SANZAR Should Cut Teams Or Face Super Rugby Bankruptcy

TheSportFreak is yet to give our opinion on the proposed axing of certain Super Rugby teams, where 2 may likely come from South Africa. Thus, we thought it is high time we come on record. Below we will give a comprehensive breakdown on the current state of Super Rugby and why SANZAR executives are desperately trying to reduce the number of Super Rugby teams so shortly after they praised themselves for the expansion to an 18-team competition.

Super Rugby in Financial Trouble

Super Rugby is not working, and what was once labeled as the toughest, most competitive, competition in the world is fast turning into a watered down product with below par rugby. Reality is fans are simply not as interested in the competition as they once were, to many (noncompetitive)  matches, and below par rugby all contributes towards dwindling viewing numbers, which results in sponsors  becoming harder to come by, or rather unwilling to pay the same high price they once were to be affiliated with the tournament. Gate fees are also at the point, where many (not all but many) of the Super Rugby franchises are almost at the point where they are willing to give away free tickets in a desperate attempt to revive interest in their franchise.

When we researched the financial standings of various Super Rugby franchises we uncovered a worrying trend. Currently more than half of Super Rugby franchises are operating at a loss, and financial losses are increasing with each year.

Below is an image from the Australian Rugby Union financial statements for the 2015 financial year. A year in which the ARU went on to record a Net Loss of $800,849 (AUD) approximately 10’Million South African Rand.

Australia Rugby Union Income

Australian Rugby is currently operating at a loss

When you dig deeper into the report to try and find out what the exact reasons were for the financial loss the reason quickly becomes clear. Super Rugby teams (franchises) make up the bulk of the losses for their parent company the Australian Rugby Union. Had it not been for international rugby and the 4-nations, the losses would have been substantially more. You can view the full report by the Australian Rugby Union by clicking here.

The New South Waratahs (NSW) which is currently considered Australia’s strongest financial franchise, largely because they operate in a part of the country / continent where rugby union has the largest market, went on to recorded losses of no less than, $720’100 AUD, approximately 5-million ZAR for the same year, as can be seen on the image below!

Waratahs rugby income

Perhaps the most worrying aspect of all is the fact that, at the moment, ALL Australian Super Rugby teams are operating at a loss!

New Zealand Super Rugby Franchises

When we compared New Zealand rugby’s financial statements to that of Australia we were expecting to see the exact opposite, however it came as a huge surprise that New Zealand rugby also recorded a loss for the same period to which we compared Australian rugby. Strangely a year which was very successful for New Zealand rugby in terms of on-field results, didn’t translate to success in revenue.

New Zealand super rugby finances

As can be seen from the image above, a shortened version of NZRU income statement, parent company NZRU (New Zealand Rugby Union) recorded a near $500’000 (NZD) loss for the same tax year (approx 5-million ZAR)

One would think that New Zealand rugby’s franchises should be pretty well of financially considering the quality of competition within the New Zealand conference. However, as can be seen by this statement released by the Crusaders rugby union, which is New Zealand most successful franchise, they merely managed to break even. Which means that all other New Zealand rugby franchises are currently operating at substantial financial losses.

What you can take away from the above is that the key culprit for NZRU failing to record a profit can directly be attributed to the Super Rugby franchises which are unable to generate a profit.

The fact that New Zealand Super Rugby teams fail to make a profit is rather mind boggling, but we will attribute it to:

  • A poor Super Rugby competition leading to a loss of interest.
  • A relatively small population size of New Zealand, leading to a limited market, with 5 franchises all competing for their share of the same market.

South African Rugby Finances

When we compared the South African Rugby Union’s financial statements to that of their Australasian counterparts we were prepared for the worse. However, what we found pleasantly surprised us!

The parent company of SA’s Super Rugby franchises, SARU, was the only governing body who managed to record a profit.

When we compared SARU’s finances to that of ARU and NZRU, whom all made losses, SARU managed to record a profit of approximately R10 million (ZAR) for the same period. Roughly equivalent to just under 1 million AUD / NZR. Not a huge profit by any means but a profit none the less!

South African rugby finances

While not bad one can’t help but wonder how much more that profit can be, if not for maladministration, corruption, internal power struggles and (some) Super Rugby franchises operating at losses.

We searched the web over to try and find financial documents on South African rugby franchises, unfortunately it seems that SA Rugby franchises are not as transparent with their finances’ as their Australasian counterparts. Unfortunately, we were unable to find any financial statement on any of the South African Super Rugby teams.

With that being said, consider the following:

  • The Kings went bust last year and SA Rugby had to spend millions bailing them out.
  • Although the traditional Springbok factory, Is there truly a profitable market for the Cheetahs franchise?

What is the point of the above / What has finances to do with axing Super Rugby teams?

As can be seen from our investigation above, one can quickly come to the conclusion that very few of the current Super Rugby franchises are able to record consistent profits. This is in stark contrast to the heydays of Super Rugby (the Super 10 / 12) when clubs were recording record profits.

A tournament can’t be successful if it continually operates at a loss and the long term viability and survival of Super Rugby is under serious threat.

The only way to fix the financial problems of the Super Rugby tournament is to privatize the whole competition, and put franchises up for sale. (we have written a detailed article on privatizing rugby which you can view here) However that is highly unlikely to happen in communist South Africa where privatization is seen as evil.  This leaves us with the only other viable option, to drastically reduce the number of Super Rugby teams.

How to make Super Rugby profitable again

To restore the pride of Super Rugby and make the competition profitable (and enjoyable) again we suggest dropping 2 SA franchises, 2 Australian franchises, 1 New Zealand franchise as well as both the Jaguares and Sunwolves. Yes, we are suggesting to boot none less than 7 teams from the competition!

While the introduction of the Sunwolves and Jaguares might have been a huge leap forward to grow international rugby it was done in an over hastily manner and wasn’t thought through.

The Sunwolves are simply not up to Super Rugby standard and the Jaguares well, the huge timezone difference makes it hard to attract a proper TV audience for away matches involving them.

Possibly a better move from World Rugby could have been to start a competition similar to Super Rugby in the America’s, which included the USA, with the Sunwolves forming part of that tournament. The yearly winner of stated tournament can then possibly join Super Rugby while the loser of Super Rugby getting relegated to the mentioned tournament. However, that makes for an entirety different post.

Conclusion

The current quality of Super Rugby (or rather lack thereof) can directly be contributed to SANZAR rugby administrators who got overly greedy and continuously tried to fix what was not broken.

A return to a round robin Super 12, or even better Super 10 competition, will directly result in better quality of on field competition, which will attract more viewers, which will in turn help solve the financial woes of Super Rugby! This will help ensure the long term survival of the Super Rugby competition, which is crucial for the Southern Hemisphere teams to maintain their competitive edge in world rugby.

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