Fans could begin to question the legitimacy of the season and broadcasters could seek a further reduction in rights fees if more AFL matches are postponed or cancelled, according to a leading sports media analyst.
The importance of completing a 17-round season plus finals to fulfil the AFL's broadcast obligations was underlined by Global Media and Sports boss Colin Smith, who said it was paramount that fans remained invested in the season.
The slated clash between Essendon and Melbourne at the MCG last Sunday was postponed after Bombers speedster Conor McKenna tested positive to coronavirus. A rescheduled date has yet to be set, while McKenna's diagnosis has also put Saturday night's marquee - and high-rating - clash between the Bombers and an improving Carlton in doubt.
The Bombers could lose more players to quarantine if they are deemed close contacts of McKenna.
"Does that put under question this season for the AFL? I am not saying that is the case but it depends on the fans," said Smith, also pointing to the concerns the unhappy West Coast Eagles are facing in their Gold Coast hub.
"Will the fans buy this? Because, at the end of the day, the success of sport is driven by fans. That is why broadcasters buy sports media rights.
"One of the challenges right now, and it's probably going to be for most of the season now in Victoria, is that bums on seats is what funds the clubs. If you have no bums on seats, it means therefore the sport itself and its club are totally dependent, especially the Victorian clubs, on what happens at the AFL. This is not a criticism of the AFL. It is just the state of play in this new COVID world."
Sunday afternoon's clash was to have been shown on Channel Seven and would have enjoyed bumper ratings in Melbourne but the free-to-air broadcaster instead had no choice but to take the less appealing match between the Gold Coast Suns and slumping Adelaide Crows.
The match attracted 319,000 viewers nationally, including 243,000 metro, which is relatively healthy given it was not shown in Sydney or Perth. By comparison, the round two clash between Sydney and Essendon in the same slot a week earlier had 621,000 viewers nationally and 445,000 metro when broadcast on Seven across the country.
Foxtel had 178,000 viewers for the live Suns-Crows match compared to a Sunday high of 255,000 for the Bombers-Swans match.
Essendon players and football department officials remained in isolation on Monday, ahead of the release of further testing results on Tuesday.
In terms of the Demons-Bombers match, network sources point out it could yet benefit Seven and Foxtel because the postponed clash could be staged in primetime on a weeknight.
If the Bombers-Blues clash is postponed, Seven and Fox could seek to have the twilight match between Richmond and St Kilda shifted into prime time. That match is slated to be a Fox Footy exclusive broadcast. The second Saturday night match already scheduled is between Gold Coast and Fremantle, which is also a Fox Footy exclusive broadcast in Melbourne.
If more matches are cancelled, it would allow Seven and Foxtel to seek a further cut on the reworked broadcast deals completed earlier this month. They pocketed combined savings of an estimated $150 million over the remaining years of this contract, expiring in 2022, because, in part, this season has been slashed from 22 to 17 rounds, game time has been shortened and there have been little or no crowds.
Sponsors - and advertisers - could also seek refunds if more matches are lost. A new pay deal for players would also be impacted by a further cut in broadcast fees.
"The deals they [AFL] have just done, which reflects that [COVID-19 changes], you wouldn't want this to continue going forward because the whole viability of the league is therefore under challenge. I think therefore the AFL has done a really good job with this so far. This is a poison chalice you would rather have avoided," Smith said.
"If it [McKenna case] becomes the norm, it throws the whole season up in the air. If fans lose their engagement, that is a real challenge."
Rugby Australia's bullish new attitude to private investment has been met with cautious optimism and a number of warnings, including one exhortation that Australia should be careful if it chooses to "get into bed with the Kiwis".
Current and former officials and administrators have welcomed new chairman Hamish McLennan's openness to drawing private capital to the embattled code, which is about to embark on the most important competition redesigns since the game turned professional in 1996.
But there has also been a keen sense of deja vu as the once-rejected trans-Tasman model roars back into favour, plus nervousness Australia will again be locked into partnerships that do not serve fans and the game's interests at home.
"At the end of the day, the [18-team Super Rugby] competition which the Kiwis were great advocates for was an abject failure one year in," highly-respected administrator Greg Harris said.
"They were the architects of that competition. I would say if you want to get into bed with the Kiwis - they do have a new CEO now [Mark Robinson] - it's 'me first' and you running a long last."
Harris ran the Waratahs, the Rugby Union Players' Association, the Western Force and Sydney University Sport over a 20-year career in rugby, commissioning various reports in those roles that advocated doing away with Super Rugby in favour of domestic or trans-Tasman models.
RUPA under his tenure and that of his successor Ross Xenos were vocal opponents of the 18-team, two conference Super Rugby model unveiled at the end of 2015. They argued the record-breaking broadcast dollars would not cover the competition's structural weaknesses, which included Australian teams playing overseas for weeks on end and poor fan engagement.
In the aftermath of the coronavirus shutdown, Australia and New Zealand are both taking time to work out what 2021 and beyond look like.
Australian consensus seems to be that the strongest fan-centred and commercial model will lead to a trans-Tasman competition with the addition of Japanese and Pacific Islands teams, but strong rumours out of New Zealand suggest they favour a Kiwi-only competition with room for one PI team and potentially the Western Force, leaving Australia's eastern seaboard heartland out in the cold.
Harris urged McLennan and interim RA chief Rob Clarke to take a more hawkish attitude into any future alliances.
"I was amazed with the disdain the ARU [now RA] and NZRU showed for the work that was done on viable competition models at the time," he said.
"Without a doubt, New Zealand had, and continues to have, strength where their game was concerned but they didn't have the strength in terms of their numbers and their commercial model."
His comments were echoed by former RA boss John O'Neill, who first proposed a trans-Tasman competition more than a decade ago.
"We had the model fully-costed by the broadcasters and us in 2009. It was viable financially and much more user friendly in terms of time zone and vastly reduced overheads," O'Neill said.
"But New Zealand blinked at the last moment and left South Africa in. The rest is history; 18 teams later, a disaster by any measure."
O'Neill was also among the earliest Australian administrators to use a private ownership model in the two codes he ran, football and rugby.
"There was overwhelming worldwide evidence then and for years before that private ownership of professional teams was more the norm than the exception in all the significant and successful competitions - the EPL, NFL and rugby in UK and Europe. In our own market with NRL and AFL there were forms and variations of private investment," he said.
"Indeed when I joined the FFA we created the A-League in 2005 the state federations were prohibited from owning a team on the basis that their job was to run the community game and that ownership of professional teams was financially too high-risk.
"All eight A-League teams were funded by private money. No cost to the community game. Made sense then and it still does now in all sports."
NSW chairman Roger Davis applauded McLennan's attitude to broadening Australia's revenue base, alleging he and then-NSW CEO Andrew Hore were rejected out of hand by former RA boss Raelene Castle and deputy chairman Brett Robinson on a proposal to enter into talks with private equity firm CVC Capital Partners.
"Private equity is a terrific idea, it enables the game to keep control of the rules and the playing content while leveraging the commercial prowess of the private equity players," Davis said.
Broadcast rights expert Colin Smith also gave the thumbs up to a private equity investment in the commercial rights to Super Rugby, or whatever replaces it.
"It can work because there is mutuality of interest in terms of maximising the commercial return but also maximising the competition and fan engagement," Smith said.
"You can't run a sports league and drain it for cash. It has to work as a genuine competition and be seen as one. The problem with Super Rugby has been that it shot itself in the foot with chasing huge dollars with a competition with huge costs."
SANZAAR is imploding; the Kiwis are plotting to control what is left of Super Rugby in the Pacific; Rugby Australia has just announced a 40 per cent cut in staff after staving off insolvency, yet interim chief executive Rob Clarke says that now is "a nice opportunity" to resurrect the game in this country.
It's difficult not to think of Nero. After all, the immediate past RA chief executives Bill Pulver and Raelene Castle, together with their chairmen, Michael Hawker, Cameron Clyne and Paul McLean, have all fiddled while the code burned.
Rugby has descended from a position where it had won two World Cups by 1999 to the Wallabies now ranked seventh; headquarters once sat on a war chest of $35m, yet incurred a $9.8m loss last year; rugby wooed NRL internationals, such as Lote Tuqiri, to the Waratahs - once ranked fifth in Australian sporting franchises, behind the Broncos and Collingwood – and now faces a player exodus; three franchises, Brumbies, Waratahs and Reds, either won Super Rugby titles or were finalists, yet last year Australia had one team (Brumbies) in the top 10 of the 15-team SANZAAR.
Clarke has been quoted saying "Rugby Australia has a bright future", although the code's incoming chair, Hamish McLennan, is far more measured.
"We are going through a difficult period but rugby's core is very strong and, while we have a lot of work to do, I wouldn't have taken on the job if I didn't think I could have made a difference."
Some believe McLennan, 54, was drafted onto the RA board only after newly elected director Peter Wiggs, having been endorsed as chair, admitted he would like to have two-time successful former CEO John O'Neill join his board.
This would have reunited O'Neill with Matt Carroll - Wiggs' choice of his former Mosman teammate as CEO – putting the St Joseph's College old boys in control, while the McLennan/Clarke pairing are former Shore rugby players, as was the Hawker/Pulver duo.
Yet McLennan gives no hint that old school ties will influence his decision making in his new role, nor that his chairmanship of the REA Group, a digital advertising real estate company operated by News Corporation, will drive the game back to its quarter-century broadcaster, Rupert Murdoch's Fox Sports.
Any suggestion that his close association with the Murdoch family will extract a generous rights deal from Fox is as meaningful as interim CEO Clarke sailing on Sydney Harbour with Fox boss Patrick Delany.
"I know all the media players," says McLennan who is also a former boss of Channel Ten. "I'll do what is right for rugby and Foxtel will do what is right for them."
McLennan is also deputy chair of Magellan Financial Group, a global equity fund. It's financial savvy the code needs right now.
"We are addressing the cost base and making the tough decisions and looking to create a sustainable structure going forward," he says.
A $14m advance from World Rugby – a pre-payment on the 2023 Rugby World Cup - has strict conditions and a loan has been taken out with HSBC.
But given COVID-19 has shut down gate revenue and Fox is in the last year of RA's contract, what type of competition can he sell to a broadcaster to pay the bills?
COVID-19, with its travel restrictions, has kicked away what has underpinned international sporting competitions.
SANZAAR has unravelled, with the Rugby Championship – Test matches between the southern hemisphere nations – all that seems guaranteed long term. South Africa is positioning to join Pro 14, a competition embracing UK teams and two former South African teams who were jettisoned from SANZAAR’s fundamentally flawed 18 franchise iteration. It is inevitable countries will have domestic competitions in what is left of 2020 and maybe 2021 as well.
New Zealand sources, where rugby union is almost a civic religion, suggest the Kiwis are seeking to control what is left in the Pacific, aiming for a provincial competition with perhaps one Japanese team, together with a Pacific Island nation. Australia, it seems, may be fortunate to have only one franchise included, if invited.
McLennan will only concede that "Super Rugby isn't working and we need to figure what to do. The pathways from club rugby to the Wallabies don't currently work. My focus will be around ensuring the grassroots right through all competitions is the right structure".
Yet funding for grassroots was Clyne's justification for sacking Western Force from SANZAAR. He said the Perth based franchise "has greatly affected our capacity to invest in community rugby". RA's funding of Community Rugby continues at the paltry level of only 3.6 per cent of revenue.
Nevertheless, McLennan says, "The schools and Under 20 teams are showing real talent, which gives us confidence that over time, under a new leader in [Wallabies coach] Dave Rennie, we will have a more competitive team."
He is confident a five-team Australian competition, embracing the existing four Super Rugby franchises, plus the recall of the Western Force (for 2020 only), will rate better with more friendly time zones and local derbies. But will Foxtel pay for a competition which doesn’t meet contractual obligations and provides minimal content?
An alternative suggested is NSW and Queensland's semi-professional Shute Shield and Hospitality Cup club competitions. However, they are not a commercial proposition for broadcasters, generating average free-to-air TV audiences of 20,000 and 10,000 respectively.
These ratings would need to be 15-20 times larger to justify a broadcaster paying for production and rights fees.
To put this in context, Super Rugby local derbies on Foxtel (behind the paywall) average 71,000, which equates to 165,000 on FTA TV.
Meanwhile, the Kiwis are investing in "Aratipu", the Maori word for "growth", which is code for the survival of their game at the possible expense of a Trans-Tasman competition.
Global Media and Sport's Colin Smith, who wrote the 2014 report for RUPA warning of the flaws of SANZAAR expansion, says "RA must get their transformation on and off the field absolutely right this time, otherwise their fan base will disappear".
Asked why McLennan would succeed when so many Nero’s have failed, Smith said, "He is a credentialed chairman and if he is supported by a leading sports administrator as CEO, he could become the Emperor Constantine to revitalise the code."
A battle for NRL streaming rights could be on the horizon after revelations an alarming number of young viewers are switching off rugby league on television.
Statistics released by Roy Morgan on Wednesday indicate that NRL TV viewers under the age of 34 have dropped 10 per cent in the past four years.
Viewership has declined across all age groups, but it is the drop in the young demographic that will be of most concern at Rugby League Central.
"Overall this important demographic comprises around 25 per cent of the 6 million NRL TV viewers," Roy Morgan industry communications director Julian McCrann said.
"A further 25 per cent are aged 35-49 while around half are aged in the 50-plus age bracket. For the NRL to turn around the decline in TV viewership, it's vital to find a way to re-engage this audience."
The development comes on the same day it was reported the NRL would block Telstra from streaming its matches after the 2022 season.
It is believed the move is part of negotiations with free-to-air network Channel Nine to extend its broadcast deal.
Foxtel, which currently sells the streaming rights to Telstra, last week signed off on a five-year extension to broadcast the league until the end of 2027.
But it is understood the pay-TV company has been prohibited from on-selling streaming rights when the new deal begins in two-and-a-half years.
The league could then allow Nine to stream matches from 2023 onwards, the value of which could rise dramatically if current viewing trends remain.
In a separate survey by Roy Morgan, Foxtel's viewership, which includes streaming service Kayo, has risen by more than 500,000 subscribers in one year.
The same study, which interviewed more than 50,000 Australians, said almost 13 million Australians had access to Netflix in the recent March quarter.
Global Media and Sports boss Colin Smith predicted there would be a serious fight to attain exclusive rights to broadcasting games digitally in the future.
"Millennials are not watching linear TV, be it free-to-air or pay," Smith said. "They still follow their sports, so there has to be a product designed for them to get them watching and paying for it, which will be different.
"And how that comes out, hold this space. I can see the over-the-top services, the likes of a YouTube, Facebook, or Amazon, looking to acquire rights to sport that could be packaged different in structure.
"There is going to be a fight in the next rights deal on simulcast. I would suggest they will want live and exclusive on their free-to-air platform as well as their digital platforms."
ANALYSIS: Money talks around the Sanzaar table and when it comes to discussions about the future of Super Rugby and The Rugby Championship the loudest voice might have a Kiwi accent.
Forget about the assumption that New Zealand is still propped up by South African broadcast money: that hasn't been the full picture for years.
In fact, a source has told Stuff the new Sky deal announced in October means NZ Rugby will bring "significantly" more to Sanzaar than the South Africans will via broadcaster SuperSport, in part because of the weak Rand.
It's a game-changing deal – heated up by competition from Spark – that defied broader industry trends and could allow NZ Rugby to radically redraw Super Rugby to make it the more domestic-focused product that supporters are craving.
Sanzaar broadcasting deals have always been complex beasts to unravel, leaving spectators confused about who pays what, and to whom.
The money each country brings is pooled, although separate deals for domestic competitions such as the Currie Cup can reduce the size of the pot.
Stuff understands that under the current 2016-2020 Sanzaar arrangements New Zealand, Australia and South Africa get an equal share of the broadcasting pot – one-third– with a set amount set aside for Argentina.
This reflects their contributions under the last deal, with the Sky deal worth $US32 million a year (although that includes the Mitre 10 Cup), Fox Sports adding $US24m and SuperSport $U26 million (SARU sells the Currie Cup separately, and the size of that deal has caused friction in the past).
The significant uplift in last deal was also helped by more money out of the UK, where a broadcast war between Sky UK and BT Sport saw the former pay about £20m a year – a staggering 620 per cent increase that won't be repeated.
However, you can burn that model because the ground has shifted in the past few years, and was doing so even before the coronavirus.
Stuff has been told that the massive deal NZ Rugby struck with Sky is worth up to $100m a year (that figure also includes domestic tests that are not part of the Sanzaar deal) while the SuperSport deal was tipped to be flat.
That's a huge increase for NZ Rugby, as in 2016 and 2018 (the most recent non-British and Irish Lions tours years) its broadcast revenues were $73m a year.
The ailing Sanzaar partner is clearly Australia, where Fox Sports is reportedly in a position to only offer $A15-20m a year for the 2021-2026 rights.
NZ Rugby could be therefore justified in asking for larger share of the Sanzaar pot to reflect its growing contribution, negotiate better terms, or even walk away from Australia in Super Rugby.
That invites the big question: can New Zealand even consider a domestic competition that could stand on its own two feet?
Armed with the above figures, we approached sports and media rights expert Colin Smith of Global Sports and Media, who correctly anticipated the bumper Sky deal.
"I think there is an opportunity for New Zealand to retain the five [Super Rugby] franchises but increasing them to a minimum of eight," Smith said.
"And having that a professional competition in itself and then you could have a crossover of the top two, or top three, playing the top two of the Currie Cup.
"If Australia gets its act together it cold also play in that as well.
"It would be a mini Champions League.
"Rightfully, New Zealand will argue and should argue because its won 70 per cent of the Super Rugby finals in the past decade that it should have the majority of the teams with a smaller number of South Africa teams and one Australian team.
"But each of them would have their domestic competitions as a major part. The challenge for New Zealand as I would see it is how you deal with the provincial unions and who gets a team and who doesn't.
"My personal view is that I don't think that Super Rugby as it's currently configured can continue in its current model. It is not sustainable."
Smith's logic for an eight-team Kiwi competition is simple: it's a numbers game.
While the 14-team Super Rugby format agreed for next year might not excite fans, it gives Sky seven games a weekend of 'content' and Sky gets the Australia and South Africa-hosted games for 'free' (no production costs).
Smith said that Sky might therefore renegotiate the NZ Rugby deal to reflect the 'lost' games but when asked if NZ Rugby could make the replacement product just as valuable by adding three more Kiwi teams to provide four high-value games a weekend, he said:
"It could be. I think that's the strategy that NZ Rugby is undertaking now with the Aratipu review.
"They're realising they have re-look at the whole structure of New Zealand rugby."
Sky would have to wear the additional production costs for that competition and pass that on, but Smith pointed out that without the huge travel and accommodation costs involved in Super Rugby, NZ Rugby could make savings elsewhere.
"It's the most expensive sports competition in the world," Smith said. "It's more expensive than the NFL, NBA, English Premier League and UEFA Champions League."
Sky has its own pressures to deal with.
No one can say for certainty if they will be in a position to honour the same terms of the NZ Rugby deal in the post-Covid-19 world, although having invested hugely in rugby through the broadcast deal, the acquisition of digital platform RugbyPass and the newly re-named Sky Stadium in Wellington, it clearly sees the sport as fundamental to its future.
Sky was contacted for this article but declined to comment.
As for NZ Rugby, chairman Brent Impey has re-affirmed its commitment to the Sanzaar alliance and clearly the Rugby Championship tests will continue to be an important part of the calendar.
But Impey also articulated that the coronavirus crisis had hastened the need for rugby to look again at the model and ask if it's working, or even practical.
"Brent Impey is a really good operator," Smith said.
"And bringing [new NZ Rugby director] Bart Campbell in as well...what he's been able to do in Melbourne, a total AFL town, to create a viable, profitable and highly business is incredible."
Super Rugby, as we know it, seems poised for a lasting revamp.
