The money is a mirage
New post
I thought about leaving this to next week but I also wanted share some findings out of the annual report, which is now on NRL dot com. The findings confirm a drum I’ve been beating for a long time but it won’t hurt to restate the case.
The money is a mirage
Last time, we talked about the impact of inflation on the perception of the growth of the revenues and profit of the Controlling Body1. While on paper, Abdo and Vlando are clearing more money than ever before, it’s not necssarily as efficient or so much better than the past, as the less financially-savvy faction of the media would have you believe in their attempt to get you to click on stories about HUGE WAR CHESTS.
Let’s go back to the start. In 2020, there was a global pandemic. The game, the country and the world shut down for a few months while everyone tried to work out what was going on. With no football being produced, the NRL was in breach of contract with Nine and Fox, so they stopped paying. The clubs still had expenditures - staff, players and demountables - but with no broadcast revenue, the NRL would have to dig into its $180 million cash on hand - no one acknowledged this was an option at the time - to keep the clubs alive. Cue the clubs at panic stations and what I assume were plenty of screamed conversations down the phone to people at NRL HQ. The NRL was projected to lose $130 million (actual loss in 2020: $30 million).
Todd Greenberg played it cool(er) and tried to see if this was an opportunity to get a better deal with the notoriously stingy broadcasters. He was fired - sorry, mutually agreed to part ways - as CEO after meeting with Seven, for not being loyal to the game’s partners, or some other blather that V’Landys made up to force him out via media pressure.
The NRL re-upped with Nine and Fox, killed the “white elephant” digital strategy, punted Telstra’s digital streaming offering and national journalists started talking about how bloated head office was. Nine got $55 million in savings over 2021-22 plus the shortened 2020 season, confirmed as much to the ASX, and then bought the rights to rugby union. V’Landys denied it was that much but never said what it actually was, lest he imply that Nine were defrauding investors, preferring to riff on how much contra the NRL gets.
In the background of AFL’s broadcast deal going from strength to strength, V’Landys was only ever held to the weakest of accounts for this. There were a couple of jabs from Roy Masters, who also once referred to V’Landys as “a Greek god”, and the mercurial Andrew Webster, who got V’Landys to admit he’d basically done Foxtel a favour and caught him in something of a lie, before someone jangling their keys distracted the journalists.
Because of how revenue is presented in the annual reports, bundling gambling, merch and broadcast together in one line item, and eveything else is deemed commercial-in-confidence, we will never really know what’s going on. The people in charge and their sock puppets aren’t exactly incentivised to tell the whole, unvarnished truth.
Seemingly to make the books balance and address the bloat that had been a Serious Issue for all of five minutes, V’Landys slashed his way through head office. This was presented as the tough decisions made by a sensible leader in a time of crisis, with plenty of cliches borrowed from the same garbage you’re fed about the financial competence of the Liberals. It was most certainly not presented as a knee-jerk reaction to an uncertain future by panicky clubs worried that they were finally going to be held accountable for never making a single sacrifice to make the overall game more robust.
I get that in 2020, things were weird. While that weirdness extended into 2021, it was clear even then that there was an end to this thing in sight. Vaccines were coming. The clubs could stand down from panic stations. The Controlling Body boasted about monster surpluses. A new broadcast deal, signed in 2021 to start in 2023, was touted as the biggest ever. Billions2. A heaving war chest. 700 million dollars reasons to smile. AFL in the dust.
Everything from hereon is in 2023 dollars, using inflation rates per the RBA, so will not match the line items in the published annual reports but inflation partly conceals the true scale of the cuts.
Ignoring 2020, from 2019 to 2021, line item funding was cut as follows:
States: from $56 million to $39.9 million
Development: $47.2m to $31.5m
Community/player welfare: $20.0m to $8.2m
Administration: $23.8m to $15.8m
That funding has not been restored in the years since.
The states have gone from 8.3% of total revenue under Greenberg to 6.1% under Abdo. Setting aside 2020, that 2.2% drop represents $45.1 million that has gone missing from the states’ coffers over the last three years. The QRL and the NSWRL each had an annual revenue of around $40 million in 2023. Assuming the state funding is split evenly, that’s $7.5 million per year, or 18% of current annual revenue, that has disappeared.
It is little wonder that the Controlling Body has ended up in court as a result. Lawsuits are one of a few mechanisms left to people to bring the powerful to account. While legal action is not cheap, a million in lawyers’ fees is nothing next to what could be clawed back from a chairman that is as likely to settle as anything, if the past is any guide.
