club in financial difficulty.
These are not the only 2 clubs who can be cited as examples. At the moment the club is facing a battle between the Balmain and the Western Magpies sides for control over the club with Balmain willing to sell part of their stake in the Wests Tigers to a private investor if how to resolve a more than $1 million current shortfall. Balmain currently is not able to contribute money to the shortfall and are also in talks with the NRL for a 'rescue package'.
When the performance of our NRL clubs is compared to that of the AFL, the NRL can have no other feeling than disappointment. However it needs to be recognised that the AFL and NRL are two different codes operating predominantly in two very different states. In Melbourne, AFL absolutely dominates, seeing regular crowds of over 60,000 and clubs with membership bases which double and sometimes triple that of the NRL. In Sydney, we have an overcrowded market where the NRL competes with the AFL and ARU for dominance in the market. This has played a part in the dwindling crowd numbers over 2013.
To ensure the financial viability of our clubs, we need to ensure that the correct people are on the boards of our football teams - individuals with business experience and who are able to think commercially to see teams working towards self-sufficiency. Many clubs including the Parramatta Eels and St. George Illawarra Dragons are very dependant on their Leagues Clubs. These teams need to be working towards a position where they are able to be self-sufficient and not depend on poker revenue to ensure the continuing success of their football teams.
An interesting comment was made in the SMH story that players are overpaid because as a unit, the players do not generate the revenue needed to ensure that their clubs stay afloat. This is another concern as I have often said that our NRL players are undercompensated.
If we want to work towards a model which ensures that our players are being remunerated in a manner comparable to other codes and that our clubs continue to exist, the new broadcasting deal needs to be managed carefully, clubs need to work harded to promote memberships and to ensure that people financially support their teams and we need to pull back from a model which depends on pokie revenue to support our clubs.
What are your thoughts? How can we ensure the continuing financial viability of our clubs?
Love,
@LadiesWhoLeague
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