Rugby Australia last year paid close to $1m to broadcast rights strategists, who ultimately rejected a $US25m-a-year TV deal and then failed to secure a bid for the beleaguered code.
Former chief executive Raelene Castle hired Shane Mattiske and Michael Tange, who pushed RA to walk away from a five-year deal with Fox Sports last November in the hope of starting a bidding war. It never materialised.
It was revealed last week that Optus was never seriously in the running for the broadcast rights.
Today rugby faces financial collapse as Optus and Fox Sports (owned by News Corp, publisher of The Australian) turn their back on the struggling code, leaving the game with few if any options for broadcasting beyond 2020.
The Australian on Monday revealed a document affirming RA’s dire financial situation, which has the code staring at liabilities well in excess of $20m and facing insolvency. The game has blown $500m over the last four years and currently has no assets, no firm competition start date and no broadcast deal.
The Australian can reveal Mattiske and Tange have been paid by RA for nearly two years and a source confirmed they had collected well over $1m. Tange started working full-time in the RA office from July 2018 and was on the executive committee.
Castle first engaged Mattiske at Sportel Monaco, the global sports television conference, in October 2018. She was there with SANZAAR to meet with all her current and prospective broadcast partners. She signed Mattiske up at that Monaco conference to be a leader in broadcast rights talks. Both Mattiske and Tange are still engaged by Rugby Australia today.
Back in March, Castle, Mattiske and Tange were saying they wanted to have the broadcast deal sewn up and announced before the AGM. It never eventuated and then COVID-19 hit.
The pandemic has crippled the sports industry and media companies, including Fox Sports, which has already undertaken severe cost-cutting measures.
It is understood Fox Sports’ primary focus is on securing longer deals with the NRL and AFL. It has been reported that the NRL is close to signing a $2.5bn deal with Nine and Fox Sports.
The relationship between Castle and Fox Sports was reported to have soured earlier this year. Back then Fox Sports had indicated it would not be bidding for the rugby rights after relations between its executive team, Castle and RA board members hit a record low.
Castle resigned almost a month ago after losing the confidence of the board. On Monday, it was announced an adapted version of Super Rugby would recommence with an Australian-only competition comprising five teams, including the Western Force, being planned.
It is expected to begin in July but may not be enough to rescue the financially stricken code.
Broadcast rights expert Colin Smith—who has advised most of the professional sports in Australia through his company Global Media and Sports—pointed out the Australia-only competition restarting will be required to be signed off by all the major broadcasters.
"It's really sad but the SANZAAR members including Australia are not in a strong position," Smith said. "Each broadcaster will have to actually individually sign off on whatever the broadcast arrangement is with SANZAAR and that it meets with their contractual commitments.
"The question is: will this satisfy the broadcast rights issues for the broadcasters of Super Rugby? It’s not just Foxtel, it’s Super Sport, Sky New Zealand and Sky UK. That would be 80-90 per cent of the broadcast rights fees for SANZAAR that are being shared across the SANZAAR members including Australia."
The cash-strapped NRL is just days away from securing a stunning new TV broadcast deal worth up to $2.3 billion, the richest in Australia’s sporting history.
The Sunday Telegraph can reveal Channel 9 and Fox Sports are on the verge of agreeing to a lucrative seven-year contract that will lift rugby league from a financial scrapheap, safeguard the game’s long-term viability and guarantee the survival of all 16 clubs.
Independent commission chairman Peter V’landys is hoping to reach an agreement in principal by Friday for the remaining three years of the current contract plus a four-season extension until 2027.
It would be the most lucrative broadcast deal in the history of Australian sport, averaging out at almost $330 million a season – a remarkable outcome given the long-term global financial uncertainty over the COVID-19 crisis.
The contract will be heavily discounted for this season because of the reduction to 20 rounds although the NRL is expecting ratings to increase because fans cannot attend the venues.
After weeks of uncertainty over Channel 9’s position with their free-to-air, The Sunday Telegraph can reveal the network has been forced back into negotiations with an improved offer because of a fierce public backlash over their threats to abandon the game.
It is a spectacular backflip after expressing a willingness to walk away from the sport last week.
“It’s not a given that NRL has to be part of our future,” Marks said.
The finer details of the match scheduling for both networks is still being thrashed out.
There would be scope in the new contract to adjust the figures if future expansion into Brisbane and other areas delivers more content.
V’landys was reluctant to comment yesterday because of confidentiality agreements with both Fox Sports boss Patrick Delany and Channel 9 chief executive Hugh Marks.
“Both partners have acted in great faith and I believe we’re very close,” V’landys said.
“Hopefully we’ll have it finalised by next Friday. That’s my aim.
“The loyalty factor has been important because you want to look after your partners who have been with the game for a long time.”
The digital component of the deal and the future of the NRL website is still to be sorted.
Global Media and Sports boss Colin Smith has a long history in local and international broadcast deals. He says this is a great outcome for all parties.
“Peter V’landys has been the saviour of the NRL, no doubt for me,” Smith said.
“In this climate, if you ask what represents a good broadcast deal, I would say anything from $300 million to $350m a year is an excellent result.
“V’landys is a master negotiator, he is a street fighter and he is not afraid to take the bull by the horns. He looks at the outcome and he actually delivers on it.
“Seriously, if Peter can achieve in excess of $300 million, that is fantastic.”
The new TV contract will allow the NRL to establish a seven-year strategic plan, including grassroots development, long-term investments, possible expansion and a stadium policy for Sydney’s nine clubs.
V’landys has vowed to slash $50 million in costs from NRL headquarters and put spending restrictions in place for coaching, sports science and general football expenditure at the clubs.
This will allow the game rebuild from its ‘catastrophic’ financial crisis and ensure money is available from the new television deal to invest $500 million from the new deal over the next seven years.
The A-League is exploring the possibility of taking control of its broadcast production, a move that could see the sport emerge as an innovator among the football codes in Australia and provide greater flexibility in how it sells its rights.
Football Federation Australia is locked in sensitive talks with Fox Sports over whether it will see out the remaining three seasons of the A-League's near-$60 million per year broadcast deal.
It appears likely that Fox will seek a renegotiation of the contract for less money, which has prompted FFA to consider different methods of structuring the 15-year partnership between the pay-TV provider and the sport.
Industry sources claim FFA chief executive James Johnson recently toured the facilities of NEP, the company to which Fox outsources its production work for all sports in Australia, and also runs the NRL's bunker and the A-League's central VAR booth.
Johnson confirmed the visit to the Herald but while he did not offer further comment on the A-League's future, other sources within the game say it is inevitable that the sport will take on production costs, which traditionally sit with broadcasters like Fox.
Global Sports and Media director Colin Smith, a previous broadcast rights advisor to the AFL and NRL, estimates the cost of producing a season of the A-League at the moment would be between $12 to $15 million.
By taking on the responsibility of production, FFA could find ways of reducing these expenses, then sell the content directly to Fox or its streaming subsidiary Kayo - or another media service if their partnership was to end.
"Looking at doing it themselves I think is really smart," Smith said. "You're then open to more broadcast partners who don't have the ability or the history of production, and doing things differently rather than just having a singular relationship with a broadcaster who does the production.
"Historically I've said I didn't see it as an advantage. But now in this world with multiple platforms and multiple geographies, I can see a real advantage to doing it in-house."
Smith said the obvious example of a relationship that could be opened up by FFA wearing the costs of production is with Optus Sport. The telco does not produce any of the live sport it shows, but rather takes the vision directly from the competitions which it buys the rights for.
The same applies for other streaming companies including Amazon Prime and DAZN, both of which are yet to enter the Australian market but have history with football.
However, several key figures in the game have interpreted Fox's decision to pay the recent $12 million quarterly instalment to FFA as a sign that it may not completely sever ties with the A-League as was first feared. Sources say Fox executives have been pleased with Johnson's handling of a delicate situation and the respect he has shown the company.
Even if Fox was to push for a reduced contract, FFA could in exchange seek more control over how it uses its rights and sell off matches, or other portions of content, to different providers to help make up the shortfall in revenue and set itself up for future growth.
With the sporting world moving away from linear broadcasting and towards streaming services, FFA had been contemplating this move - which has already been made in Australia by tennis, netball and basketball - prior to COVID-19, with the current circumstances and uncertainty accelerating the organisation's contingency planning.
"They could have a multimedia approach - whether it's going to go to OTT, highlights, overseas, domestic. All of that can be done and it's exactly what tennis does," Smith said.
"The Australian Open, Tennis Australia does all of that itself - contracted out to other parties - and then it provides that coverage to the likes of Channel Nine, ESPN in the United States or whomever. Every major broadcaster brings their own commentator here, but they use the same pictures. They might have one camera to do an interview, but that's it. It makes the whole efficiency of the system much better."
Besieged rights holder Fox Sports is seeking to slash its $57 million per year funding commitment to the A-League by 50 per cent or more, as parent company Foxtel fights for survival.
Having last month paid a $12 million quarterly instalment to Football Federation Australia amidst the spectre of legal redress had the money been withheld, Fox Sports has now flagged its intention to renegotiate the remaining three years of the six-year contract.
Parent company Foxtel is $2 billion in debt and has cut 250 jobs with more redundancies likely as subscribers desert the pay-TV provider for cheaper streaming services.
Multiple sources close to the matter have confirmed that initial discussions are imminent on a restructuring of the agreement between Fox Sports and the FFA, which could include a ‘performance based’ component in terms of the A-League delivering improved viewership numbers and match attendances.
Broadcast rights analyst Colin Smith, head of the consultancy Global Media & Sports, is convinced Fox Sports will be looking to trim its annual outlay to $28 million, or less.
“The A-League, as it stands now, is not in great shape,” Smith said.
“Fox Sports will be looking to make big cuts in any renegotiations but there might be some potential upside in performance-type clauses relating to lifting crowd numbers and viewers to levels of the past.
“Frankly, if you can’t get your fans back your days as a television sport are numbered.
“Right now, I don’t see (rival) broadcasters lining up to want to screen the A-League.
“Especially when you factor in production costs which are $40,000-plus a game.”
Should Fox Sports succeed in downgrading its financial outlay to the A-League, the ramifications for the clubs - who receive $3.6 million a year in grants - would be profound in an already dystopian-looking post-COVID-19 sporting landscape.
As it is, with FFA having shed 70 per cent of its staff during the coronavirus outbreak, and with a black hole in sponsorships and myriad national team programs to fund, the clubs can expect to receive only a fraction of the $900,000 apiece they were banking on from the latest quarterly instalment.
With no product currently available due to the coronavirus shutdown, FFA also has contractual obligations to Fox Sports with a resumption of an abridged end to the season and finals format slated for early August, health and safety stipulations permitting.
Smith believes Foxtel’s re-evaluation of its relationship with domestic football has as much to do with its own dire financial position as the under-performance of the product it has invested so heavily in.
“People wrongly think, ‘oh yeah, the broadcasters are trying to screw down on sports’,” he said.
“But this is a fight for survival for everyone and there’s no certainty who is going to come out of it in one piece.
“I don’t think a lot of people realise this and they say ‘oh, it’s the bloody broadcasters just trying to take advantage of the situation because they can’.
“But they’re also trying to ensure they have a future themselves.
“Whilst Foxtel has the support of (majority shareholder) News Corp, and News Corp is okay, they’ll come out of this.
“But, whatever happens, they’ll be a reshaping (of the business model) and they’ll want to keep the must-have sports (AFL, NRL and cricket).
“As for the others (like football) they’ll pay a proper value for them, or they won’t broadcast them at all.”
When Fox Sports began its relationship with the FFA 15 years ago, they were, according to Smith, “believing in the dream”.
“But the dream has soured (since the new six-year $346 million deal was signed in 2016) and audiences are down a third or more of what they once were,” he said.
“Fox Sports were investing in the vision of new teams, expanded TV audiences and attendances but the figures have gone the other way.
“The last deal was signed on the basis of what the code needed to grow, rather than what it was worth.
“Fox Sports had to pay the last instalment - there was no get-out-of-jail card for them.
“If I was FFA, I would be looking to extend the term beyond the remaining three years in return for a reduction in payments from Fox Sports.”
With the FFA looking at a Plan B should the Fox Sports talks not yield a sustainable outcome, Smith sees Optus Sport as a potential new home for the A-League.
“Optus is looking like the home of football now with the Premier League, Champions League and now J.League (and K League),” he added.
“The A-League should be talking to them also. What’s critical is they need a broadcast partner.
“You could make an argument that once Foxtel lost the EPL rights to Optus it accelerated the demise of the A-League on Fox Sports and (more recently) Kayo.”
Nine Entertainment should careful what they wish for after boss Hugh Marks threatened to walk away from rugby league this week, according to a former NRL and AFL media rights adviser.
In the midst of sensitive broadcast negotiations with the NRL and Foxtel, Marks told analysts and investors at the Macquarie Australia Conference 2020 on Tuesday that the free-to-air broadcaster could relinquish the rights to rugby league.
Colin Smith, who is boss of Global Media and Sports and has previously advised both the NRL and AFL, said it was risky for Nine to play out broadcast negotiations publicly.
“There’s an old saying, ‘Be careful what you wish for’, and I would think any other broadcaster would love to have State of Origin or finals even if it was just for this year,” Smith told AAP.
“There’s some big risks for Channel 9 in what they’re doing.”
While Foxtel relies on live sport to sustain the subscription television model, Smith says free-to-air broadcasters also need rights to a major sport to maintain their businesses.
According to Smith, a free-to-air sports broadcaster without either the NRL or AFL risks going backwards enormously and he cited financial hardship Channel 10 faced once it lost AFL rights.
Australian Rugby League Commission (ARLC) chairman Peter V’landys is negotiating with both Nine and Foxtel over a cost reduction for the 2020 NRL season and a reassessment of the value of the game.
And while Smith agrees there is a reduction in the value of sport in the pre-COVID-19 marketplace, giving up rights to a major live sport on a free-to-air network is even more costly.
He said making the broadcast negotiations public could damage the relationship for the future deals.
“It changes the relationship (between the NRL and Nine) and my personal view is when push comes to shove I’d be amazed that Channel 9 doesn’t broadcast this year,” he said.
“I think the risk is too great for them to do that.
“I’m not quite sure it’s in the interests of anybody to do all of your discussions out there in the public.”
"May you live in interesting times," is the English translation of a traditional Chinese curse and events in this COVID-19 troubled year have matched its ironic intent.
There have certainly been some unusual scenarios presented in the future televising of Australian sport, including a reported possible bid by Channel Nine for AFL which would presumably entice Channel Seven to bid for NRL.
OK, the networks did swap tennis and cricket last year but those deals resulted in an increase in broadcast rights for both sports, while the current negotiations with the two big winter football codes are all about lowering, or extending, broadcast fees.
Typically, these talks between Nine, publisher of this masthead, and the NRL are being played out in Sydney's publicly aggressive manner, with similar dealings between Seven and the AFL played out in Melbourne's traditionally "appropriate" way.
Nine boss Hugh Marks told a meeting of analysts and investors on Tuesday afternoon that "it is not a given that NRL has to be part of our future".
It was a statement which fits into the Chinese curse category. A peaceful three decades of Nine owning four of the top five programs nationally - rugby league's three State of Origin matches, together with the NRL grand final - threatens to be upset by troubled times ahead.
Sure, streaming has killed off the so-called halo effect in free-to-air TV. The idea of paying overs for sport because viewers will stay with the network after the football, rather than switch to a rival channel, has been undermined by streaming services, such as Netflix and even Nine's own product Stan.
The news Nine may walk away from NRL caused what one might call cautious joy over at Foxtel. Executives at the Rupert Murdoch-owned network concede that the traditional FTA model is under siege. However, they also see Nine's threat, including the bid for AFL, as a negotiating ploy to lower the payment it will make to Peter V'landys' ARLC for the remainder of this disrupted season.
Somewhat contradictorily, considering Marks' threat, Nine would like to add another three years to the existing TV contract which concludes in 2022.
Still, Foxtel would be delighted to own all of the broadcasting of rugby league, rebranding the pay TV network NRL TV, making it a one-stop shop for the code.
Yes, but what about anti-siphoning laws? Doesn't the federal government insist nationally interesting sports be available free to viewers?
Channel Ten would be interested in the two games a week the NRL is committed to show on FTA TV, the finals and Origin.
But Global Sport and Media's Colin Smith has come up with a scenario far more lucrative for Foxtel and one Murdoch would blow his already overburdened budget to make happen.
"Foxtel could offer matches currently on the anti-siphoning list to Kayo," said Smith of Foxtel's streaming service, which has leaked thousands of subscribers since March when NRL and AFL competitions stopped.
"Subscribers wouldn't pay anything. They would simply select the matches that are free and opt out of the other Foxtel matches and sports programs.
"Sure, they would have to have the Foxtel streaming service installed but it would be zero cost to them.
"It becomes an excellent marketing tool for Foxtel, with the aim viewers will eventually pay for the matches not on the anti-siphoning list, just as subscribers tailor their Foxtel packages to meet their budgets."
Rugby league would once again be effectively owned by Rupert but would NRL clubs care if they were paid a motza?
V'landys has been historically close to News Corporation via his role as chief executive of Racing NSW, buying space for race fields in newspapers. A similar, smaller deal exists with The Sydney Morning Herald.
He has achieved deals with NRL clubs, players and state and federal governments to restart the season on May 28 but is yet to finalise agreements with Nine and Foxtel over how much they will pay for a shortened and crowdless year.
In these "interesting times" maybe V'landys will evoke another Chinese proverb, reminding Nine of the valuable vision about to sate the sports-deprived appetites of the viewing public from May 28: "One (TV) picture is worth ten thousand words (dollars)."
Rugby league players, officials and fans were promised answers on Friday. Instead, the frustrating wait goes on. Rather than the Nine Network standing in the way of progress, it is believed a rival sport has forced the latest delay.
ARL Commission chair Peter V'landys emerged from a meeting with Foxtel chief executive Patrick Delany and Nine Network boss Hugh Marks with a modicum of clarity.
The season will definitely start on May 28, Nine apparently falling into line after firing another warning shot across the bow of the NRL on Thursday night.
Earlier in the day V'landys had promised to wield a big stick but whatever he said appeared to convince Marks that the game was on the right track. A ceasefire has been called.
Both the Nine Network and Foxtel have been pushing for an extension to their existing contracts – which run until the end of 2022 – as part of any deal to the get the game back on the park this year. The delay buys all parties time to reach an agreement.
There was also a commitment that State of Origin would be played after the NRL season. Just when that will be literally remains the million-dollar question as the game and broadcasters wait for more clarity around cricket's T20 World Cup.
At a very minimum, the regular season will run for 17 rounds, which would mean the grand final would be played on its original date, October 4.
Under that format, each team would play the other once before another two rounds involving marquee match-ups or intense rivals.
It is believed V'landys would be open to the season running longer — Foxtel was keen on a 22-round regular season — but any final decision is likely to hinge on whether the T20 World Cup goes ahead.
Should it be postponed, there is every chance the season could push on into November. Both the Nine Network and Foxtel have rights to the cricket tournament, which is scheduled to begin on October 18 and finish on November 15, but they would have a content shortage and potentially more money to spend if it was cancelled.
V'landys insists the game will be in position to outline a final schedule early next week, although nothing can be taken for granted in the current environment.
The about-face by the Nine Network highlighted the changing landscape. One moment, they were preaching patience and caution.
The next they were said to be supportive of the NRL starting on May 28. Whatever V'landys said to Marks, must have been convincing.
No doubt he would have pointed out that the network is contractually obliged to broadcast the game should it return.
The amount the NRL will receive in return is still to be determined — the networks pay close to $300m between them for the right to televise rugby league in all its forms and a 17-round regular season would mean a significant cut in that revenue.
There are also other matters to decipher, including the stance of the Queensland and Victorian governments.
Queensland Premier Annastacia Palaszczuk had called for a detailed outline of the NRL's plans and she now has that in her hands.