It’s a similar story on what I think of as the soft side of the game. The line items of administration, community, player welfare and development represented 15.8% of total revenue under Greenberg, were reduced to 9.7% over the last three years of Abdo, representing a $119.6 million saving on parts of the game no one sees.
V’Landys goes around touting how the administration costs are lower than any other major Australian sport, as if that means anything, could be meaningfully verified or that anyone cares. The constitution requires the ARLC to use rugby league as a social good, for health, to bind community, to give kids something to do that will keep them out of trouble. For a sport that loves to mythologise how important it is to communities around the country and derives part of its legitimacy from that myth, we’ll never know what difference that $120 million would have made. Perhaps none, perhaps something.
From 2021 to 2023, the Controlling Body has claimed a surplus of nearly $173 million in 2023 dollars. If you take out the funding that could have gone to the states, admin, community, etc, a total of $165 million over that period, then a surplus of just $8 million over the three years is left. That’s a return of 0.4% on the revenue of that period. Greenberg averaged a return of 3.1% and Smith, 3.8%.
It doesn’t take much to fire people as a cost saving measure, ignore that the work they were doing isn’t being done anymore (and is probably causing more work elsewhere - see how slow the RLPA negotiations went, or whether clubs are expected to pick up developmental responsibilities), and then tout that as financial genius. Our economic system demands most businesses work the same way.
Granted, we haven’t adjusted for the increased funding to NRL clubs. In 2023, this is worth about $22.1 million per club now or about 51.5% of the total revenue. Reducing that to 43% of revenue, in line with the average under Greenberg and Smith, would reinflate the surplus to the tune of $122 million over the last three years.
Most of that will end up in the pockets of players, so I’m not going to begrudge them that, but some of that money will end up where exactly? What are the NRL clubs doing with it? Making profits? For whom? For what? What’s wrong with just balancing the books? Where is the accountability or justification?
The Controlling Body has played a very basic and obvious shell game for four years now. Many reporters have been spoonfed the headline number and stopped there, assuming that line go up meant the game was in uniquely rude health. Instead, the game has just been diverting funding from Toowoomba’s Clydesdales to Sydney to shore up V’Landys’ support among ARLC-voting clubs so he can keep his job and continue to derive whatever perverted pleasure he gets from that. The game could have afforded both but the stated policy is that everyone else be damned.
These are your leaders, this is their pathology, they do not understand the hedonic treadmill they travel on and that no amount of money they shovel at the clubs will ever be enough to save them.
Thank you for reading The Maroon Observer
Here’s a couple of other minor points:
Lol, you fucked up the rules and ruined two seasons just to get it back to where it was. Well done, you absolute bunch of clowns.
Revenue is broken out more than last year. I note digital services income is down - mission accomplished.
There are $5 million of still unexplained restructuring costs incurred in 2020 and 2021, which I assume are covid redundancies. There are now $11 million of investment servicing costs across 2022 and 2023. The way the report is broken down, it will never be possible to determine whether investments in the hotel portfolio are generating revenue, generating profits and/or generating sufficient profits to justify the investment in the first place. I’m sure it’s fine.
There’s something about “national conference” and “Sydney conference” that sums it all up
A couple of years ago, I spent about 30 seconds typing in a blank Google Doc and posted a screencap to Twitter with something to the effect of “here’s a super secret but very real document from the NRL”.
Even though this caught a few people, like the Shutdown Fullcast, I have never told a joke. Nick Politis wants to go back to the good old days:
Roosters supremo Nick Politis has outlined his vision for rugby league for the next decade, imploring the NRL to split the competition into two conferences, involving an 18th team in Perth and not Papua New Guinea.
Politis wants the nine Sydney clubs in one conference and playing against each other twice. The remaining nine teams would form a national conference and also play against each other twice. The teams would then play against the rival conference teams once, creating a 25-game regular season.
To the positives:
“They should fast-track it. Bring in the Bears in Perth. We can’t ignore Perth when you have the Premier [WA Premier Roger Cook] wanting to come into the competition. I met the Premier myself who said they have a lot of big businessmen ready to back them. I told [ARLC chairman Peter] V’landys and [NRL CEO Andrew] Abdo. Now they’re looking at PNG.”
