Podcast: The Detail

Why rugby’s financial model is broken

Last weekend's Super Rugby brought the spark back to the game, but even full houses of excited fans won't solve rugby's money woes. 

The Super Rugby Aotearoa competition has sparked new life into the sport, with huge crowds celebrating escape from lockdown by going to the first games.

But as exciting as it was to see the oval ball being tossed around again, it's not likely to be enough to rescue the sport from a downward spiral in finances.

Tied to the global game, going down the gurgler during this pandemic, the New Zealand union must find ways to boost its coffers - without neglecting vital parts of the game, including the women's and grass roots competitions.

To say the game is dying is a "bit strong", says freelance rugby writer Liam Napier. "But as we sit, coming out of Covid-19 it’s probably coming off life support. Any business that's projecting to lose 70 percent of their revenue and cut half their staff is in a pretty tenuous position."

Napier tells The Detail's Sharon Brettkelly the beauty of Super Rugby Aotearoa is that it’s owned and operated by New Zealand Rugby without interference from the world body, and that's a rare thing. But despite the record crowds at the first games, it won't turn around the business.

New Zealand Rugby is too dependent on the All Blacks and the model has to change, he says.

"World rugby is in dire financial straits because the unions survive off the funding that comes from test rugby and that just can't be played at the moment, so you basically have your revenue stream turned off overnight.

"The All Blacks generally play 12 to 14 tests a year and that money then flows through to super rugby to provincial unions to the grass roots. Even pre-Covid there's an acceptance that that model needs to change but nobody saw this coming."

Napier explains the sources of income for rugby, including sponsorship and broadcast rights, are changing - and there is a growing need to bring in investors such as the private equity giant, CVC Capital Partners, already a big investor in northern hemisphere rugby.

"There are a lot of opportunities in this space; it’s just a matter of navigating it to make sure you get the best investment. But you don't lose total control, and even then it’s a bit of a fraught space."

Want more from The Detail? Find past episodes here.

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