The Warriors are still waiting for more details of their relocation to Australia, including whether they will be able to bring family members with them.
Biosecurity measures were also expected to be shared with the clubs on Friday, but it is understood that process has now been delayed.
"There are a few others things to be sorted out but the broadcasters are united with us to start on May 28 as the target date," V'landys said. "They are all on board for that. As far as the competition structure is, we need a bit more information to move it forward in terms of other sporting events and how that effects our broadcast partners.
"State of Origin will be after the grand final. We need to consult the players and the clubs naturally but that is our plan."
Nine, so bullish on Thursday night, declined to comment when contacted by The Weekend Australian. Foxtel also kept its powder dry.
Broadcast expert Colin Smith said if he was in Foxtel's shoes, he would do whatever he could to get the season up and running, even if it meant doing so without the Nine Network. While that would have implications for the government's anti-siphoning laws, Smith suggested he could see Foxtel being given permission given the current circumstances.
"This is an absolute wildcard – why couldn't they put three of the NRL games in front of the paywall of Kayo," Smith said.
"That could be a killer blow to Channel 9. I think they can (do it). The other thing is that would grow subscribers enormously with Kayo. It is a brilliant marketing tool for Foxtel."
The NRL is open to renegotiating an extended television deal for beyond 2022 when it meets with broadcast partners for talks next week.
A day after coming under fire from the Nine Network, ARL Commission chairman Peter V'landys confirmed he would meet with Nine and Foxtel next week.
Those talks will largely centre around the preferred structure of the season for both broadcasters, as well as other clashes with events such as the Twenty20 World Cup.
Front and centre will be the financial value of the rest of the season, with Nine arguing games are worth less when played behind closed doors.
The talks come amid a backdrop of challenging times for both sports and television networks.
While free-to-air television ratings are up during the coronavirus shutdown, there are fears advertising revenue could drop by as much as 20 per cent due to retail closures.
Nine also told the stock exchange last week they could save up to $130 million if the NRL was cancelled for 2020.
The developments have prompted sports media experts to recommend sports engage with their broadcast partners for longer, reworked deals.
The AFL, Channel Seven and Foxtel are currently believed to be considering an extension in their deal until the end of 2024.
The value of that deal is expected to be slightly lower, as all parties combat the effects of COVID-19.
V'landys said it was possible a reworked extended deal could also be considered in the NRL.
"If that's part of the scenario we will look at it. We will look at anything," V'landys told AAP.
"These uncertain times have put pressure on everybody. It's put pressure on advertising revenue, so we have to understand all that."
Foxtel are expected to take a hit through the pandemic, with fears subscription numbers will drop on the heels of a tough 2018-19 financial year.
Global Media and Sports boss Colin Smith, who has previously advised both the NRL and AFL, said no sport could afford to take a head-in-the-sand approach.
Instead, he advocated long-term partnerships, with extended deals locked in for as long as a decade.
"I think everywhere people are going to be sitting down saying 'we want to sit at the table with you and renegotiate the rights'," Smith said.
"That's code for: 'The world has changed and we have to renegotiate them downwards'.
"It's going to take a lot of time to recover from where we are today. There is no short-term recovery out of that," Smith said.
Smith also said he expected Nine to want to regain exclusive rights to some games rather than the current simulcast deal with Foxtel.
He added despite Nine's frustration at the NRL on Thursday, there was very little chance they would want to leave the code.
"A free-to-air sports broadcaster without a football league – and in this country that means AFL or NRL – goes backwards enormously," Smith said.
Retaining lucrative television rights deals were already expected to be a challenge for sporting organisations, even before the coronavirus spread.
Most American broadcast deals run for well in excess of five years, while the International Olympic Committee signed an 18-year deal with NBC in 2014.
"That's where I can see the end game," Smith said.
"I would suggest these contracts will probably go until 2030 or something like that."
Sports broadcasters were succumbing to a virus well before the arrival of COVID-19, a virus not as deadly as the pandemic that has shut down leagues around the world and decimated advertising but an earlier debilitating disease, nonetheless.
The sickness attacking sport was cost-accelerating, unsustainable debt, mainly for media rights of the football codes and cricket. All this came at a time the revenue streams of the free-to-air and pay-TV broadcasters were under siege from streaming services such as Netflix.
So, when the NRL's long-time FTA broadcast partner, Channel Nine, delivered a scathing attack on the code on Thursday, it was paradoxically both unprecedented and unsurprising.
It's all about cost. Nine doesn't want to pay full freight for a disrupted season with falling viewership.
Nor will the network even agree to pay a pro-rata amount for games telecast, given it will be played in empty stadiums, devoid of the theatre of the crowd, possibly all through 2020.
Furthermore, Nine boss Hugh Marks probably wants to renegotiate the final two years of the 2018-22 contract.
In fact, he almost certainly seeks to extend the existing contract at significantly reduced rates.
The days when networks bought sports rights to prevent the opposition acquiring them – as Manly bought North Sydney first-graders and relegated them to reserve grade – are over.
But for Nine to launch this brutal salvo on rugby league because it has been shut out of the confidential talks over a restructured 2020 competition is a diversion.
Fox Sports, which televises exclusively five games a week to Nine's simulcasted three, has been sidelined, too.
Given that ARLC chairman Peter V'landys is very close to News Corporation, which owns Fox, and has been the beneficiary of some recent, lavish praise from its newspapers, Fox's Patrick Delany could have come out with a petulant page one protest.
However, the shunning of both of the code's telecasters ignores V'landys management approach, which is the converse of today's inclusive style of empowering everyone around the boss.
He is autocratic and makes decisions quickly. NRL clubs are finding that ARL commissioner Wayne Pearce and ex-member for Dubbo Troy Grant, a former NSW Nationals leader, have formed a triumvirate, with V'landys dominating and everyone else subservient.
Clubs are equally in the dark, unsure whether the competition, due to restart on May 28, will be located in Sydney or Queensland, or whether it will be two conferences or one.
Now, with the Herald suggesting all remaining rounds will be played, it would seem V'landys, while not talking to the telecasters, is at least listening, or more accurately, reading Marks's play.
While Fox Sports hasn't attacked the NRL with the unprecedented venom of Nine, it's not as if the Murdoch empire hasn't played a hard line with the other football codes in these belt-tightening times.
It is a network that has previously demonstrated a duty of care to Australian sports – it paid a restructured FFA above market rates to unshackle it from a nationalistic, sectional club structure and it elevated rugby union from shamateurism, launching Super Rugby 25 years ago with a $US550m 10-year contract.
But Fox Sports is bleeding red ink. It is dependent on $1.07 billion in shareholders' loans, has made 200 staff redundant and stood down another 140 on Tuesday. Those numbers could yet double as it seeks to further protect its bottom line.
Now Fox Sports is refusing to make another rights offer to Rugby Australia and will seek to free itself from soccer, with both sports having already sacked most of their staff.
So, where does that leave rugby league? It is a sport on the federal government's anti-siphoning list, meaning it must be offered to a FTA broadcaster before Foxtel can bid.
The financial meltdown, aka the Corona Correction, won't result in NRL being screened on the ABC, because no commercial network can exist without NRL or AFL.
Channel Ten had NRL in the 1990s, lost AFL rights 10 years ago and, as Global Sport and Media's Colin Smith says, it has caused "a downward spiral ever since and led to their insolvency".
Rather than abandon rugby league, Nine is likely to seek "exclusive NRL" content in a renegotiated contract, refusing Fox's simulcast of its games.
Nine's boss has picked only his first mark. His next fight will be with Fox.
Artificial intelligence used by the Israeli Army is revolutionising sports broadcasting globally and could be the financial saviour of the NRL in the next broadcasting contract.
As the COVID-19 pandemic closes down attendance at events, sports are looking to leading-edge artificial intelligence to add value to the broadcast of matches.
With Tel Aviv becoming a second Silicon Valley, artificial intelligence algorithms developed for the Israeli Army can be used to predict a try in an NRL game.
Israeli start-up company WSC Sports, whose founders are all ex-Israeli Army personnel, has developed technology in use in the broadcast of NBA games. However, it is not packaged separately to media buyers.
Rugby league is a made-for-TV sport, but faces a problem with the X and Y generations drifting away from linear TV. The code's challenge is to appeal to a generation that prefers to watch highlights on smartphones, rather than invest in a 100-minute telecast of a game on a big screen.
Technology that uses advanced data science across multi camera angles and algorithms of historic try-scoring situations to effectively predict a try – packaged in 20-second or longer segments – would be additionally attractive to the short-attention-span generation.
Colin Smith of Global Media and Sports believes the NRL's digital arm, nrl.com, which has more than a million visitors, could link with WSC Sports to use their technology and sell near live highlights separately to interested broadcasters.
Alternatively, nrl.com could be sold to one of the big digital giants, such as Netflix or Amazon, to stream vision on mobile phones.
Smith, who admits to being a critic of former ARLC chairman John Grant when he invested $150 million over six years in nrl.com, agrees with incumbent chairman Peter V'landys that, currently, it is an asset with minimum value.
However, he believes it can be reconfigured and build on its existing fan engagement, saying: "What nrl.com must have is long-term, multi-year rights to NRL content that provide a growing stream of revenues for the ARLC or new owners.
"Most of the sports viewership of generations X and Y is via their smartphone and it's unlikely when they are older with families, mortgages [and paying off COVID-19] they will ever return to sport on linear TV.
"Sports like the NRL must design live or near live content they will watch and critically pay for. One offering of nrl.com could be based on the technology that was invented by the Israelis to protect their citizens."
In the same way some veteran league watchers called the thrilling Cowboys try that drew the 2015 NRL grand final seconds ahead of it being scored, algorithms can be used to anticipate tries and fed into broadcasts of games.
TV network bosses would probably say, "I already pay my commentators to do that", but no human eye can simultaneously do the work of multi angles and advanced data science with unique algorithms.
The "anatomy of a try" can be projected onto the big screen at stadiums but is primarily aimed to supplement highlights packages provided to smartphones.
"The NRL, as a matter of urgency, should build the business case and financial model that defines the value of a reconfigured nrl.com that includes all of its current content and live/near live highlights," Smith says.
"I accept that current broadcast rights do not enable the NRL to offer this content in addition to what has already been contracted. But, with the ARLC probably looking at a long-term TV contract in the post-coronavirus world, nrl.com could become a significant asset to sell.
"Designed appropriately and quickly, it could address the NRL revenue challenges.
"The payment by the new owner of nrl.com would be an upfront acquisition fee plus an ongoing royalty fee to the NRL. The contract should be open to the current NRL broadcasters plus the four digital behemoths – Google, YouTube, Amazon, Facebook – plus the sports betting agencies and the OTT specialists such as Eleven, DAZN."
Grant, when speaking to the Herald following criticism on his legacy by outgoing Souths boss Shane Richardson, claimed nrl.com could always become a saleable asset.
"If monetisation was made a priority, nrl.com could be worth a great deal of money," he said.
Given the parlous state of ARLC finances as a result of coronavirus shutdown, the incumbent broadcasters probably have the upper hand in negotiations. However, Smith believes nrl.com could be the code's gold pass, achieving Grant's ambition of it being "a Netflix for rugby league fans".
Coronavirus may have signalled the death of the multi-billion-dollar TV sports rights deal.
As sporting codes deal with enormous financial losses because of the pandemic, with little to no TV rights money coming in without games being played, Global Media & Sports director Colin Smith said the AFL and NRL should not expect a bigger deal from Australian broadcasters in the future.
Smith also said all the football codes needed to up their fan engagement, noting the industry before COVID-19 already needed to "adapt and create" its products to attract and keep the next generation of supporters.
Smith said the coronavirus pandemic had triggered a "reset button".
"It's going to be a complete reset," he said. "It puts into question the multi-billion-dollar deals. Future deals have got to come back to true economics either of subscribers or TV viewership.
"Those deals are going to have to stand on what will provide a commercial return for the broadcaster.
"Sports and broadcasters have got to do more to really engage with the fans. I think that's been missing and they've got to do more to get more people watching it and interested in it and follow it.
"The AFL has done a better job with this. Just look at their club memberships. The others? They have huge work to do, to re-engage, to bring back real rivalries either attending games or watching on TV or through their smartphone."
Smith suggested the NRL needed to be more innovative and believed it needed to start season 2021 with a bang.
"If I was running the NRL I would kick off my season with State of Origin," he said.
"That is the largest broadcast product in Australia bar none. That gets approximately 11 million viewers each year. Why not kick it off with a great start? A State of Origin match. And then restart the club competition with that impetus. Your fans have impetus.
"State of Origin is even big in Melbourne. It is seen as an iconic sporting event in Australia. If you look at it cumulatively, it is bigger than the NRL or AFL grand final."
Smith said all broadcasters were challenged before the COVID-19 pandemic with the rise of streaming services such as Netflix, Amazon and Stan.
"Millennials and younger are not watching linear TV – they are watching sport and other content differently," he said. "The fragility of the sports system – that is spending up to what you earn – when the piggy bank stops, then the whole economic system is unbelievably challenged."
In 2015, the AFL struck a huge six-year, $2.508bn broadcast rights agreement with the Seven Network, Foxtel and Telstra. The deal runs from 2017 to 2022.
The NRL secured a $1.8bn deal with the Nine Network, News Corp Australia, Foxtel and Telstra for five years from 2018.
Smith said the suspended seasons put the codes in a perilous state with some fans.
"Fans might say, 'I haven't missed it that much'," he said. "What they've got to do now is engage them and then have some absolutely fantastic games that re-engage with the fans."
Rugby Australia, which is the only major code without a broadcast rights deal beyond this year, has some challenges ahead.
"This needs to be the reset and re-engagement button for rugby," Smith said. "When I say reset, the critical question is what should SANZAAR look like in the future?
"How will rugby in Australia re-engage and grow their fan base that will recommit their broadcast partners such as Foxtel?
"What can a rebuilt, refocused Australian rugby look like, somewhere in the future across the Wallabies, Super Rugby, Shute Shield/Hospitality Cup, Sevens and the emerging women's rugby?"
Broadcast rights experts have warned now is the worst imaginable time for any sport to search for a new TV partner as the A-League braces for the increasing possibility of life without Fox Sports.
As revealed by the Herald, football's powerbrokers are preparing back-up plans in the event Fox pulls out of its $57 million a year deal to cover the A-League, which still has three seasons to run.
But the financial crisis brought on by the coronavirus pandemic has also impacted media companies, dramatically reducing an already declining capacity to spend big on rights fees and creating uncertain investment conditions, according to Global Media & Sports director Colin Smith.
"You couldn't pick a worse time," Smith told the Herald. "The world has been turned on its head and the business of sport is going to be affected, probably more than any other. This will be a reset."
Another senior media industry figure, who spoke on the condition of anonymity because of the sensitive nature of talks related to football, said every rights buyer in the world would be approaching new investments with an abundance of caution.
"The reality is everybody is going to be extremely cautious going forward because nothing is being played at the moment and nobody actually has any idea when stuff will come back," the source said.
"Sports bodies the world over have not cottoned on to the fact that the world has fundamentally and structurally changed, and it's not going to be the same."
Fox Sports has not yet revealed its intentions regarding the A-League but could use the COVID-19 outbreak as an opportunity to renegotiate the current contract at a much lower price, or to pull out of the agreement entirely.
"The last deal was done on the basis of how much the league needed, not what the league was worth to Foxtel," Smith said. "In other words, Foxtel did the deal accepting there was going to be a loss, but with the growth of what they foresaw and what was promised to them, that it would deliver.
"In fact the reverse has happened - they've gone further backwards in attendances and television audiences, therefore the value of the A-League as a driver of subscribers is minimal ... they are in dire trouble."
A-League clubs and Football Federation Australia are preparing for a future without Fox and have accelerated contingency planning that would have otherwise occurred over the next 12 months.
One company that had emerged as a potential saviour is already tightening its belt in the new environment. Despite showing early interest in the A-League rights, London-based streaming platform DAZN has largely shelved plans to enter the Australian market, according to multiple sources, with the mass stoppage of sports around the world directly affecting its subscription base.
Sources close to Optus Sport would not engage on "speculation" regarding the A-League, but the telco has never previously shown interest in broadcasting domestic football. The Optus chief executive officer is Kelly Bayer Rosmarin, a former board member of FFA who resigned in protest late last year.
Smith said the A-League should actively pursue a tie-up with Optus to align the local game with "premium football" like the English Premier League, which was previously shown on Fox until mid-2015. All other reforms should also now be put on the table, he said, including a possible shift to a winter timetable, which he flagged earlier this year.
Smith also recommended the A-League pick up any future tab for production rights, which he estimated at approximately $80,000 a game, and then on-sell a finished product to broadcasters - a move that sports including basketball, netball and tennis have already made.
"What they need to do is then have a real multi-medium approach, so they could sell global rights to an Amazon or social media [company], not just in Australia," Smith said. "Then you could have a free-to-air television partner with a revenue-sharing model. That's a real opportunity, but you need financial muscle to be able to hold that, because the [broadcast distributions] to the clubs will be significantly less as you rebuild it."
As we know, the widespread cancellation of sporting events across the globe has dealt a serious blow to Foxtel's viability, whose only competitive advantage rests with televising live sporting events.
In particular, the cancellation/postponement of the 2020 AFL and NRL seasons has been particularly devastating for Foxtel, given these are the jewels of the company's live sports offering and the key reasons why many subscribe to the network.
The cancellation of live sports also comes at a particularly bad time for Foxtel, given it was already drowning in some $2.3 billion in debt and had bled subscriber numbers in the quarter before the coronavirus outbreak. Specifically:
Now Global Media and Sports director, Colin Smith, believes "Kayo in particular could lose 50 per cent of its subscribers... it'll be a significant drop".
So on the face of it, Foxtel is facing a dire situation, stuck between an impending collapse in subscriber numbers and revenue alongside mounting debts that need to be repaid.
It is also facing increasing competition from cheaper online streaming platforms, which continue to grow their offerings in Australia as well as gradually stripping Foxtel of its exclusive content.
For now, Foxtel's CEO Patrick Delany is putting on a brave face, exuding confidence about the company's future:
"You'd have to be living in la-la land if you thought there wouldn't be some effect [on subscriptions] given the lack of live sport but we feel secure because we're very strong in other genres like movies, drama and lifestyle," Mr Delany said. "We're known for sport but the number of customers that take only a sports package are a minority compared to those that take sport plus things like entertainment and drama."
Foxtel has moved to shore up its subscriber base by opening up its content library to Foxtel Now subscribers until 31 May, alongside offering 15,000 hours of on-demand sporting content such as replays of live games, documentaries and sports entertainment programs.
Whether these measures will prove enough to stem the loss of subscribers remains to be seen as Foxtel battles for its very survival.
The cost of the sporting shutdown due to the coronavirus will probably exceed that figure in the end, maybe even double it, and nothing will be the same again.
Former Wallaby legend Simon Poidevin cannot be clearer when he discusses the future of rugby union, staring at a $90m budget black hole and needing a new broadcast deal later this year.
"Rugby has gone into this catastrophe with the weakest possible balance sheet," Poidevin tells The Weekend Australian. "I can't see the game surviving its current state without government assistance. The government may also propose a proper restructuring of the game. I feel for the modern players who really do face an uncertain future."
The structure of all sports in Australia will change. That coaching box full of support staff? Mostly gone. Never to return. All those administrators at football code headquarters and bloated staff numbers at clubs? Stood down. Plenty won't be back.
Clubs have been set up like small-to-medium sized businesses. Executives were on bonuses for profits generated or rising revenues. Except, as non-profit organisations they paid no tax – with player salaries also capped it has left more money for off-field spending. Chasing that one per cent improvement supposedly vital for on-field performance.
Cam Vale, the chief executive of Baseball Australia and former AFL and NRL administrator, uses the example of the famous book Moneyball by Michael Lewis, which spawned a race to find player efficiencies but also created a costly industry of analysts and coaches.