That’s a boost for the western faction in the stakeholder media kabuki. Fox, Nine and Politis seems to be the trinity of people V’Landys listens to these days, so if we can stop pretending PNG is viable so the Controlling Body can get a state government to out-pork barrel the feds, get the Bears and the WA government to see eye-to-eye on one, one, one North Sydney Oval game, let’s get on with it already.
Then, to the rest:
“Eighteen is perfect. We’ve got to do that. I think it makes sense. It’ll be great for the gate. Playing all the Sydney teams twice is better for us than playing the Titans or Dolphins at home. Revenue will go through the roof. You’ll get better crowds.”
To be fair, none of the Queensland clubs want to host the Roosters either, but this mostly smells of Blake Solly publicly soiling himself in 2021:
Rabbitohs chief executive Blake Solly has put forward a proposal for 15 Sydney blockbusters each year that could pull crowds of 30,000 to 40,000…
The 15 games could be: Dragons v Sharks, Panthers v Eels, Sea Eagles v Eels, Roosters v Rabbitohs, Dragons v Rabbitohs, Tigers v Bulldogs, Dragons v Bulldogs, Roosters v Sea Eagles, Rabbitohs v Sea Eagles, Tigers v Eels, Dragons v Roosters, Bulldogs v Rabbitohs, Eels v Bulldogs, Sharks v Sea Eagles and Panthers v Roosters.
You can look up how many people attended those games since, which have been more or less played twice a year. Then you can look up how many games in Sydney cracked the top 15 best attended games last year (one, the grand final) or what the best rating regular season game ever was (Conflict on Caxton I).
Sydney is has a slew of replacement-level NRL franchises that don’t bring anything to the game other than generic NRL-branded content and a lot of whinging. Their continued existence is subsidised by clubs whose fans actually exist. Where have I heard that before?
I don’t know why the magic bullet is less Titans and Dolphins and more Dragons and Bulldogs. There’s clearly an oversupply of NRL in Sydney, so the league would be better off with more out-of-Sydney teams, not fewer. It might be time to consider replacing Manly with the Capras. One has 78 years of history and the other would have paying customers.
Spinning the Broncos, the biggest team in the sport, the Dolphins, the second biggest team in the sport with one (1) NRL season under their belt, and the Warriors, responsible for approximately 20% of all broadcast revenue, and other rating winners and subscription providers, like the Storm and Cowboys, out into their own conference would actually make that very clear. I almost want to do it so there’s indisputable proof that the rest of the world has moved past the hill, the halcyon 80s and Phillip Street, and rugby league can be more than these dinosaurs will allow.
Giving a Sydney team a guaranteed ticket to the grand final, held in Sydney, to face an actual national champion that’s travelled is exactly why we have to hear about the North Sydney Bears every few months.
One assumes that Politis, who definitely isn't an old man complaining about the arcane differences between a draw and a broadcast schedule to fill column inches, will stick by what he has to say once these brilliant initiatives are implemented and the broadcasters commensurately adjust their investment. The Roosters will surely be just fine with the resulting club grant.
“It’s the best I’ve seen since I’ve been involved,” the long-serving administrator said. “V’landys was correct; we are the game. We provide the product but before we were going broke because the people in the game had this anti-club attitude. Don’t give them money they’ll just blow it. It’s a major turnaround in thinking brought in by V’landys.”
It's telling that the sensible ideas for the sport come from Foxtel of all places, and the dumb shit exclusively comes from club bosses. Gould, Politis, Solly and Fletcher are the worst offenders. Perhaps this is why previous administration's starved the clubs of funding.
This diatribe ignores that a huge chunk of the NRL’s revenue comes from State of Origin, to which the NRL clubs are obstacles and not participants, and that revenue has been siphoned off from the state bodies doing the yeoman’s work of keeping the sub-elite game going, to feather NRL club nests. The same clubs were opposed to the introduction of State of Origin in the first place, want more restrictions put on it even now and never acknowledge that Origin is the only reason the NRL recovered from the Super League war, also caused by the clubs’ collective misunderstanding of how the world works, to have any national relevance today.
“You've got to listen to a successful businessman with his rugby league knowledge.”
Intermission
Daydreaming
From the CM:
Secret talks3 are under way for a $23m, 10-team US super league competition that could give the NRL a permanent foothold in one of the world’s biggest sporting markets.
This masthead can reveal a consortium has met ARL Commission boss Peter V’landys to table a proposal for ‘NRL America’…
The league, to be operational by 2025, would be owned and governed by private investors. While the ARL Commission would not be expected to run the competition, the consortium is prepared to offer an ownership stake, and official branding rights, to give the NRL a bona fide, long-term presence in North America.
