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Rugby Australia reports A$9.4m operating loss, NRL agrees A$40m bailout

(by Mark Metcalfe/Getty Images)

Rugby Australia has announced a provisional A$9.4m (€5.2m/$5.8m) operating loss for 2019, stating “harder decisions” will come amid the Covid-19 pandemic, while the National Rugby League (NRL) has revealed details of a A$40m bailout package for its clubs.

Rugby AU held its annual general meeting today (Monday) via video conference as the governing body faces up to multiple challenges amid the global pandemic. Rugby AU last year reported a net profit of A$5.2m for 2018, but warned it would operate at a loss in 2019 due to the Rugby World Cup.

While an update on Rugby AU’s finances was provided to members at today’s meeting, the body said its Annual Report will not be issued until audited accounts can be delivered. As expected, in a World Cup year with reductions in broadcast and matchday revenue from fewer domestic Test matches, Rugby AU operated at a loss in 2019.

However, the body said all revenue targets were met, with operating expenditure increasing by A$6.6m in 2019 due to increased grants, player payments and legal costs and settlement of the case surrounding the sacking of former Australia international Israel Folau.

Earlier this month, Sanzaar announced that its Super Rugby club competition had been suspended due to Covid-19. This has placed severe strain on the finances of franchises, along with Rugby AU’s cash reserves. Rugby AU also suspended talks over its next broadcast rights deal, as chief executive Raelene Castle conceded that the governing body may need to approach the government for financial assistance during the crisis.

With the Covid-19 issue rapidly-evolving and its implications for the sport set to be far-reaching, Rugby AU today said it is required to action “significant cuts” across the business for the sport to remain financially viable in the short term. Australian broadcaster ABC reported that Castle stated she will take a 50 per cent pay cut, with other senior executives taking a 30-per-cent reduction.

In a statement, Rugby Australia chairman Paul McLean said: “To put it simply, there is no way of knowing what damage this crisis will have on our game, or for how long it will continue to impact us. It has forced us to make some extremely difficult decisions, and there will be even harder decisions to come as we continue to navigate the implications of the virus on the game’s finances.”

Elsewhere, the NRL has today agreed on a recovery plan with its clubs relating to the impact of Covid-19 on its 2020 Premiership season. On March 23, the NRL followed the Australian Football League (AFL) in suspending its 2020 season amid the Covid-19 outbreak, with officials stating the sport is set to face the biggest financial crisis in its history.

Australian Rugby League Commission (ARLC) chair Peter V’landys and NRL chief executive Todd Greenberg said today’s plan provides funding certainty for the remainder of the 2020 season. The deal, unanimously supported by all 16 clubs, has been created on the back of a significant whole of game cost reduction.

The NRL will pay a total of A$40m in monthly grant payments to the clubs, A$2.5m apiece, between April and October to cover their ongoing operational costs. This is an increase of A$6.4m of funding compared to the 2020 budget.

The NRL will reduce its operating costs by 53 per cent, including a 95-per-cent reduction in staffing levels during the shutdown period and a 25-per-cent cut in executive salaries. In addition, the NRL has proposed a funding model for player payments to the RLPA, which will be provided to the members of the players’ union for consideration.

V’landys said: “We had no option but to stop the competition in the wake of advice from our biosecurity and pandemic expert but remain optimistic that the season will restart as quickly as possible, ideally by July 1. If that isn’t possible, then we need to be prepared for all contingencies. The crisis has highlighted that the game’s present cost structure is not sustainable and the ARLC will lead by example in substantially reducing its costs now and into the future.”

The NRL said the revised financial models provide clubs with the capacity to survive the financial year with either a remodelled 20-week competition, including finals series and State of Origin, or a worst case scenario of no rugby league being played again this year.

Greenberg added: “We are working together to achieve the best outcome in the short, and long term. We must use this opportunity to reset the game’s costs and overall structure. These measures will put the game in the best position to rebound strongly from the pandemic.”