"Moneyball was such a great influencer on the on-field part of sport, whereas the lessons from this are as much if not more in the off-field – as we are finding out now."
Entire sports are exposed as the financial tide quickly washes out. Licensed clubs and poker machine revenue? Reduced to nothing. The investments outside their sports, the government joint ventures for facilities. Surely put on hold. Cancelled. Player wages slashed, pay cuts across the board, empty corporate boxes and grandstands.
Sponsors are sticking with sport. At least in the short-term, though probably only the corporations who can afford it. This week alone tens of thousands of jobs were lost in the retail industry. It will be hard to justify sports sponsorships when that is happening.
AFL hall of famer Kevin Sheedy, a plumber in his Richmond playing days, says footballers are now facing working as well as playing the game.
"We don't know if it will go professional or semi-professional – so much money will be lost out of the industry."
Hawthorn president Jeff Kennett, always a straight-shooter in the best of times, is even more blunt on the permanent cost-cutting that will unfold across sport. "This is not trimming, it is heavy pruning. It is pruning the tree right back to its base, in the hope that it grows again. There is no alternative. You'll never see the numbers that we had four weeks ago in our game again."
Suddenly, the tenuous nature of the business model for sports has been exposed. So much money goes in – more than $1.15bn in TV money annually alone only for the six biggest codes – but almost none has been saved for a rainy day. The question is, how much of the money will come back when sport eventually resumes?
It was only a few weeks ago when the Hawks, a powerhouse off the field with $28m cash on their balance sheet, were moving full speed ahead with plans for a new $130m training centre at Dingley in Melbourne's southeast, having spent more than $10m on plans over four years. This week it was cancelled.
Canterbury coach Dean Pay was stood down without pay, as were his Parramatta counterpart Brad Arthur, Ivan Cleary at Penrith and many others. Canberra hooker Josh Hodgson revealed NRL players had only one more pay cheque coming. Brisbane Lions have stood down 90 per cent of staff, the A-League's Melbourne Victory – soccer's richest club – say the sport's shutdown is the "biggest financial challenge (we) have ever faced".
Meanwhile, broadcasters have told the sports the big cheques will stop. Add that to a list including no ticket and corporate box revenue, and no income from licensed clubs.
There is still an air of defiance across sport. NRL chairman Peter V'landys has said "rugby league will survive", Football Federation Australia chief executive James Johnson said similar about the A-League.
Matt McCann, a sponsorship expert with Bastion EBA, says most brands are honouring their partnership agreements and says if football codes get pushed back to late this year it could be a rare silver lining.
"Looking forward, if the seasons are shortened and pushed to the back half of the year, it's going to offer a different, potentially short burst of unprecedented activity for so many brands to connect during key sales periods."
Kennett says the AFL is the best-placed code to survive, though Sheedy questions whether the competition will still have 18 teams in the future. Fans are sticking with clubs too, though it remains to be seen how long for those with monthly payment plans for their memberships.
"We have got 70,000 members and out of that so far only two have asked for partial refunds," Kennett says.
Not all clubs and even entire sports can say similar. Rugby Australia is staring at a $90m hole in its budget this year, the last year of its $60m annual broadcast deal with Fox Sports. The NRL is only a few years from trying to borrow $49m to get it through an offseason between TV deals and will soon get through the $120m it has in the bank.
The football codes spent much of the week locked in talks with their players, with the AFL – which owns Marvel Stadium, purportedly worth $1bn before debt – asking players to take a 79 per cent pay cut. TV networks could walk from their deals or renegotiate extended contracts at smaller rates.
Broadcast expert Colin Smith of Global Media & Sports says sport should have heeded the signs of a changing market anyway as the wider public change their viewing habits.
"You just have to look at the profit margins being cut drastically in recent years for the broadcasters. Sports need to change, they need to reset. It has to happen for them to survive.
"The problem with Australia is that we probably have more professional clubs per capita than any other country in the world. We have four football leagues fighting for space, and then you get to sports like cricket and then the second-tier ones like basketball and football, and then there's the women's leagues as well. There is going to be a hard landing for some of these sports."
Post-COVID-19, Poidevin says Super Rugby can no longer go on playing over three continents. He said it is time to do away with the National Rugby Championship that has "not worked" and focus on club rugby in Sydney and Brisbane.
"This is a chance for everyone to look at what rugby was and what it can be. Through the circumstances of severe financial duress, to make some tough decisions.
"You just can't go on with three continents playing Super Rugby. We've got to move towards a time zone competition. Whether that starts with Australia, New Zealand and then extends into Japan. Despite the quality of those South African teams, people don't want to watch them at all hours of the morning. The travelling for all the teams involved is quite demanding."
John Didulica, the chief executive of soccer's Professional Footballers' Association, is grappling with having 125 A-League players coming off contract in May. But he says his sport needs to work collectively to look at what the sport and elite levels look like after the stoppage is over. "We need to try to plan for that. So we don't have to rebuild completely. We all need to come together, call it a strategy group or council. We have to use this time to plan on how we look and what we do after this is all over."
Vale, of Baseball Australia, says: "We must stop comparing ourselves to the USA, Asian and Europe sporting leagues and structures. Those overseas sports are owned by wealthy individuals and corporations, Australian sport is owned by the people and its biggest driver is broadcast and media interest – that is our structure."
With that mind, Smith says an obvious important part of sport is at risk of being missed: the fans. In an era when viewer choice is so fragmented and a younger generation is not tuning in, he is worried about teams cutting staff, such as their social media experts.
"Those are the people who you need during this time – the people to get the content out there with the fans. The younger generation don't necessarily follow teams like we have. They follow the stars. They want to see the stars."
Dan Migala, a Denver-based sports business consultant for 4Front has worked with several Australian sports bodies in fan engagement, says sports need to play their part. "Without games to be played, teams need to creatively provide hope anyway they can for their fans to fill that void. It's not only because it's good for business, it's understanding the important role they play in their fans' lives. If teams can help cheer their fans on, the fans will be even more loyal to them when the games return."
The obvious question remains exactly when the games will return. But the bigger one for all parts of sports is how much of the big money ever will come back.
Foxtel chief executive Patrick Delany says he is confident about the company's future despite the worldwide shutdown of live sport as a result of the coronavirus pandemic and will offer sweeteners to customers in an aggressive attempt to keep subscribers.
"You'd have to be living in la-la land if you thought there wouldn't be some effect [on subscriptions] given the lack of live sport but we feel secure because we're very strong in other genres like movies, drama and lifestyle," Mr Delany said. "We're known for sport but the number of customers that take only a sports package are a minority compared to those that take sport plus things like entertainment and drama."
The pay TV company has invested heavily in local and international sports – including NRL, AFL, cricket, basketball and Formula One – to drive subscriptions. These sports are also available on Kayo, a streaming platform with no lock-in contracts. But as major codes suspend or scrap their 2020 seasons in response to the pandemic, Foxtel and Kayo face a potential exodus of customers.
Global media and sports director Colin Smith said: "Kayo in particular could lose 50 per cent of its subscribers. I don't know the exact figure but it'll be a significant drop."
Free-to-air television will also suffer, he said. Network Seven, which airs AFL and the Olympics, and Nine, which screens NRL and tennis, have the greatest reliance on sport. (Nine is the owner of this masthead.)
A former CEO of a major Australian media company, who asked not to be named due to their continued involvement in the industry, agreed that pressure would be felt across the board. "We are dealing with Depression-era economics. Everyone is affected by it; I don't think anyone knows [what will happen] other than staying in business is extremely difficult."
On Thursday, Foxtel announced a raft of measures to help retain subscribers. Those on limited packages will receive free access to drama, entertainment, lifestyle, documentary and children's programming; and the ability to watch this content on two additional devices. Customers of the Foxtel Now streaming service will receive similar upgrades, while Foxtel broadband and NBN customers on monthly allowances will be exempt from data restrictions. These enticements will end on May 31.
A new programming line-up on Foxtel's Fox League channel will include 38 hours of live broadcasts – focusing on the impact of the coronavirus lockdown – and repeats of classic games. A pop-up channel called Fox Sports More will this week feature 36 of the best rugby matches over the past four decades, and Fox Sports and Kayo will debut an eight-part Erebus Motorsport series called Inside Line.
Foxtel's sports channels can also be viewed on Kayo, which offers 15,000 hours of on-demand content including live games, replays, documentaries and sports entertainment programs.
"You have to remember that Kayo subscribers are the biggest sports lovers in the country," Mr Delany said. "It'll be interesting to see how much they enjoy all the other sports content we're doing."
Further programming additions to Foxtel and Kayo will be announced in the coming weeks.
Mr Smith said that TV rights are generally paid in quarterly instalments – and rights-holders will not be compelled to pay future instalments unless sporting bodies can meet their contractual obligations.
Mr Delany declined to comment on commercial arrangements and said it was too early to discuss redundancies or other potential cost-cutting measures.
Like all established media companies, Foxtel faces broader structural challenges including competition from low-cost rivals such Netflix. Foxtel, which is majority-owned by News Corp, has debts of $2.3 billion. Its broadcast and commercial subscriber base was at 2.27 million as of December 31, down from 2.33 million in the September quarter. Foxtel Now subscribers dropped from 375,000 to 334,000 in the same period and Kayo lost 32,000 customers between November 5 and February 5.
"Our news channel ratings are through the roof, including our international channels because people want to see what's going on in the UK, US and Asia," Mr Delany said. "And that's before you get to things like our movie channels because movies will be a big source of entertainment for Australians over the next couple of months."
A quarterly installment believed to be around $900,000 is due to each of the 11 clubs next month but with the league locked down by the coronavirus, rights holders Fox Sports aren't expected to sign any cheques for non-existent content.
Colin Smith, head of the consultancy Global Media & Sports, fears the beginning of the end of Fox Sports' $57.6 million annual commitment to football may be imminent, with the sport unable to deliver on its contractual obligations and now technically in breach after Tuesday's suspension by FFA.
"In normal circumstances Fox Sports would not want to shoot down football when the A-League is facing its toughest scenario," said Smith.
"But the reality is that this is as tough for Fox Sports as well since they're about to lose most of their Kayo subscribers because there's literally no content, both locally and internationally.
"They'll be looking to make savings and won't be paying rights fees to any sport (NRL and AFL included) while there's no content.
"In terms of the A-League, I would suggest firstly they won't get any new payments and secondly, I understand, Fox Sports have the right to withdraw altogether (from the final three years of the six-year $346 million deal).
"They might not embark on that course right now - but I think they'll be keeping their options open to say 'thank you, we won't continue to broadcast ... feel free to go with anybody you want to'.
"I would imagine they have Force Majeure clauses and everybody will be going back to read the fine print."
Fox Sports' relationship with the A-League has been souring for some time amid nose-diving ratings, even though the numbers are skewed with fans now following the game across multiple platforms.
Regardless, Fox Sports have trimmed the resources they direct at the competition and club bosses have reportedly become increasingly resigned to the prospect of life without them at the expiration of the deal in 2022.
The extraordinary lengths they went to to remain active during the coronavirus outbreak was allegedly aimed at providing Fox Sports with no excuse to tear up the existing deal.
The coronavirus may, though, have brought matters to a head.
Smith warned that whether Fox Sports stay or go, the A-League must prepare itself for drastically reduced remuneration from future TV deals.
"It's clear Fox Sports is in cost-cutting mode - and if they were to walk away from football, in the current circumstances you would fully understand it," he added.
"I think the A-League will need to plan not only for a life without Fox Sports but for a significantly lower rights fee, whomever they deal with (in the future).
"In that scenario, the sustainability of the clubs will depend more then ever on the wealth of their owners, who may be suffering big financial losses themselves (in their own businesses)."
The A-League might find a future home on Optus Sport, speculates Smith, with the telco already securing the English Premier League, UEFA Champions League and J.League.
"The A-League, I think, would be on their radar," he said. "But they wouldn't make the numbers work (on the same magnitude of the current A-League deal).
"You have to remember that Optus will also be hurting. The money being taken out of the economic system might lead to people cancelling subscriptions, and that will hit Optus' bottom line.
"There are already one million people out of work in Australia since the coronavirus hit and that figure could double by the end of next week."
Anticipating the carnage, Optus has already flagged plans to refund or suspend accounts free of charge for all customers who pay for its sports streaming service.
"Across the board, I feel this is a tipping point and the nexus between player salaries and rights fees will have to break," added Smith.
"Rights fees will plateau - if not reduce significantly. You can see in the next 12 to 18 months there are going to be some massive re-negotiations to recover the position of both the broadcaster and the sports themselves.
"I can't envisage anywhere now where rights fees will go up.
"But there's still a hunger for sport and viewers will come back once sport is up and running again.
"But leagues will be challenged and there will be clubs - across all codes - that will no longer be viable."
When it comes to sports, broadcast rights and those negotiating them, the "head comes off and the pumpkin goes on". That's the way one senior television industry figure likes to explain the rapid escalation of rights values in Australia over the past decade and a half, a boom that turned football codes like the NRL into billion-dollar businesses but which has now left them terribly exposed.
The NRL's five-year deals with broadcast partners ballooned from $500 million in 2007 to $1.025bn in 2012 and $1.8bn in 2016, its salary cap skyrocketing from $3.3m in 2005 to $9.8m this year. In the AFL, the rise has been similarly steep: up from a $780m contract in 2007 to $1.25bn in 2011 and then a six-year, $2.508bn windfall that began in 2017.
Cricket has also been wading in broadcast rivers of gold from home and abroad, with its domestic television revenue jumping thanks to its six-year $1.182bn deal struck with Seven West Media and Foxtel only weeks after the sandpaper scandal in 2018, up from the $590m over five years it signed off on with Nine and Network 10 in 2013.
The music may be about to stop, with sports turned upside down by the coronavirus pandemic and the global shutdown of competition, but television executives will tell you a slowing of rights value increases has been coming for some time.
Colin Smith, the managing director of Global Media and Sports, says the "cord cutting" for pay television and the drop in viewership of sport on free-to-air television had already made it hard to envisage rights fees continuing to climb, labelling coronavirus as "the straw that broke the camel's back".
"The idea that broadcast rights can continue to defy gravity and continue to go northwards significantly is unlikely," Smith said.
"This has been a huge wake-up call globally [on] the fragility of the sports system. It is totally dependent on broadcast rights. Sports have not built in many cases a fortress to protect themselves from major downfall. The classic example is the NRL. And it's not only the sport itself – I think you could see the disappearance of some clubs out of this because the AFL and the NRL will not be able to fund all the accumulating losses of the underperforming clubs.
"The whole issue is the driver of professional sport has been sports media rights and I don't think that's necessarily been realised by the Australian public, how the vibrancy of our professional sports system is dependent on that."
One of the first major indicators of a shift in thinking by broadcasters was when Nine chief executive Hugh Marks in 2016 ruled out the network paying more to retain its decades-long association with cricket, a position supported by the investment bank that was advising the company as it was losing an estimated $40m a year televising the sport.
Such remarks before a rights negotiation have tended to be dismissed by the sports as the usual rhetoric aimed at tempering expectations but in that case Nine, now the publisher of this masthead, did walk away from cricket and picked up the rights to the Australian Open tennis instead. Cricket Australia still got its bumper pay day, although there is widespread agreement among industry figures that Seven and Foxtel paid too much.
Foxtel, majority owned by News Corp, has been the primary driver of rights deals going through the roof in Australia but even before sport skidded to a halt around the world due to the coronavirus pandemic, it was swimming in $2.3bn of debt, confronting subscriber churn from its core pay television service and had lost 30,000 paying customers from its streaming device, Kayo Sports, over the summer.
As former News Corp chairman and chief executive John Hartigan told The Sydney Morning Herald last week, the pockets of the free-to-air networks are now nowhere near as deep as they once were, and the "landscape was ripe" now for a drop-off in broadcast fees. With an entity such as Foxtel needing the NRL and AFL as much as the football codes need it, Hartigan has suggested the codes and broadcast partners contemplate new long-term agreements with television partners that may be of lesser overall value but would provide more financial certainty in these perilous times.
In the NRL's case, the governing body had flagged opening talks for its next broadcast deal, due to begin in 2023, midway through this year, with ARL Commission chairman Peter V'landys and NRL commercial manager Andrew Abdo flying to the United States last month to meet with executives from streamers like Amazon Prime, Facebook and Google, as well as Fox Corp supremo Lachlan Murdoch.
Suddenly, with the competition shut down, they are talking to the broadcasters on very different and more urgent terms.
"Anybody who thinks the structure post COVID-19 is going to be the same is wrong," Smith said. "It's going to mean salaries will have to be looked at, and that includes player salaries. It will mean that some non-viable clubs will be challenged. [Sports are] going to have to re-think their business models.
"The other thing that drives sports media rights is competitive tension. Who is going to be at the table to compete on this? Everyone in the global sports ecosystem has been severely affected.
"The whole system is really under threat and it brings to stark reality the whole dependence of the sports system on sports rights."
Super Rugby has confronted numerous problems during its 25 years, but experts warn the coronavirus pandemic may prove a knockout blow for the southern hemisphere's premier club competition.
With 15 teams in five countries straddling 16 time zones from Buenos Aires and Cape Town to Sydney and Christchurch it has long been criticised as unwieldy, expensive to run and exhausting for elite players.
Now virus-related travel bans have put the competition in limbo, leaving administrators scrambling to set up locally-based alternatives that do not require international travel.
While officials say Super Rugby is on hold "for the foreseeable future", in reality they are preparing for the season to be scrapped.
SANZAAR admitted that would place the governing body and its constituent unions "in a precarious position", as broadcasters have paid huge sums for the rights to cover the game.
"Without that revenue, without the ability to be playing in front of stadiums that have crowds, it all does have a direct impact on the bottom line," SANZAAR chief executive Andy Marinos told Newshub.
"That's something I know the national unions are dealing with all of their clubs and then indirectly with all their governments."
Short-term plans are focused on staging local derbies in New Zealand, Australia and South Africa, with Japan's Sunwolves potentially part of the Australian competition and the Jaguares of Argentina based in Africa.
However, that may not satisfy broadcasters.
New Zealand's Sky Network Television noted in a market update this week that "the company has options to recover some costs associated with sports content rights".
Australia-based sports consultancy firm Global Media & Sports (GMS) said SANZAAR's members were in no position to pay back tens of millions of dollars in broadcasting revenues.
"I doubt any of the unions could afford to do that, I'd wager that most of that money has been spent already, or at least allocated," GMS managing director Colin Smith told AFP.
Given Super Rugby's myriad structural problems, Smith said, the virus-enforced shutdown would raise questions about its future, with the makeshift local derby matches potentially forming the nucleus of new national competitions.
"It's been very, very expensive and there's an argument for the unions to say 'Is this something we should continue with, can we afford it?'," he said.
"It goes to the future of the competition."
Super Rugby began with 12 teams in 1996 but its format has undergone almost constant tinkering in the past decade, testing the loyalty of fans.
Over-ambitious expansion plans have been followed by the painful axing of Australia's Western Force, the Central Cheetahs and Southern Kings in South Africa, as well as the Sunwolves at the end of this season.
The Cheetahs and Kings both joined Europe's Pro14 competition and there has been persistent speculation all of South Africa's teams could ditch Super Rugby for a more lucrative and time zone-friendly switch to the northern hemisphere.
In Australia, the game has been flatlining in the face of keen competition from other sports, notably rugby league and Australian Rules, after years of poor onfield performances.
Rugby Australia has suspended negotiations on a new broadcast deal due to the virus crisis, with reports it had received little interest anyway.
"This couldn't have come at a worse time for them," Smith said.
Despite the issues, New Zealand Rugby chief executive Mark Robinson insisted Super Rugby was viable in the long term.
"We're a world-class competition, as we've seen in recent times the quality of the rugby has been outstanding," he told reporters.
"So we believe it's a competition that's got a future, what that might look like is something that we're always revisiting and looking at."
Super Rugby has confronted numerous problems during its 25 years, but experts warn the coronavirus pandemic may prove a knockout blow for the southern hemisphere's premier club competition.