Karl Stefanovic supposedly put some money in. Rugby League America is also courting The Rock. Manly is open to an affiliation with a New York team that has no players or opposition.
If playing rugby league is going to take off in the States in a meaningful way, concentrating efforts in one region would be the way to go. Getting teams along the west coast would help keep a sensible lid on costs and the time needed by players, instead of forcing part timers on six hour redeye flights to criss-cross the country and play in front of dozens of people, while putting content into an acceptable timezone for the east coast of Australia.
Three franchises – New York, Dallas and Las Vegas – have already been sold for a start-up franchise fee of $US1.5m ($2.3m)
Never mind. This almost certainly isn’t going to happen. Even if it does, it will cause yet another almost irreconcilable split in American rugby league that will need to be repaired once the money has disappeared.
As evidence, I’m not re-writing this:
Then again, Peter V’Landys is the most consequence-free man in history so he'll probably help destroy the reconstructed USARL and they'll say thank you before asking for more. The IRL won’t breathe a word.
Anti-siphoning
Anti-siphoning was a piece of 1992 legislation put in place to protect free-to-air networks against the then-new pay TV slurping up all the good stuff. It meant that certain sporting inventory - among them AFL and NRL, Origin, the Melbourne Cup, the Olympics, the Australian grand prix, the Australian MotoGP and most of the major Australian international teams (when playing in Australia or in certain World Cups or both4 , depending on the sport) - had to be offered to free-to-air networks first.
By reducing the number of bidders, prices were kept lower for broadcasters but it also (probably, unintentionally) protected the sports from themselves by preventing them from going full paywall. Keeping at least Origin and the grand finals in the shop window, as it were, was and is a good strategy. Look at rugby union for the alternative.
A couple of years ago, there was an opportunity to review the system as it reached a mandated expiration date. The Morrison government, known for its proactive approach to a range of matters like pandemics, bushfires and floooding, punted and extended the deadline.
The current framework is out of date. There’s barely any women’s sports on the list. It’s not clear to me why it matters where the Australian team plays. And, as the NRL has gone into bat for its mates at Kayo:
“Essentially when the list was conceived, we lived in a very different world … now of course people take their content in all manner of ways,” [NRL head of corporate affairs] Mr Zelinsky said.
“We should be technologically neutral if the intent is for people to be able to see [sport] freely; we think that’s a great outcome [but] it doesn’t necessarily need to be free-to-air television.
They’re proposing that Fox (or Youtube or Amazon or whatever) should be free to bid on the rights to Origin or the grand final with the FTA networks but would have to show it on their equivalent of Kayo Freebies, in front of the paywall. That would probably be a good thing? Kayo Freebies isn’t any worse than 9Now.
It’d at least make Nine work a bit to keep the rights and probably sink them without it. You will, of course, recall the 2020 campaign by Nine to unleash a torrent of undermining from their journalists during re-negotiations with the NRL, a course of action that was at best unethical and if it isn’t already, should have been illegal. You’ll then forgive me for not crying a river when Google and Facebook, evil as they are, eventually eat Nine and their compatriots.
Here’s your irregular reminder that then-CEO of Nine, Hugh Marks, quit because he was fucking his assistant and everyone found out. Marks was engaged by the NRL as a consultant to re-negotiate the RLPA agreement but the Controlling Body dithered on the negotiations.
Foxtel’s Patrick Delany claimed that the FTA networks can buy the rights but aren’t necessarily obliged to show them on FTA. Nine could, for example, push inventory to Stan Sports. If true, that would be self-defeating if the intent is to allow as many Australians watch major sporting events as possible. Albanese’s government’s proposed reforms seem to be targeted at providing more protection for FTA by putting more restrictions on streaming platforms, which is a net loss for sports.
Also:
“When the Knights are playing the Dragons, as much as we may love it, I’m not sure if you qualify as ‘nationally significant’ or ‘iconic’,” Mr Zelinsky told the inquiry.
Lmao, ass franchises getting owned in a Senate inquiry.
That is the term the annual report uses for the two-headed snake that is ARLC and NRL, which I think will be handy.
A quick Google shows there are headlines touting a $2 billion NRL media rights deal from 2015, 2020, 2021 and 2024.
It’s never secret if you know about, Pete.
Which is why the 2022 World Cup was on Kayo and 2017 was on Seven.