With 15 teams in five countries straddling 16 time zones from Buenos Aires and Cape Town to Sydney and Christchurch it has long been criticised as unwieldy, expensive to run and exhausting for elite players.
Now virus-related travel bans have put the competition in limbo, leaving administrators scrambling to set up locally-based alternatives that do not require international travel.
While officials say Super Rugby is on hold "for the foreseeable future", in reality they are preparing for the season to be scrapped.
Sanzaar admitted that would place the governing body and its constituent unions "in a precarious position", as broadcasters have paid huge sums for the rights to cover the game.
"Without that revenue, without the ability to be playing in front of stadiums that have crowds, it all does have a direct impact on the bottom line," Sanzaar chief executive Andy Marinos told Newshub.
"That's something I know the national unions are dealing with all of their clubs and then indirectly with all their governments."
Short-term plans are focused on staging local derbies in New Zealand, Australia and South Africa, with Japan's Sunwolves potentially part of the Australian competition and the Jaguares of Argentina based in Africa.
However, that may not satisfy broadcasters.
New Zealand's Sky Network Television noted in a market update this week that "the company has options to recover some costs associated with sports content rights".
Australia-based sports consultancy firm Global Media & Sports (GMS) said Sanzaar's members were in no position to pay back tens of millions of dollars in broadcasting revenues.
"I doubt any of the unions could afford to do that, I'd wager that most of that money has been spent already, or at least allocated," GMS managing director Colin Smith told AFP.
Given Super Rugby's myriad structural problems, Smith said, the virus-enforced shutdown would raise questions about its future, with the makeshift local derby matches potentially forming the nucleus of new national competitions.
"It's been very, very expensive and there's an argument for the unions to say 'Is this something we should continue with, can we afford it?'," he said.
"It goes to the future of the competition."
Super Rugby began with 12 teams in 1996 but its format has undergone almost constant tinkering in the past decade, testing the loyalty of fans.
Over-ambitious expansion plans have been followed by the painful axing of Australia's Western Force, the Cheetahs and Southern Kings in South Africa, as well as the Sunwolves at the end of this season.
The Cheetahs and Kings both joined Europe's PRO14 competition and there has been persistent speculation all of South Africa's teams could ditch Super Rugby for a more lucrative and time zone-friendly switch to the northern hemisphere.
In Australia, the game has been flatlining in the face of keen competition from other sports, notably rugby league and Australian Rules, after years of poor on-field performances.
Rugby Australia has suspended negotiations on a new broadcast deal due to the virus crisis, with reports it had received little interest anyway.
"This couldn't have come at a worse time for them," Smith said.
Despite the issues, New Zealand Rugby chief executive Mark Robinson insisted Super Rugby was viable in the long term.
"We're a world-class competition, as we've seen in recent times the quality of the rugby has been outstanding," he told reporters.
"So we believe it's a competition that's got a future, what that might look like is something that we're always revisiting and looking at."
The coronavirus pandemic will hit all professional sports but there is considerable irony in AFL clubs being more savagely impacted than NRL clubs.
AFL clubs have worked harder than NRL clubs to grow revenue, particularly via gate takings and memberships to the point they produce 50 per cent of the total game income pie, whereas NRL clubs contribute only 30 per cent of all game revenue.
Therefore, with fans locked out of games, it will affect the budgets of AFL clubs more than NRL clubs who have traditionally relied on grants from their licensed clubs and handouts from headquarters.
The irony doubles, considering that a recent Herald survey reported that 79 per cent of NRL club respondents say League Central doesn't do enough for them. Pair this with 40 per cent of them also saying the next broadcast deal is the most critical issue for the code.
NRL club chairs/chief executives therefore have their heads simultaneously in the sand and the solution in their hands.
Insofar as broadcast deals contribute approximately 60 per cent of all game revenue and NRL clubs do little to add to it, or generate their own income, it's a bit rich to blame League Central.
Todd Greenberg was the chief executive when all 16 NRL clubs received 130 per cent of the salary cap as a grant – a far higher percentage than the AFL – yet NRL clubs are now saying they should be given more from a pie that headquarters has increased via game sponsorships.
TV broadcasting, whether it be FTA TV or Pay TV (Foxtel), is facing massive disruption of lower subscribers, poor financial results, lower viewership and an explosion of competing OTT services (Kayo, Stan, Disney+, Amazon Prime, Netflix etc).
The irony, therefore, compounds, when the next NRL rights deal becomes not an issue of the art of negotiation but of fan engagement.
As Australia's foremost broadcast rights consultant, Global Media's Colin Smith, says: "The key question is how the NRL broadcast deal can protect and grow the TV network whether it be Foxtel, Channel Nine or somebody else in OTT?
"The key driver to that is a collective NRL/club responsibility in driving and growing fan engagement.
"Fan engagement can easily be measured through club memberships and social media interaction and that, in turn, drives TV ratings and game attendances. NRL clubs have seriously under-performed in driving their fan engagement through club memberships.
"Total AFL club membership is 1.058 million members. Total NRL club membership is 277,200, a drop of 16.8 per cent from its peak in 2018.
"In other words, AFL is 3.8 times larger than the NRL memberships."
What is even more salient is that:
Smith concedes that Sydney-based NRL clubs have been historically supported by poker machines, meaning growing club memberships was not a priority.
But government taxes on gaming and the rise of sports betting means that this source of income is falling and will deteriorate further as the over-55-years-olds become the only age group playing the pokies.
A final measure of irony is that both the AFL and NRL receive approximately the same from TV revenue, yet the AFL is a $1.1 billion industry and the NRL is a $700 million one.
As Smith says: "It is entirely doable for the NRL to grow its media rights but broadcasters must have returns from their sports.
"If the NRL clubs want more from a broadcast deal and more for themselves, they must, as a matter of urgency, focus on growing fan engagement very significantly."
With fans now locked out of stadiums, it becomes a timely test of NRL clubs to see how they grow fan engagement via social media.
The spectacular success of the World T20 final on Sunday is a signal that women's sport has arrived as a premium sporting product, according to Australia's leading broadcast rights consultant.
A crowd of 86,174 packed into the MCG to watch Meg Lanning's Australians lift the trophy after an 85-run win over India. And more than a million people watched from their couches, despite Nine Network's decision to air the final on its secondary digital channel.
Colin Smith, of Global Media and Sport, described the crowd and the ratings figures as "very significant numbers".
"If Channel 9 had their druthers they would put it on their main channel," Smith said.
"The T20 final coupled with the 54,000 who attended the AFLW grand final last year indicate there is a groundswell of support for premium women's sport.
"This was a step forward in the rightful recognition of women's sport as a premium product."
Smith said he expected to see the value of women's sports broadcast rights increase on the back of the World Cup win. However, he said Cricket Australia faced the challenge of translating the Australian team's success to competitions such as the WBBL.
"They need to make sure they have the best players in the world playing in the WBBL and they build a genuine tribalism in each team," he said.
Translation of the success to other women's sports would be even more challenging.
"The question is how do we actually lift the bar in a very competitive market," Smith said. "How does it flow to soccer, rugby, rugby league.
"The AFLW has grown dramatically, perhaps even too fast, but as they build, in five years, as standards improve, it will be a juggernaut.
"It's up to all sports to build the traditions and enhance the tribalism of their women's teams. It's not about equal pay, it's about embracing their women's teams as much as they do their men's teams."
The looming battle between broadcasters Foxtel and Optus Sports for Rugby Australia media rights threatens to reignite the embers of the Super League war from a quarter of a century ago.
The 1995-97 conflict was seen as a fight between Australia's two biggest media titans, Rupert Murdoch and Kerry Packer, over pay-TV rights to rugby league.
While News Corporation and its partner Telstra funded Super League's $1 billion campaign to win rugby league content to offer to subscribers of its new pay-TV network Fox Sports, Packer contributed little to the Australian Rugby League's fight to retain the rights.
Optus was the main funder of the ARL during the three-year battle, which ended with Murdoch and Packer dividing the spoils. Fox Sports and Nine screened matches of the new merged NRL competition, sponsored by Telstra.
Optus got nothing. Now, the looming RA media rights battle is not so much over football content on set-top boxes but over subscriptions to mobile phones and broadband services.
Today, mobile and broadband services are critical to sports broadcast platforms, whereas in 1995 they were an exploratory new medium. The explosive growth in mobile broadband is driven by the elusive Generation Z and the Millennials, who are increasingly following their sport on smartphones and far less on linear TV, whether it be free-to-air or pay TV.
This means the battle for sports media rights will include the major telcos, such as Telstra, Optus and a merged TPG/Vodafone.
If Foxtel and Optus go to war over subscribers it is not only good news for RA, whose rights will be decided in a month, but also the AFL and NRL as well.
Foxtel needs to defend its fortress, built after the Super League war. Optus may be about to cash in on its ancient investment, even if the ownership of the company has changed since its ARL-sponsored premiership was called the Optus Cup.
But Telstra, which holds a 35 per cent equity in Foxtel with News Corporation, is fighting with one hand tied behind its back.
If it bids aggressively for digital rights to RA, NRL and AFL to drive retention and acquisition of its customers, it could find itself competing against Foxtel, which would therefore weaken its own position in the joint venture. Optus doesn't have that complication.
Foxtel last week pitched a 12-month offer to Telstra customers of a 40 per cent discount for its Kayo Sports streaming service, meaning a cost to subscribers of only $15 a month, equivalent to the price of an Optus Sport subscription.
Neither Foxtel nor Telstra will want rival Optus strengthening its position, particularly in NSW and Queensland, the heartland states for loyal rugby union viewers.
The release of Optus Sport's number of subscribers, as compared to Kayo's, will be welcomed by the NRL and the AFL, who are looking for competitive tension for their broadcasting deals, which are due to begin in 2023.
Corin Dimopoulos, Optus head of TV and content, recently announced the Singapore owned-telco had acquired the rights to Japan's J.League for the next three years, its first acquisition in Asia.
In doing so, Optus revealed it was streaming to 825,000 active subscribers. Kayo has 334,000 paying subscribers and 370,000 in total.
Assuming the definition of subscribers is the same, if Kayo had as many subscribers as the Optus numbers, it would be worth an additional $150m in revenue annually to Murdoch.
"The differential between the number of subscribers means Telstra won't want to further strengthen Optus with other content, especially in Sydney and Brisbane," said Colin Smith, of Global Media and Sports, Australia's leading broadcast rights consultant.
"Concurrently, Optus may be emboldened to decide that by broadening its sports offering, it will drive more Optus Sports subscribers and take mobile share from Telstra."
The interesting new complication is the potential emergence of a new telco, with the mega-merger of TPG and Vodafone. This creates three broadband-and-mobile giants all competing for attractive content, such as sports rights, and for Australian customers, particularly the Millennials and Generation Z.
The ACCC initially ruled against the merger but this was challenged by TPG and Vodafone and last week the Federal Court upheld their appeal.
Telstra would be ceding market share to Optus and damaging its own investment in Fox if it loses the RA rights to its main rival.
Fortress Foxtel, already under siege from online OTT rivals and forced to surrender European content while needing to curb losses, is in a worse position.
Optus must still decide if it wants to be a producer of games, rather than an importer of overseas content.
But, after a quarter of a century, Optus could well be back in the main game, even if the battleground is a new one.
Respected broadcast rights analyst Colin Smith says television networks will increasingly prioritise exclusivity in deals with sporting bodies, and the 'halo' effect of major events still works.
The comments come as fresh figures showed the $300 million exclusive deal struck between Nine Entertainment Co and Tennis Australia for the Australian Open has helped the TV network to boost television ratings.
"I can see media companies desiring to have a multi-platform approach across free to air, streaming and even with radio. Simulcast of premium sports broadcasting across independently owned TV or streaming providers will be more problematic going forward," Mr Smith said.
A simulcast arrangement involves sharing the broadcast of a particular program or sports match.
Data from television measurement provider OzTAM revealed a 17 per cent increase in audience across the two-week Australian Open tournament compared with the previous year.
The Australian Open, which concluded on Sunday night, averaged 531,660 metropolitan viewers and 726,935 when including regional areas. In 2018, the Open averaged 453,381 in the capital cities - a figure that media buying agencies rely on - and 622,307 nationally.
Nine's broadcast of Nick Kyrgios and Rafael Nadal's match last week was watched by 1.918 million metropolitan viewers alone.
Nine is the owner of The Sydney Morning Herald and The Age. The media company's deal gave it exclusivity of all premium tennis played until 2024 across broadcast, streaming and digital platforms.
Mr Smith said the Nine's tennis broadcast was proof the halo concept - the idea of using a sport to cross-promote shows and boost audiences - still worked.
"The view was that up until more recently that halo is gone - it's no longer as relevant as it was. I would suggest that has now changed ... the way that Channel Nine has been promoting their shows, promoting across platforms, has reinvented and has grown the halo back again," he said.
Nine's sports boss Brent Williams said this year's growth was a combination of the success of Australians, competitive matches and the arrangement Nine chief executive Hugh Marks landed with Tennis Australia.
"We saw some fantastic tennis this year and the success of the Australians - Ash Barty, Nick Kyrgios, John Millman - the fact they went deeper in the tournament certainly helps us a lot," Mr Williams said. "It was a bold and brave decision by us to walk away from 40 years of cricket and to step into tennis but for us and our business it made so much sense."
Australia's other major summer sport - The Big Bash League - runs on both Seven and Foxtel but has lost audiences this year. As of Saturday's matches, OzTAM's preliminary ratings figures showed a fall of 10 per cent year on year for Seven to 383,000 viewers, and 609,000 nationally. Meanwhile, Fox Cricket's exclusive men's BBL matches were averaging 158,000 nationally, down 25 per cent year on year. The combined coverage is averaging 780,000 across Australia, a fall of 7 per cent. These figures will change ahead of the final on the weekend.
Seven said its entire cricket offering - women's international, Women's BBL, tests and BBL - has so far reached 15.213 million based on viewers who watched at least a minute of coverage. By comparison, Nine's tennis reached 14.5 million.
Mr Smith said the challenge for the cricket - particularly the Big Bash - was building tribalism and consistent scheduling.
"One of the key things for Channel Seven is getting more viewers, therefore, higher TV ratings and therefore higher advertising revenue. For Foxtel, it's all about getting more subscribers whether they are on Kayo or Foxtel," he said.
"One of the challenges that Big Bash cricket has got - it's been a premium entertainment property but is still yet to build club tribalism. The other part of this is definable windows. Big Bash is being swapped in and out where it fits with tests."
Foxtel's audacious investment in cricket has suffered flat Test ratings amid a significant spike in the free-to-air audience this summer, but the subscription television provider says its introduction of streaming service Kayo Sports makes the figures "smack bang on our forecasts".
The pay-TV outlet, which is majority owned by News Corp, has banked heavily on the sport, shelling out $630 million over six years as part of Cricket Australia's overall local broadcast rights deal of $1.2 billion it secured with Foxtel and Seven West Media in 2018.
For the Test series against Pakistan and New Zealand, Fox Sports again had an all-star cast featuring the likes of Shane Warne, Kerry O'Keeffe and Michael Vaughan to front its coverage while it promoted its access to players and technological gadgets.
According to Oztam figures, Foxtel's Test ratings decreased one per cent from its first season under the rights deal in 2018-19, with a daily five-city metro average of 161,000, slightly down from 163,000 for last year's series against India and Sri Lanka. Seven's metro average was 509,000 across the five Tests, up 13 per cent from 452,000 last summer, with its share of that audience increasing from 73 per cent to 76 per cent.
That does not include numbers for Foxtel's streaming app Kayo Sports, which was launched in November 2018 and as of last November was reported to have 443,000 total subscribers, 402,000 of them paying customers for the service which starts at $25 per month. Kayo viewing figures are not released publicly by Foxtel but Fox Sports chief executive Peter Campbell said the television ratings did not tell the full picture.
"We've had this year a marginal at best decline in our OzTam number but that does not include the Kayo number," Campbell said. "Kayo only launched in late November of 2018 and you've seen the subscriber numbers that were reported in the last quarter.
"The [ratings] are smack bang on our forecasts for what we expected this summer. We're really pleased with the offering that we've been able to make to our customers through Foxtel and also to our Kayo customers as well."
Fox Sports has exclusive rights to Australia's one-day and Twenty20 internationals as part of its deal with CA but home Test matches are shown on both Seven and Fox as are 45 matches of the men's Big Bash League including five finals.
Colin Smith, managing director of Global Media & Sports, said Foxtel's daily national Test average audience of 257,000 was still "pretty good numbers" but believes its streaming subscriber numbers are low.
"When you think about Netflix with three million subscribers in Australia ... when [customers are] only paying $25 a month for Kayo you want as many as possible," Smith said. "They'd be wanting somewhere upwards of a million subscribers this year .... 400,000 is not where they need to be at all."
Kayo Sports released some cricket viewing information in September, saying an average of 175,000 users watched Australia's matches during last year's World Cup while an average of 187,000 users watched India's games.
Smith said Seven's ratings were slightly lower than he would have expected.
Sydney FC midfielder Anthony Caceres has urged the FFA and A-League to consider the complex process of moving the competition from summer to winter to improve the quality of Australian football.
A change of seasons would place the A-League in direct competition for broadcast dollars, crowds, stadia and media coverage with Australia's dominant winter codes, the NRL and AFL.
However, Caceres has added voice to a growing belief within the game that it would be best to take on the bigger codes rather than avoid them as summer conditions in Australia deteriorate.
"I think it's a pretty good idea to tell you the truth," he said on Wednesday.
"We dish up pretty good quality across the league considering the conditions we play in at times and I think the change would only lift the intensity of the games and improve the product of this league, so I think it's something worth looking into, definitely."
Cacere's view follows a report in Nine Media on Wednesday in which Professional Footballers Australia chief executive John Didulica and broadcast rights expert Colin Smith compelled the FFA to consider the radical switch.
Smith argued the European soccer leagues, not the NRL and AFL, were the A-League's biggest competitors for viewership and said business analysis was needed to help save declining crowds and ratings.
Players have long called for the code to revert to winter to improve the quality of Australian football.
So far this season several W-League and Y-League games have been rescheduled, while drinks breaks have been frequent through sweltering conditions in the A-League.
Sydney and Canberra teams have also been forced to change their training schedules to avoid hazardous air quality due to smoke haze from bushfires, and it is only set to get worse as the impact of climate change intensifies.
On Wednesday another fog of smoke blanketed Sydney impacting visibility, but Sky Blues medical staff concluded it was safe to train outdoors.
"These are extreme conditions, obviously," Cacares said.
"It's something that has affected everyone greatly. Looking at these conditions, whether we change the league from summer to winter is probably the least of our concerns with all the people that are suffering because of it, but obviously it's a discussion for the future.
"It's just a case of getting on with it. We haven't let it affect us mentally, I guess.
"Obviously you do feel it sometimes but you've just got to keep on going and get the job done."
Australia's players union and a leading broadcast rights expert have urged the A-League to properly explore the feasibility of a radical switch back to winter that would put it head-to-head with the AFL and NRL.
Nearly forty years after the idea of summer soccer was first raised by revered journalist and FFA hall of famer Andrew Dettre, there is a growing belief within some sections of the game that it may be better off taking on the bigger codes rather than trying to avoid them.
Several W-League and youth league matches have been postponed or cancelled this season as a result of sweltering heat or smoke haze, while A-League players have long complained about the fatigue of playing through summer and the impact it has on the standard of matches.
The effects of a particularly brutal Australian summer and the prospect of even hotter seasons to come as a consequence of climate change have put the debate into even sharper focus.
A winter calendar would align the A-League not only with Asian leagues but the state-based competitions throughout Australia, removing one of the major obstacles to the ultimate goal of a top-to-bottom football pyramid with promotion and relegation.
It would also present a raft of significant challenges, not least the availability of stadia during AFL, NRL and Super Rugby season, and the prospect of being drowned out in media space by rival sports. Those are the chief reasons why a switch is not on the A-League's radar and viewed as completely unworkable by FFA, as well as the fact that current broadcasters Fox Sports would almost certainly not be supportive.
But with the A-League's television ratings and attendances on a concerning downward trajectory, and the competition failing to capitalise on the "clear air"of summer, the time is nigh for some "out-of-the-box thinking" and research, according to broadcast rights advisor Colin Smith.
"You're being swamped as it is," Smith, the head of consultancy Global Media & Sports, told the Herald.
"Where 12 months ago I would have said definitively 'no, that's the craziest thing they could do', because of the shape it's in now, it is time to rethink things."
Smith, who has brokered numerous deals between broadcasters and sports for over 20 years, believes it could be that European leagues in England, Spain and Italy are the A-League's biggest competitor for viewership and fan engagement, not the AFL or NRL.
"Right now, as a broadcast, fan engagement product, the A-League is probably the worst its been since its inception," Smith said.
"If I was the A-League, I'd think it's time to do a really detailed and comprehensive analysis of the business case [for playing in winter] and it's something I'd be talking to broadcasters about.
"It could be then attractive to an Optus to then say, 'wow, that means we can actually have wall-to-wall football 12 months of the year, we become the home of football in Australia'."
Professional Footballers Australia chief executive John Didulica is also supportive of broaching what he said was an "incredibly complex" topic.
The old National Soccer League switched to summer for the 1989-90 season, primarily to escape the long shadows of the AFL and NRL – a decision Didulica said has largely proved to be incredibly successful.
Didulica acknowledged a move back to winter would have profound implications for grassroots football and facilities access, but he said no long-term plan for the sport would be complete without a thorough examination of which is the most optimal season window for football.
"These are the discussions we need to have," Didulica said. "The broadcast deal's up in 2023. The question is whether it gets tied into a bigger discussion around the integration of our football vision.
"Ultimately, we want to be selling our best product. That's the way to maximise value. If we're looking ahead 15, 20, 30 years, are we putting ourselves in a position where it's impossible to deliver a product of requisite quality as well as managing player welfare issues?
"With so many other things in flux, I think it's a really timely opportunity to reset and discuss everything. There should be no policy matter that can't be revisited over the next two or three years."
The current A-League regulations allow for games to be moved when forecasts exceed a prescribed "Wet Bulb Globe Temperature" reading, but players and fans often complain that the threshold is too high.
"It's just a lot more physically demanding," Sydney FC midfielder Paulo Retre said after Saturday's 2-1 win over Adelaide United, which was played in draining 35-degree heat at Kogarah.
"You make a couple of runs and you just feel out of breath. Things that you think maybe you could normally get to or you feel like you could be in the right position, you're just maybe not there.
"To be honest, it is tough. Whether [the answer is] scheduling games on a different day or even a time change, I'm not sure, but today it was really tough."
City Football Group (CFG), the owner of Manchester City and Melbourne City, has become the world's most valuable sports group, after a private equity firm bought a 10 per cent stake in the group for $US500m (AU$737m).
The record-setting deal with California-based SilverLake was announced on Wednesday (UK time), and saw CFG's valuation rise sharply to US$4.8 billion (AU$7.1 billion).
Analysts describe it as one of the biggest sports deals in history.
But was it a deal worth making?
CFG has eight football clubs in its stable, but current English Premier League (EPL) champions Manchester City are its most valuable asset by some distance.
Forbes valued the club at US$2.69 billion (AU$4.0 billion) in May, and last year it brought in record revenues of £535.2 million (AU$1.02 billion).
That was the first time revenues had surpassed £500 million, but profits were a much more modest £10.1 million (AU$19.3 million), with wages totalling roughly £315.8 million (AU$602.1 million).
Ignoring revenues from CFG's much smaller clubs – such as New York City FC, which Forbes says brought in US$42 million (AU$62.0 million) in 2017 – CFG's new valuation is roughly seven times its annual revenue.
That's at the high end of valuation multiples used for sport team purchases, putting SilverLake's investment at the expensive end of sport team buy-ins.
For example, baseball's Kansas City Royals was sold earlier this year for a reported US$1 billion, or 4.1 times the club's annual revenue, while the NFL side Carolina Panthers was sold in 2018 for US$2.3 billion, 5.9 times the club's annual revenue.
That said, CFG's expansion shows no signs of slowing, and neither does the EPL's.
Just days after the SilverLake announcement, CFG announced it had purchased a 65 per cent stake in Mumbai City FC, its eighth football club.
And the EPL's broadcast revenues for the current 2019-2020 season are up 8 per cent on the previous season – partly thanks to the pound's depreciation following the Brexit referendum.
Global Sports and Media director Colin Smith told The New Daily the future looked bright too – so long as CFG continued to invest heavily.
"[CFG] has been unbelievably focused in terms of its performance, since they bought into Man City [in 2008]. They've spent hundreds and hundreds of millions of pounds on players, and that's delivered returns for them on the pitch," he said.
"But it's not like you can stand still with this – that's got to continue."
Most of the club's revenue comes from live TV deals, though commercial sponsorships contribute a pretty sum, too.
It's a similar story for most premier league clubs, according to Deloitte.
The professional services firm's latest football finance review found broadcasting rights on average comprise 59 per cent of club revenue in England.
Sponsorship money comes in second, with 27 per cent, and match day revenues make up 14 per cent.
Buying a 10 per cent stake in the biggest football group in the world might sound like a great investment, but it's relatively uncharted waters for a private equity firm.
That's because a football club's financial success is closely tied to its on-pitch performance, making it a relatively risky investment.
And its profits are small beer, compared to those recorded by Alibaba, Dell, Skype and other tech companies in which SilverLake has previously invested.
So much so that one "Wall Street veteran" told the Financial Times that SilverLake managing director Egon Durban has bought shares in the club to improve his social standing more than anything else.
"He's one of four managing partners at the most important technology private equity firm in the world," the source said.
"But he's tried to reinvent himself as something more than that, someone whose contact book stretches from Michael Dell to Elon Musk to Ari Emanuel, who can make deals that rely on bringing unique combinations of people together."
According to the Financial Times, SilverLake plans to hold onto its shares for ten years.
Over the past five, CFG's valuation has grown from US$3 billion (AU$4.4 billion) to US$4.8 billion (AU$7.1 billion)
The governing body is just two years into a five-year, $2 billion broadcast deal, but already preparations are being made for the next one. Given how quickly the media landscape is changing, nobody knows what it will look like.
"There isn't a single model that everyone is pursuing," says a source who has been involved in previous negotiations for Australian sporting rights deals. "All of the major [global] players are pursuing a different model because the world is so fragmented. Everyone is placing a bet and learning."
It's a gamble sporting organisations can't afford to get wrong. In the NRL's case, it doesn't own a single asset and broadcast remains its major revenue stream. If the traditional networks can't afford to pay as much and the 'FANG' disruptors - Facebook, Amazon, Netflix and Google - don't enter into the fray, there will be less money for the game to survive on.
"I think the transition will come slowly and in a very confused and difficult fashion over the next decade, especially in countries like Australia where we haven't even completed the NBN rollout," says sports marketing expert Con Stavros, an associate professor at RMIT University.
"The TV networks are being squeezed and they can't overpay for sport and try to make it up elsewhere," he says. "The big bidding wars won't be there in the future. For most sports, they don't know what they are going to look like and many of them are probably better off locking in something now if they can."
Rugby league has long gone with a two-partner model of a free-to-air and subscription provider. The existing deal with Foxtel and Nine Entertainment Co – the publisher of the Herald – expires at the end of 2022, but already the media landscape has shifted dramatically since the ink dried on the last deal. Nine had been the home of cricket for three decades but opted out in favour of tennis when it no longer made financial sense. Nothing is forever.
Fox has its own challenges. In a statement to the ASX in May, News Corp flagged cuts to spending on "non-marquee sporting content" and increased subscription rates after a financial loss of $417 million in 2018. In a bid to offset consumer churn, it introduced sports streaming service KAYO, effectively cannibalising its own market in the process.
"That damages the business model of Foxtel," says an industry expert currently involved in a sporting rights negotiation. "It's driving their average revenue per user down. If you were at $78 [with Foxtel per month] and now people are taking up the $25 offer, simple economics dictate revenues are down."
It raises questions over whether Fox can afford to play a similar role next time around.
The NRL isn't waiting to find out, although it's unlikely meaningful negotiations will commence for at least another 12 months. Rugby League Central is considering all of its options, including bringing broadcast production of its matches in-house. The model has been used overseas and locally, most notably with V8 Supercars and in tennis.
However, industry experts such as Global Media and Sports boss Colin Smith – who has advised the NRL, AFL and ARU during previous rights negotiations – believes the move could increase rather than reduce costs. The only local production companies currently equipped for the task are NEP or Gearhouse. However, a well-placed source with knowledge of the upcoming rights negotiations predicts Fox would transform itself into a production house in time to produce the content for the next league, cricket and AFL rights deals.
"Whoever the free-to-air rights holder is will probably end up with less sport but put their own commentators in to voice over the pictures delivered to them by Fox Sports," the source says.
The next TV deal will be the first big-ticket item for incoming Australian Rugby League Commission chairman Peter V'landys. The Racing NSW boss will next week officially succeed Peter Beattie, whose greatest legacy is perhaps the introduction of the "no fault" stand-down rule to address off-field player misbehaviour. One of the first stars affected, Dragons forward Jack de Belin, unsuccessfully challenged its validity in the Federal Court, where the NRL claimed scandals had already cost the game $10 million in lost sponsorship and that the figure would balloon to "hundreds of millions" of broadcast revenue if left unchecked.
"We are looking to the future, which is why we have started," Beattie says of preparations for the next rights deal. "It's very early and it's rapidly changing. It's something that doesn't stand still and for us it's about maintaining value for the game. That's what the no-fault rule was about, all of the digital stuff we're doing, the women's game, the footprint work. All of that adds value to the game.
"The good thing for us is that while the media landscape is changing, our value as a sport has been maintained," he says. "Even in free to air - and people are looking at other devices and other stuff - our share of that has increased.
"We've made no decision to go early or late, we're just getting ready and looking at all the options."
Nothing is off the table. In-house production, having multiple free-to-air or disruptor partners, creating new content opportunities, ending simulcast arrangements, selling off properties such as State of Origin separately, playing matches over quarters to increase advertising slots - they are just some of the ideas that are being workshopped behind the scenes. The CBS-owned Ten network has already publicly confirmed it will likely engage in the bidding process, while Seven will need to weigh up whether it can commit to AFL and NRL.
Meanwhile, viewing habits continue to change. Smith believes traditional television viewership is down 20 per cent in just five years as content is increasingly consumed on other electronic devices. However, he describes top-end league content as a "must have" for free-to-air broadcasters.
"It provides Australia's blockbuster [ratings result] with State of Origin averaging over 9 million viewers alone, all exclusive on channel Nine," Smith says. "Fans watching games on TV is more than 10 times greater than attending a game - for the NRL that is even higher, [about] 15-20 times as the NRL is perfect for TV."
There was once a time when moguls bought media rights for bragging rights. However, a source close to current negotiations says companies are no longer prepared to pay "overs" in order to trump their contemporaries.
"The days of Packer versus Murdoch versus Stokes are over," the source says. "These companies are now answerable to boards and shareholders and they won't cop a $50 million loss to win a pissing contest."
NRL executives and prospective media partners aren't the only ones watching nervously as the landscape shifts. Any drop in broadcasting revenue will result in less money to clubs (they are currently funded to the tune of 130 per cent of their salary cap limit), meaning the players could also be out of pocket once the current collective bargaining agreement expires.
"If the revenues do come off in the future, that is something we will have to take into consideration," says Rugby League Players' Association chief executive Ian Prendergast. "However, I'm still optimistic there will be ways to slice and dice the rights in the future to at least maintain the current revenue that flows from broadcast rights. Hopefully we can continue to build on it in the future."
Existing television rights holders will oppose any deal that cuts them out of the production process amid predictions the NRL could be worse off financially if it took responsibility for the broadcasts itself.
As revealed by the Herald on Monday, the NRL is considering bringing the production of its matches in-house before selling them off to interested media outlets. The move has already been made by a number of major sporting bodies in Australia and abroad in response to changes in technology and viewing habits.
The current rugby league rights holders, Foxtel and Nine Entertainment Co - the publishers of the Herald - have no interest in ceding control of the way the product is delivered to their audiences to Rugby League Central. While such a switch could potentially allow for an increased number of rights holders when the existing deal expires at the end of the 2022 season, an industry expert has warned that production costs could actually increase under such a scenario.
Global Media and Sports boss Colin Smith - who has advised the NRL, AFL and ARU during previous rights negotiations - said centralised broadcasting often didn't make financial sense.
"From what I have seen historically, the answer is no," Smith said. "If you think about the amount of TV production that Channel Nine does across sports, there are real economies of scale.
"They could have a truck, say, in Perth on an NRL day and then the next day that same truck could be doing their netball coverage.
"If you think about TV production, there are only really two houses that can do something. It's not like the NRL is going to set up its own trucks for live TV production, there is literally only NEP or Gearhouse that could do that.
"When it happened with V8 Supercars a number of years ago, there was actually no saving. What it did was increase costs because the broadcaster still needed production people to make sure it was fit for purpose.
"I can't see any upside right now in [the NRL] doing this."
Smith said the NRL rights remained a valuable commodity despite the consumer trend towards traditional television screens to other electronic devices.
"The world is changing … it's no longer a case that you are doubling your media rights over two rights periods," Smith said. "That just won't happen in the future.
"Because of the proliferation of audiences across all these multi channels, the number of people watching TV from five years ago is probably down about 20 per cent.
"I would say it is more challenging to get a major increase [in rights value].
"The $150 million the NRL has invested in digital, it is questionable whether they have got a return out of that. But they have learned a lot so you couldn't say it is all bad."
Meanwhile, the NRL on Tuesday confirmed that Perth had earned the right to host the return of the club-based Nines competition in February. The governing body has shown a willingness to take other marquee events out of Sydney to grow the game, as evidenced by Magic Round in Brisbane and State of Origin matches to Melbourne, Perth and Adelaide.
Smith said adding another Queensland franchise was the best way for the NRL to increase the value of its media rights.
"Then there's real value," Smith said. "It's the second largest NRL market, the third-largest market in the country. That is an under-served market, especially in Brisbane.
"You need a live game in Brisbane every week."
For Australia's small but diehard American football community, rolling out of bed at 3am on a Monday morning to watch NFL RedZone for seven hours had become a weekly tradition.
But a world-first deal between the National Football League, America's richest sporting body, and Tabcorp, Australia's biggest gaming company, has now changed that. And experts believe it could point to a looming revolution for how sports broadcast rights are sold globally.
RedZone was developed a decade ago by the NFL's own TV network in the US. It features simulcasts from each NFL game on a Sunday (US time), with coverage crossing to whichever game had a team closest to scoring a touchdown.
Essentially enabling fans to watch every game at the same time, the product was a smash hit in the US and proved hugely popular in Australia when it was rolled out on ESPN a couple of years ago.
Last month it emerged that the NFL had pulled the rights in Australia away from ESPN. The move upset American football fans in Australia, and it initially seemed the only way to watch RedZone in this country was by subscribing to the NFL's own streaming service.
But last week $10 billion ASX-listed wagering giant Tabcorp announced it had struck a deal to become the NFL's official betting partner in Australia - the first such deal the league had signed anywhere in the world.
As part of the deal, Tabcorp secured rights to air RedZone on the Sky Racing channel and in thousands of licensed venues around the country. And broadcast rights experts say the deal could be a sign of things to come.
"More dollars flowing into the NFL, but more people will watch the NFL as well. Which means, over time when the next rights deal comes up, it's worth more," said sports rights expert Colin Smith. "The same applies to horse racing. If I've got vision, I'm going to watch more and wager more," he said.
With TV networks in Australia and around the world increasingly reluctant to pay ever increasing amounts for sporting content, organising bodies may increasingly turn to the gambling industry to help secure their financial futures.
Mr Smith has been involved in negotiations between various sports and broadcast networks for more than 20 years, including the AFL's five-year, $780 million deal a decade ago.
He said the Tabcorp-NFL deal would be a precursor to more rights diversification around the world, and would open the door to betting companies snatching up more content.
This "revolution", in his words, is due largely to the legalisation of online gambling on sport in several American states in the past year.
While Tabcorp declined to say exactly how much the deal was worth, Mr Smith said it was unlikely the company had to break the bank. Nonetheless, the deal remains significant.
"We do know there's a direct correlation between wagerers betting on a sport and then watching it on television, whatever the platform," he said.
Tabcorp has identified US sports as a growing area, particularly for younger punters. The company expressed a desire to become the "home" of American sporting content in Australia. But it declined to elaborate on any plans to acquire broadcast rights for popular US sports such as Major League Baseball, or the NBA.
"We are proud to bring Australians NFL action to enhance our existing sports offering to customers and venues and complement Sky's unrivalled coverage of Australian and international racing," said Tabcorp managing director wagering and media Adam Rytenskild.
For its part, the NFL said it hoped the deal would help the sport of American football to continue to grow in Australia.
"We are looking forward to working with Tabcorp, the leading operator in Australia," said Christopher Halpin, NFL executive vice-president and chief strategy and growth officer.
"We are excited about our growing popularity in Australia and this partnership will help further serve our fans there."
You have a big job, Mr V'landys.
There was general acceptance by NRL club chairs on Thursday at the appointment of Racing NSW chief executive Peter V'landys as chair of the ARL Commission, although there were some reservations about the former chairman, Peter Beattie, simply anointing his successor.
Conflict of interest considerations never concern club bosses, provided they make money. It certainly angered them when News Corp half owned the NRL, with Rupert's men sitting on one side of the board table making a low ball TV rights offer to the NRL and then scurrying around the other side of the table to accept it.
But V'landys has promised a pot of gold to the clubs and, based on his successes with Racing NSW, he may deliver it. His High Court win earned product fees from online bookmakers and the rights income he extracted from the Tabcorp-owned Sky to broadcast races in NSW allowed him to launch the mega racing event The Everest.
Every five years, when the NRL TV rights are negotiated with the networks, there is general pessimism the money will be less than last time. Yet each deal, following News Corp's ownership exit from the game, has been higher. The current five-year contract expires in 2022 and, with the AFL deal being a six-year one, V'landys will go to the market earlier than rugby league's major rival.
He is a shrewd dealmaker but he has a major challenge this time. Free-to-air viewership has dropped 30 per cent in five years as new technology, mainly streaming with offerings like Netflix and Stan (and soon Disney), has fragmented the traditional FTA and Foxtel audiences. The halo effect on TV, where audiences stay with a network, has almost disappeared, with some exceptions like the Australian Open tennis and the Olympic Games.
FTA's declining audience has now become a significant issue, with agencies and major companies questioning the reduction in reach and it is likely that they will want to pay lower advertising rates. Sports media rights values are also under challenge globally, with English Premier League domestic rights fees falling by 15 per cent and while international rights fees also fell, the devaluation of the pound sterling offset the loss. In 2019, the NRL is holding its own, with its total audiences falling three per cent while the overall FTA audience has dropped eight per cent.
Up to round 20, gross viewership in the AFL was 84.9 million whereas the figure was 78.4 million for the NRL. But the AFL average audience was 449,000 viewers while the NRL's was 467,000. These numbers reflect the poor ratings for the AFL's Giants and Suns but it's anticipated the AFL will spend upwards of $200m over 10 years to entrench these clubs in the same way the Swans are now an established brand in Sydney.
Furthermore, AFL numbers are up two per cent on the previous year when NRL total viewership exceeded the AFL for the first time since 2010. This year, the AFL scheduled more FTA Thursday night games and indications are it is serious about the 2020 season, with rumours it will allow flexible scheduling over the last five rounds in order to switch highly anticipated matches to FTA broadcaster Channel Seven.
So, with the AFL threatening to become an even bigger challenge for NRL and advertisers questioning value, V'landys will need all his formidable negotiating skills.
Channel Ten may provide some competitive tension. It is now owned by American network CBS and paid $20m for the rights to screen Melbourne's Spring Racing Carnival, up from only $7m paid by Channel Seven. CBS is a leading sports broadcaster in the US.
Channel Nine is losing upwards of $40m a year on rugby league, which historically has been recovered through halo. To ensure the NRL is more attractive for Nine in the next rights deal, it is likely the network will bid for fewer games and demand exclusivity. This would prevent Fox Sports simulcasting and therefore test the close relationship V'landys has with Fox owners News Corp.
While State of Origin continues to be Nine's broadcast powerhouse, its Sunday night game in Perth did nothing for the ratings in NSW and Queensland, with the Melbourne audience falling 18 per cent. Adelaide will host a game next year.
The ARLC is using Origin to expand its national footprint but it seems to be in a holding pattern with its strategy on clubs.
V'landys, given his Sydney-centric attitude to racing and his confrontational attitude to Victoria, may preside over a Fortress NSW/Queensland strategy. Both Channel Nine and Fox have indicated they want a second Brisbane team, but clubs will oppose expansion if it means lower annual grants.
Australia's leading expert on sports rights, Global Sport and Media's Colin Smith says, "It appears neither the ARLC nor the NRL clubs have a strategy here.
"With the real and present cautionary future of the AFL that has solidified its base in Sydney with the Swans, its overall financial muscle and long-term thinking building a similar position for western Sydney, Gold Coast and Brisbane, the AFL by 2035-40 could be the national football code.
"This will push the NRL into a second-rung sport. It is a must for the NRL to have a comprehensive strategy that further strengthens and grows the sport on the eastern seaboard."
Smith adds: "I anticipate the NRL will get less broadcast income in the next deal unless they can develop some competitive tension or offer a more attractive product such as a second Brisbane team. Queenslanders watch the Broncos No.1, followed by the Cowboys, the Storm and the Titans.
"The NRL future strategy must be predicated on growing and strengthening its footprint. He says this should entail the consideration of:
A couple of hours after a clandestine meeting of the Australian Rugby League Commission directors on Monday morning to officially anoint Peter V'landys as its incoming chairman, the man himself strides into the Racing NSW boardroom. His shirt is a little frayed, untucked slightly at the back, the working class man for a working class game. His phone hums incessantly, almost every minute on cue. If he didn't know what was coming, he does now.
Those not familiar with the bizarre sporting web might only know him as the man on the other end of the phone line as Alan Jones berated Sydney Opera House chief executive Louise Herron over her reluctance to use the building's sails for a promotion of V'landys' The Everest horse race last year.
Those familiar with the scene know him as the man who is the most powerful administrator in the sector, having relentlessly worked, and later weaved, his way to the top of the rugby league food chain while holding down the role as Racing NSW chief executive. He's polarising, a shrewd networker, ruthless negotiator and a fiscal force who will soon head the city's most watched sport.
V'landys is in the middle of a very Sydney scenario, running one billion-dollar industry at a management level while dealing with the same broadcasters, wagering giants and politicians as the chair of another half-billion dollar sport. As one southern wag put it, "if there's no conflict in Sydney they're not interested".
But does V'landys, who arrived in Australia barely out of nappies as the son of Greek migrants, have any conflict? And if not, does he have the time to make two such high-pressured roles work?
Sources familiar with V'landys' work ethic tell of emails and text messages sent from him at all hours. It's said he starts rising just after 4am to manage his workload.
There's not a single line of any board document which escapes his gaze. His fanatical attention to detail is well known – legend has it he likes to ensure all parts of the racetrack are perfect for major Sydney race days, down to garden arrangements.
V'landys has refrained from publicly speaking about his elevation to rugby league's top job, preferring to wait until former Queensland premier Peter Beattie officially steps down as chairman at the end of next month. He declined to comment for this story.
But is it physically possible to be able to do both roles?
"Do you ask Michelangelo, ‘how do you paint all day all week?'," says Tony Shepherd, the chair of the SCG Trust and AFL expansion club Greater Western Sydney Giants.
Beattie is an unabashed fan, even if publicly anointing him as his successor before Monday's unanimous vote rankled some fellow ARLC directors.
"The thing about Peter V'landys everyone has to remember is that he's a workaholic," he says. "Maybe a lesser mortal [couldn't do it], but I've got absolute faith he can – and he will. The only people who need to be worried about V'landys when he comes in are people who are not doing their job or people who are duplicitous. What he says to your face is what he says behind your back.
"... he's had to fight all his life to get where he is. He's the sort of guy who can deliver. Whenever you're as successful as he is you always get your detractors and whingers."
It's easy to argue his strongarm over Sydney's sporting scene is because of the strength of his relationships and vast network.
V'landys' media contacts are wide. The Royal Randwick directors' room on major race days is a rotisserie of influential Sydney media identities and political movers and shakers. He rarely drinks while there as his guests indulge. His room is visited by executives from this publication, but is extremely well frequented by News Corp management, who share a close relationship with one of NSW's most powerful figures.
Racing NSW is one of the biggest advertisers of the News-owned The Daily Telegraph. V'landys also has a commercial arrangement with The Sydney Morning Herald and Nine, the publisher of this masthead.
Sources familiar with the inner workings of News Corp's publications recalled an occasion, prior to V'landys joining the ARLC, when a journalist was told to find someone to provide comment on how the Racing NSW chief would be a great addition to rugby league's top table. Originally promoted as a representative of the clubs, V'landys was later invited onto the ARLC by Beattie as an independent when constitutional reform fell over.
Nine and News, through its subscription-based Foxtel, hold the NRL's lucrative television broadcast rights under a five-year agreement which is due to expire at the end of 2022. They will both be major bidders next time.
V'landys' fellow ARLC director, Foxtel executive Amanda Laing, is not expected to take part in the next broadcast rights negotiations because of her job with the pay TV company. How hands-on V'landys' role is in the talks remains to be seen as the NRL fights to maintain its revenue while the value of TV sports rights deals fall.
"Let's be clear, I'm not saying he's conflicted but it is really about gently treading through tulips and making sure the two organisations are independently protected," Global Media and Sports principal Colin Smith said. "In a very challenging environment it makes it even more sensitive. If [the NRL TV rights negotiation] is going to be run by the chief executive and a sub-committee that's less of an issue."
V'landys' supporters, meanwhile, scoff at the conflict of interest accusations. If he has the ear of some of the city's biggest media players, he also has the ear of the most powerful men at sports stadiums and racetracks.
Former NSW government ministers have walked into the racing stable after political life. V'landys also advocated for ex-premier Barry O'Farrell to be appointed chief executive of Racing Australia after stepping down from the state's top office.
Earlier this year O'Farrell was appointed Wests Tigers chairman and he also sits on the board of the SCG Trust, which is chaired by Shepherd, who counts a Racing NSW directorship among his many governance gigs.
If there is any problem with V'landys' two gigs, his Racing NSW board can't see it. Shepherd calls the conflict of interest accusations as "absolute nonsense" while the regulator's chairman, Russell Balding, who has previously led the ABC, Sydney Airport and Cabcharge Australia, has given V'landys the green light.
"What's the conflict? The issue is NRL and Racing NSW are not directly competing head to head," Balding says. "At times they're complementary. What Peter is gaining from a personal point of view, what the NRL is gaining and what we're gaining is cross fertilisation of ideas and initiatives.
"I've been in lots of meetings with Peter and there's one thing he values more than anything else, that's his integrity. He won't allow anything to compromise his integrity. If there's any perception of a conflict of interest he'll step back. The board said, ‘Peter, it's your call [if you want the ARLC chairmanship] and if you want to go that way we're 100 per cent behind you'."
Getting a read from government is problematic. A spokesperson for Kevin Anderson, the Minister for Better Regulation and Innovation, which includes racing, said: "Any questions relating to the CEO of Racing NSW should be directed to the board of Racing NSW."
A cohort of NRL clubs remain perplexed not at V'landys' appointment, but the manner in which it came without their knowledge. His ascension was formalised on the same morning as the NRL finals launch. Some club bosses wanted to quiz him if he thought he could be prejudiced in any way doing the job and how he would handle doing deals across broadcasting and wagering, while also lobbying government, for which he has a successful track record.
A top club executive asks: "What if the state government has $40 million set aside to spend on local sporting facilities in a regional electorate and they want his advice on how to use it, does he lobby for an upgrade to the local football ground or racetrack?"
The sentiment is echoed by others, all of whom resist invitations to speak on the record.
"It's very hard to see how Peter is not seriously conflicted at a board level and that board needs to be totally conflict free," said a former high-ranking NRL official. "Everyone can say, ‘we're well intentioned and we can separate ourselves', but conflict exists when it's either perceived in real terms or actually exists."
What many want to know is how he will get on with NRL chief executive officer Todd Greenberg.
The first call V'landys made on Monday after the ARLC board meeting was to Greenberg. His message to him was that as chairman he would enjoy nowhere near the public profile Beattie has cultivated for himself.
V'landys has no interest in being the face of the game. He doesn't want to present trophies. He will work in the shadows, fronting only when "he needs to take the bullets".
Asked about the potential relationship between V'landys and NRL management, a senior rugby league official outside of the ARLC said: "They'll have no problem if they're straight with him because he'll be straight with them. If they try to undermine him, they'll be in deep shit. He won't put up with it. Greenberg will have no problems otherwise."
Greenberg is renowned for his slick media performances. V'landys, on the other hand, has a history of making the media work for him.
In an interview with the Herald before the first running of his highly disruptive The Everest in 2017, V'landys joked: "I purposely create controversy to get media attention."
The race was plonked two weeks after the NRL grand final in a media-friendly timeslot and when the gaze of the Australian sporting public had drifted away from the football codes and to the racing south of the border. He feuded with Victorian racing officials, who had a sledgehammer taken to their traditional spring carnival. The spat quickly became very personal and very public.
He'll have many deals to do, too.
One of the fastest-growing income streams for the NRL has been via bookmakers betting on matches. It's been helped by the proliferation of smart technology and a younger generation more familiar with first try-scorers than first fours.
The NRL has significantly raised its product fee in recent years and is also into the fourth year of a five-year contract with Sportsbet as the official wagering partner. V'landys' nous here will see him playing a role in setting betting taxes for Racing NSW and the NRL.
BetEasy chief executive Matt Tripp, also a part-owner of the Melbourne Storm says: "Peter is one of the most effective administrators in Australia, and if anyone can juggle their roles, it's him."
New Zealand Rugby will get a "real uptick" in the next broadcasting deal as a "paranoid" Sky and telco Spark slug it out, says sports rights expert Colin Smith.
GSM principal Smith, who forecast that Super Rugby's "flawed" expansion would end in tears, believes NZR has been handed a golden opportunity to bring more money into its coffers – cash it needs after the collapse of World Rugby's Nations Championship project.
"New Zealand is in an unique opportunity because Spark have announced they want Super Rugby and the Rugby Championship," Smith told Stuff from Switzerland.
"For Sky it's must-have to retain Super Rugby and the Rugby Championship, because unlike Australia, New Zealand is a single-sport nation.
The Sanzaar partners have turned their energies to broadcast deals for the Rugby Championship and Super Rugby after the demise of the Nations Championship.
With New Zealand players heading overseas at an alarming rate and Super Rugby crowds declining 6 per cent this year, the stakes for the new deal could hardly be higher.
Spark and Sky have been flexing their muscles even since the former telco changed the sports broadcasting landscape by landing the rights for the Rugby World Cup, and Smith said Sky's fear of losing more rugby rights would force them into bidding aggressively.
"If you go into the powers that be at Sky New Zealand, they're paranoid about it, absolutely paranoid about it," Smith said.
"That's why I think some of the changes that have occurred, with [former director of sport] Richard Last going and John Fellet having to step off the board.
"Sky had their their heads in the sand on this.
"I've done a lot of work with Jeff [Latch, Spark head of Sport], even when he was at TVNZ.
"I know him well and he is sincere ... they will want to buy some rugby content over and above the Rugby World Cup.
"The problem they have is that [new Sky boss] Martin Stewart has come out and said, 'We are going to retain rugby,' because frankly if they don't retain rugby their business model is over."
The rivalry between Sky and Spark will be welcomed by NZ Rugby, but Smith said it was possible that both broadcasters might grab some rugby content – an outcome that could breathe life into the struggling Mitre 10 Cup competition.
"It wouldn't surprise me if there is in fact a second strategy with Spark, that they might acquire only part of the content, i.e. like the Mitre 10 Cup," Smith said.
"They are doing a lot of things in cooperation with TVNZ and to put rugby like the Mitre 10 Cup on free to air could be good."
The news is not all good for NZ Rugby, with key Sanzaar partners Australia and South Africa unlikely to to get much of an increase – if any – from the next broadcast deal.
"In Australia it will be much more challenging because in essence there is only one bidder," Smith said.
"In South Africa ...I don't think competitive pressure will be there but SuperSport, who holds the rights and would want to continue the rights, has investments in Super Rugby clubs and would want to maintain Super Rugby."
Smith cautioned that any big deal for NZ Rugby could be one of the last.
Globally, broadcasters are struggling to come up with profitable models in the age of "disruption" – limiting their ability to pay ever-increasing amounts for sports content.
Smith noted that even the UK domestic rights for the English Premier League fell by 13 per cent last year and the US pay-TV market had been decimated.
"There is a global phenomenon ... people are 'cord cutting' out of subscription TV," he said.
"In the US three years ago ESPN had 100 million subscribers.
"Today, there are about 80 million.
"The economics of this are quite challenging.
"In Australia, for every one subscriber out of Foxtel you need five new subscribers out of [Foxtel-owned streaming service] Kayo.
"There's no magic solution out there."
The Perth Origin match is a guaranteed financial success but any plans to base an NRL team in the Western Australian capital would involve a significant contribution from the state's richest man, mining magnate Andrew "Twiggy" Forrest, to supplement any commitment from the WA government.
"Unless Twiggy finds another $200m, a second Brisbane team is ahead of Perth," was the observation of one ARL commissioner.
Forrest is a rugby union man and owns the now-defunct former Super Rugby team, the Western Force, as well as underwriting a proposed Global Rapid Rugby competition involving teams from Japan, Fiji, Hong Kong and Samoa.
Significantly, Papua New Guinea is not part of his football plans but the country is a mecca for miners, leading Colin Smith, director of Global Media and Sports, to say, "There is actually a good argument for Twiggy to fund a NRL team, not in Perth but Port Moresby. Rugby league is the only sport of substance in PNG and would have massive appeal. The PNG Hunters won the 2017 Queensland Cup."
Smith, who has advised Forrest, as well as the NRL, AFL, FFA and RUPA, in broadcast deals, has been a long-term advocate of a second Brisbane team.
However, Channel Nine and Foxtel have made it clear they do not want an 18-team competition, where the favourites would be Perth/Port Moresby to join an additional Brisbane team. Apart from the scheduling problems of a ninth game – the existing 6pm Friday and 2pm Sunday times are unpopular with clubs and viewers – Foxtel is facing severe financial challenges and the audience of free-to-air TV is contracting.
TV's "halo" effect, where viewers stay with Nine – owners of this masthead – after an NRL game has ended, is being undermined by OTT providers such as Netflix.
But rugby league's share of the diminishing FTA audience is increasing and NRL metrics around dead time in games and the percentage of time the ball is in play are all on the rise.
So, a 17th team in a popular market could be attractive compromise to broadcasters and more acceptable to existing NRL clubs who fear a reduction in their share of the TV revenue pie, as well as the challenge of finding another 60 capable players for two additional teams.
"Brisbane is currently underserved by the NRL," Smith says. "A second Brisbane team makes sense, compared to an 18-team competition, which is a completely different set of analysis. Significantly, broadcasters, both Channel Nine and Fox Sports, want another NRL team in Brisbane.
"Brisbanites/Queenslander NRL fans are very parochial, especially to the Maroons and Queensland clubs.
"NRL TV viewership in Queensland is Broncos No.1, then the Cowboys, then the Storm (via their Queensland roots), then the Titans, ahead of any Sydney team." Smith anticipates broadcast revenue despite a shrinking FTA market and pay TV's challenges, could rise by up to 20% when the current deal concludes at the end of the 2022 season.
"Another NRL Brisbane team will drive ticketing, merchandising, sponsorship and critically – in a more challenged broadcast environment – a major upsurge for media rights, including a plus 15-20 per cent growth," he said.
"The commercial return upside for another Brisbane team is very significant. It means that each week in Brisbane there will be a live NRL game for fans to attend. Their attendances will be four to five times greater than the average attendances in Sydney." However, the new team must be home grown and not transplanted.
"It must have a direct connection to Brisbane or be a part of a community," he said. "It must not be a relocated team from Sydney. That will definitely be rejected in Queensland.
"Having a fourth Queensland NRL team can also be catalyst for NRL growth in regional Queensland heartland in markets with local games in Cairns, Rockhampton, Toowoomba, Maroochydore etc just like AFL plays in Ballarat, Launceston, Hobart, Darwin and Cairns. In 2019, there are zero NRL games in regional Queensland which is dumb."
Redcliffe, to the north of Brisbane, with its young family demographic and existing strong club culture exemplified by the Dolphins, is the popular candidate.
ARLC chair Peter Beattie would not be drawn on the second Brisbane team/Perth issue.
"The biggest challenge facing us is getting the next media deal right and part of that is getting the best footprint for the game," he said.
The ARL Commission will consider selling the regular season, finals games, the grand final, and the State of Origin series as separate entities as the code looks to squeeze every cent it can from the next broadcasting deal.
It is understood separation of the game's major products has been contemplated as part of a discussion paper distributed to club bosses late last week.
As revealed in The Australian this week, the paper also contemplated an early approach to the game's current and potential broadcast partners as they look to get a jump on the AFL and provide some clarity to clubs over their future in the competition.
The commission and NRL have bundled together their major products as part of recent broadcasting deals but are expected to investigate whether separating them would create more tension in the market and allow them to grow their broadcasting revenue as a result.
The game's current broadcasting deals with the Nine Network and Foxtel run until the end of 2022 but officials are weighing up whether to begin discussions as early as next year over a new deal. The commission and NRL yesterday outlined their plans to the clubs and while there is no certainty they will kick off talks next year, they want to be in position to open discussions should the opportunity arise or the situation demand it.
That stance yesterday received the imprimatur of media rights expert Colin Smith, managing director of Global Media and Sports. Smith previously worked with the NRL on broadcasting deals and suggested the game would be wise to have its ducks in a row and at least be prepared to begin talks with key stakeholders.
"Protecting your revenues is critical so testing the market, they should contemplate," Smith said.
"They got a huge number (last time). Ultimately it was a really good deal for the NRL, no question about that. I would think it is really critical that the NRL is right on top of this and ready to move, and also testing the market, and therefore ready to roll over early if it necessary.
"Because the threat will be that in the next round of rights either there will be a minimal increase or it could reduce. There is no alternative bidder out there in the foreseeable future that would bid what Foxtel pays for the NRL.
"If you and I were talking about the AFL I would be giving the same answers – and probably even more so because in the AFL case it is nearly $2.6 billion between Channel 7 and Foxtel.
"Just to highlight what I am saying, in the English Premier League in their domestic rights that were signed late last year, they dropped by 13 per cent.
"Therefore if I was the NRL, I would be out there testing this and if I could do a deal that could make me whole or give me a slight increase, I would do it sooner rather than later."
State of Origin is widely regarded as the jewel in the rugby league crown and its value to broadcasters has been placed at upwards of $100 million a year. However, it has been bundled up in recent deals, leaving the value untested on the open market.
That could change if the ARL Commission and NRL believe they can get more money from the broadcasters by selling it separately – Origin would be a cash cow for all the commercial networks.
"That is what the NFL (in America) does and does really well," Smith said of splitting the broadcasting products.
"I have always argued State of Origin is something really unique. There is nothing like it. The question is will the sum of the parts be greater than the sum of the whole?
"What you will find is you will get a huge price for State of Origin, you will get a huge price for the finals, but what does that mean for home-and-away.
"And what does that mean for other content like internationals, which is still a work in progress. If I was them I would be doing a bucketload of work on another team in Brisbane."
The broadcasters are likely to have a massive say in the size and shape of the competition; chief executive Todd Greenberg is currently conducting a review of the game's footprint. Expansion and relocation are at the heart of that review and Greenberg's work is expected to ultimately determine whether the game looks to immediately place a team in Brisbane or waits until one of the current clubs fall over.
At the same time, the clubs are in discussions with the commission over the termination clauses in their new licensing agreements. The commission is expected to demand stricter guidelines around club finances in return for lifetime guarantees to play in the premiership.
Rupert Murdoch's new media strategy – "get big, or get out" – has dire consequences for Foxtel and is therefore bad news for the future of Australian professional sport. Murdoch's News Corp owns 65 per cent of the TV subscription service which funds 80 per cent of the broadcasting fees paid to Australian sport.
Murdoch, in order to scale up to meet the competition of the so-called Four Horsemen of the Apocalypse – Apple, Google, Facebook and Amazon, each of whom has a market cap over one $1 trillion – sold most of his 21st Century Fox TV interests to Disney, which is worth about a quarter of one online giant.
The 88-year-old America-based media mogul, who once boasted he used sport as a "battering ram" to expand his global pay-TV empire, has now divested his pay-TV interests in the UK and India, two of the three biggest cricket-playing countries in the world.
This places a recently signed $1.2 billion deal between Cricket Australia and Foxtel at odds with what Murdoch is doing in the rest of the world. Apart from newspapers, Foxtel is News Corp's only media asset.
The six-year cricket deal with Seven West Media was expected to drive Foxtel subscriptions and grow Kayo Sports, its wholly owned streaming service. But Kayo has only 290,000 subscribers and it needs five of them to compensate for the loss of one Foxtel subscriber.
Revenues have fallen 11 per cent, with Foxtel hit by the double whammy of churn and the average revenue per subscriber down.
This has caused profits to decline catastrophically (earnings before interest, tax, depreciation and amortisation were down 46 per cent), with a debt of $US1.68 billion ($2.4b) requiring urgent refinancing. Telstra, which owns 35 per cent of Foxtel, has refused to participate in the refinancing and News Corp has provided an immediate shareholder loan of $300 million.
With Foxtel's locked-in billion-dollar deals, including the NRL and AFL, not expiring until 2022 and cricket four years later, News Corp was forced to disclose to the Australian Stock Exchange on Monday that it would cut investment in "non-marquee sporting content".
That's bad news for Rugby Australia which, unlike NRL's partnership with Nine, and AFL and cricket with Seven, does not have a free-to-air broadcaster. Rugby's Foxtel deal is ending and ratings are poor, with some games shown at times only insomniacs love. Football's contract is at the halfway point but one recent A-League round (five games on Foxtel and one on Ten) had a total audience of 100,000. A single NRL match can rate three times one A-League round.
Foxtel's investment in other sports, such as V8 Supercars, will also be challenged and some will bleed to death via cost cuts.
Some analysts ask whether Foxtel will follow the path of the financial challenge of Channel Ten, which once broadcast AFL, cricket, V8 Supercars and had a specialist sports channel One HD.
Under the executive chairmanship of Lachlan Murdoch and his chief media advisor, Siobhan McKenna, Ten was forced into receivership and its only key sporting property now is the Melbourne Cup. McKenna led News Corp in Foxtel's negotiations on the recent cricket deal.
Ten is now 100 per cent owned by CBS, one of America's most successful broadcasters, screening NFL, college football and basketball. In order to derive a return on its investment, it will need to take a proactive position with sport in Australia. A Labor government has indicated it will strengthen Australia's anti-siphoning laws, forcing more coverage away from subscription services towards free-to-air TV.
This is bad news for Foxtel but good news for Ten. However, free-to-air TV simply cannot afford to replace the Foxtel funding.
Anyone who has spent an eternity on the phone to Telstra seeking a change to a bundle package would not be surprised if the Australian telco doesn't even have a future strategy for sports rights. Optus, owned by Singtel, has found the purchase of the English Premier League and Champions League works for them and may expand.
Industry experts suggest the long-term survival of Foxtel will be challenging. Colin Smith of Global Sport and Media believes that sport viewing on TV is facing the most profound period of change since the introduction of pay TV more than 30 years ago.
Smith said: "Sports, particularly AFL and NRL, must rethink their broadcast strategies, particularly how they capture Millennials who watch sport differently. Will they sell game highlights as a separate package? Fan engagement is the key issue. If sports want increased rights fees, they need to be more closely aligned with fans. They will need to convince fans to attend games, watch on TV, become members of clubs. Whereas AFL regards the fan who attends games as more important than the TV customer, NRL is possibly the reverse. The A-League is leaking fans quite alarmingly."
Smith explains that "cord cutting", the phenomena where fans disconnect pay TV and enjoy the multi channels of over-the-top TV, such as Netflix, has been one of the game changers. "Multi-channelling means the fan is now a far more elusive beast," he said.
AFL chief executive Gillon McLachlan recently took a small team of executives to the US to woo the west coast-based Four Horsemen but the online behemoths have hitherto shown little interest in sports rights.
Furthermore, they are very sensitive to recent criticism of the little tax they pay in Australia and investigations by the ACCC. Google and company protest they are tech companies, not media organisations but ... suppose they became "frenemies" of Australian sport in the same way Google reached a revenue-sharing arrangement with Fairfax over advertising. The NRL and AFL could provide the content, which is already well advanced via their resourced digital media departments, and Google could be used as a media player and customer interaction centre.
A State of Origin match could raise infrastructure issues, where streaming services in the past have not been able to contend with the number of people wanting to watch. Optus experienced this problem when it tried to screen the football World Cup last year. However, this would be unlikely for a digital behemoth such as Google.
However, with anti-siphoning legislation, a free-to-air broadcaster would be required to join the partnership. This, together with the changing trends of watching sport on TV, could mean Google, NRL and its long-term incumbent TV network, which is now the owner of this newspaper, are all together on, let's say, Cloud Nine.
All of Australia's sporting codes – including the AFL and NRL – could be impacted as pay TV provider Foxtel reins in spending on "non-marquee" sports, in a sign the era of record rights deals may be ending.
Foxtel spends $800 million on sports rights each year and media analysts say moves to pull back spending by the pay TV giant could affect the entire sporting landscape.
"There is no question now that Foxtel is putting away its cheque book and Foxtel has been the driver of this market," said media analyst Steve Allen.
Rupert Murdoch's News Corp, which owns 65 per cent of Foxtel, flagged cuts to "non-marquee sports" in an update to the ASX on Monday after revealing the pay TV company lost $417 million in 2018.
Rugby Australia is expected to be the first sporting body to face the austerity drive as it begins negotiations over a new broadcast rights deal, but Football Federation Australia's (FFA) A League is expected to be hardest hit.
"If I was Rugby (Australia) and the FFA I'd be concerned as they would be looking at savings there, but this could profoundly change the whole market," said Global Media and Sports boss Colin Smith, who has previously worked with the NRL on its broadcast deals.
The A-League's current deal is worth around $40 million a year with $35 million of this coming from Foxtel, according to industry analysts.
Mr Allen said the A-League is "dead in the water" without Foxtel's support, but the impact is expected to be felt all the way from V8 Supercars to the top tier sports.
Foxtel's blockbuster deals with NRL and AFL, worth a combined $3.5 billion, do not expire until 2022.
The pay TV subscriber numbers, revenue and earnings are going backwards in its core pay TV business despite a massive spend on sports broadcast rights in recent years.
The focus will now have to be on "what are people really interested in, what are they prepared to pay for," said Mr Allen.
"Now they have to ruthlessly go through their expense base and look at whether particular sports they've bid for have netted anything in terms of subscribers."
Cricket Australia's $1.2 billion rights deal with Foxtel and Seven West Media last year is now being viewed as the high water mark for sports rights in Australia.
Free to air television broadcasters are not expected to be able to pick up the slack if Foxtel does start cutting back, and sporting codes rely on broadcast deals to provide up to 65 per cent of their revenue. The broadcast deals also drive sponsorship dollars.
Foxtel and News Corp did not respond to requests for comment on Tuesday.
In the market update, News Corp also flagged further price rises for Foxtel. The media giant was forced to diclose the financial details to shareholders after they were provided to potential lenders as it seeks refinancing for Foxtel debt totalling $US1.68 billion.
It comes after News Corp provided Foxtel with a $300 million lifeline to cover debts maturing in April. Telstra, which owns the reamining 35 per cent of Foxtel, did not contibute any new funding.
Rugby union has been attempting to align its northern and southern hemisphere seasons to maximise its sporting and commercial potential almost since the game turned professional more than 20 years ago. The reaction to World Rugby's latest attempt to resolve the sport's Schleswig-Holstein question shows why, to paraphrase Lord Palmerston, all those who have previously sought the answer have either died, gone mad or forgotten about it.
Ireland captain and International Rugby Players president Johnny Sexton described the thinking behind the new Nations Championship concept as "out of touch". The RFU's acting chief executive, Nigel Melville, called the proposal "under-cooked". And players from the Pacific Islands threatened to boycott this year's World Cup in response to a leaked document (subsequently disowned by the governing body) that excluded them from the new competition for at least 12 years.
The presentation that World Rugby rushed out in response clarified the playing format but was relatively light on commercial detail.
Twelve teams will take part – those of the Six Nations and a Rugby Championship expanded to include, on current rankings, Fiji and Japan – and play each other once a season, alternating annually between home and away.
The Six Nations and Rugby Championship will continue as normal but double up as European and Rest of the World Conferences, with points won combined with results from the two other international windows to identify either four semi-finalists or two finalists to compete for the title in a match staged on neutral ground in Europe at the end of November.
The Nations Championship will offer a route of progression to countries playing in the feeder competitions beneath it by enabling their winners to face the bottom team in each conference in a promotion-relegation play-off at the same time as the final. The tournament will not take place in a World Cup year and will be tweaked to make room for British and Irish Lions tours in the seasons these take place.
From a commercial perspective, though, World Rugby offered only a single bullet point, saying: "Broadcast rights aggregated and collectively sold, increasing revenue potential. Possibility to centralise some sponsorship rights."
While immediate analysis has focused on the structure of the competition, its integration with the established calendar and player welfare issues associated with the new schedule, firming up the numbers behind that commercial "potential" and "possibility", will be just as crucial in determining whether the new championship gets off the ground.
Despite the initial reaction, the Nations Championship in theory offers maximum financial gain for minimal restructuring pain. Instead of building something new from scratch, it gives the patchwork international fixture list the sort of audience- and media-friendly narrative that all sports and broadcasters crave, creating as a result a bigger commercial cake from which all parties (including World Rugby) could take a more valuable slice.
Some reports have suggested the governing body is projecting the new property to deliver a 35-per-cent increase in revenue on what its components currently generate between them, while one senior rights negotiator told SportBusiness: "The Six Nations will turn over £85m in TV rights each year and in real terms we're talking £140m-£150m for this thing, although that may or may not be all TV rights."
As with all commercial deals, timing is of the essence. The southern hemisphere unions of SANZAAR (South Africa, New Zealand, Australia and Argentina) have been financially challenged for several years but have always met strong resistance from their Six Nations counterparts to any form of revenue sharing from the matches in which they meet.
However, rights marketing specialists in the sport believe that the European game's growing interest in attracting private equity funding – "Money has never been more needed and more talked about," Scottish Rugby chief executive Mark Dodson recently told the BBC – indicates that their own model is now also under strain. Colin Smith, managing director of Melbourne-based Global Sports Media, a rights consultant who has advised the Australian, New Zealand and South African unions, agrees that the southern hemisphere's need is more pressing, but also observes: "There is a shortfall of capital both in the north and the south."
He explains: "The financial power of England and France is significantly greater than the southern hemisphere unions, particularly at club level, but the RFU have had to make significant layoffs because the financial model is challenged, and the large majority of Premiership clubs have made losses. Notwithstanding that the Premiership has significantly increased its media rights and sponsorship revenue, they needed a CVC to come in to redesign the commercial model, and it wouldn't surprise me if the same thing needed to occur in some way in the Top 14 as well. So the financial model is an issue with both the north and the south."
With SANZAAR heading towards the next renewal period for its media rights, the Six Nations having struggled to attract a title sponsor in recent seasons, and ex-Formula One owner CVC Capital Partners seemingly targeting a portfolio of investment across the northern hemisphere club and international game, World Rugby has a small window in which its opportunity to incentivise all parties to come together for mutual benefit (which includes funding its own mandate to grow the global game) is at a peak. However, that window could quickly close if CVC or another private equity firm gets there first, or if the Six Nations pushes through its own plans to pool the tournament's media rights with those of its competing teams' November internationals, which have been earmarked as the business end of the new global championship.
To get over the line first, World Rugby will need to show the unions greater benefit in three key areas: media rights, sponsorship and matchday revenues.
World Rugby's public pronouncements on the commercial benefits of its Nations Championship proposals have so far concentrated on the increase in media-rights values the new property could achieve, based on the uplift in interest and viewership to which the governing body says its consumer research points, alongside the eagerness of a global broadcast partner reported to be waiting in the wings.
Media-rights specialists agree that the theory is sound but that achieving these ambitions will not be without difficulties on the ground itself.
Smith says building critical mass through aggregation makes sense for a sport "whose rights value is significantly lower than every other football code in every territory except New Zealand and South Africa" and sees cricket's Indian Premier League as offering a potential model for distribution based on a range of domestic, global, pay and free-to-air packages.
There is also agreement that turning the friendly internationals of the June [now July] and November windows into competitive fixtures would certainly make them more valuable broadcast properties, but with the southern hemisphere portion again having significantly more potential for growth.
Kyle Nel, managing director of Cape Town-based sports marketing agency Treble Entertainment and formerly SA Rugby's commercial manager, says: "I think one of the big drivers is the June inbound tours. They really haven't been money spinners for the south at all. If you look at our gate takings and TV rights, the money all spins around the Rugby Championship – the traditional guys playing each other."
And he adds: "Through the northern hemisphere countries wanting to look after players, even though we think we are teeing up against England or Ireland, the domestic rugby unions can't under the current regulations guarantee or enforce the visiting unions to play a full-strength team. And the supporters aren't stupid. There is so much entertainment available in sport that unless it's ‘the best of the best is playing live' you flick the channel. And that is what has been happening to the June inbound window."
Unlocking new value in broadcast rights may be easier said than done, given the difficulties inherent in unpicking the existing arrangements and deciding who sells what in future – as well as in determining how the new pot will be divided. World Rugby describes the current rugby broadcast market as "complicated"; Smith prefers "a dog's breakfast."
While the time might be right to float a Nations Championship or world league from a strategic perspective, the Australian media rights consultant warns that the new property is launching on an ebbing tide as far as media-rights values are concerned. SANZAAR, for example, is considered unlikely to sustain the revenues achieved in the last renewal, when competition between BT and Sky for the UK portion helped deliver a near-150-per-cent increase on the value of the previous contract.
Smith tells SportBusiness: "The value of rugby rights is probably plateauing, and I think that is in both the northern hemisphere and the southern hemisphere, but especially in Australia. We saw the devaluation of English Premier League rights in football last year, with BT and Sky being happy to share rights. As I understand it, that could happen significantly in rugby too."
There is also the issue of which rights are bundled for sale as part of the Nations Championship and which are left to stand alone, with SANZAAR having always included both Super Rugby and the Rugby Championship in a single tender. "The increased value of the new property cannot disproportionately devalue the unions' remaining media-rights inventory," stresses Nel.
And then there is the prickly issue of how to divide up the spoils, with the current disparity in earnings between individual nations highlighting differences in the value of specific matches that may or may not come under the marketing umbrella of the Nations Championship.
New Zealand's hosting of a Lions Tour in 2017 added around $20m to the union's normal broadcast revenue, while the RFU's ability to generate more than twice as much media income as Scottish Rugby reflects primarily the higher value of England's November Tests.
Nel says of the likely implications: "If World Rugby has more money to share then you're going to have the strongest playing unions saying, well, we're the best in the world so we should be commanding the most money; and the unions in the traditionally-strong commercial markets are saying the same thing. That's what you are seeing in English football, where media rights distributed to the clubs are calculated and reported on a transparent commercial model, and [in rugby union] it will need a really clever model to divvy it up."
Increased sponsorship revenue for Nations Championship participants was labelled possible rather than probable by World Rugby, and rights experts believe the opportunity here is smaller than in the media segment, partly because of current market conditions and partly because of the disparate and dislocated nature of the sport's core markets.
Private equity firm CVC's investment of more than £200m (€233m/$264m) in Premiership Rugby demonstrates a belief that the sport has significant untapped potential to exploit, at least at club level, the struggles of the Six Nations in getting anywhere near the £16m-a-year it sought from a successor to RBS in 2018 – Guinness is now paying £6m in 2019 rising to £12m by 2024 – suggest the international game may be bumping its head against the ceiling.
That could be a temporary situation, with one negotiator pointing out: "The rights market is soft at the moment and has been for two or three years, with Brexit the main thing putting off decision-making." But he also warns that a competition spanning Europe, South Africa and Australasia may struggle to find a sponsor willing to pay a premium for exposure in all those markets, saying: "Most sponsors in rugby have a regional base: they are looking at one or two key markets in Europe and possibly one or two around the world, and the existing competitions tend to support that.
"So the question is, would you support this world league as a new sponsor? It could open up new sponsors but there's a lot of proof needed of how it's going to work."
That view is echoed by Nel, who previously managed all sponsorships for SA Rugby and believes that it is the new semi-final and final phase of the competition that will generate most new revenue and hold most appeal for a global brand – although that could be devalued if, as has been suggested, World Rugby abandons the semi-final phase to head off the threat of legal action raised by Premiership Rugby and the Top 14. "Potentially, the commercialisation of the new property will be a hybrid model," Nel says. "There might be one overarching sponsor for the play-off element, [so] the existing elements remain with their current right-holders to sell in their market and World Rugby has this new property – i.e. the play-offs and final – to take to market."
World Rugby has said its consumer research indicates that "a structured annual competition would make fans and new audiences more likely to watch, attend and engage with international rugby, exposing the sport to new fans worldwide". However, its public emphasis on the benefits accruing to the broadcast and sponsorship segments overlooks the potential implications for ticket sales and stadium revenues.
The significance of the matchday segment varies from union to union. In 2017-18, for example, the RFU earned £30m through ticket sales – more than it generated in sponsorship and equating to 20 per cent of all rugby-related revenues. Matchday income accounted for a similar proportion of turnover for Rugby Australia and Scottish Rugby, but SA Rugby collected only ZAR 59m (€3.6m/$4.12m) from its home Tests – just six per cent of 2017 revenue.
The new Nations Championship could alter that balance by formalising the June/July and November fixture lists so that the 12 countries involved will play each other only once a year, either home or away. Depending on how the schedule pans out, that could give an advantage to teams that do not currently line up against the biggest names at full strength on a regular basis, and disadvantage those that do. England, for example, are unlikely to be hosting all of Australia, South Africa and New Zealand as they did in November 2018. Nor will the All Blacks be visiting Twickenham with the regularity seen between 2008 and 2014, when they appeared in six Novembers out of seven.
South Africa, in contrast, have significantly more to gain from a revived June/July window after years of attendance and revenue decline. Nel observes: "We've gone from crowds of 50,000 back in the day, when there was a mystique to playing the northern hemisphere teams, to a 25,000 crowd for a Test match, which is just not healthy."
Fox Sports’ head of television, Steve Crawley, has called for a summit to workshop changes to the NRL to stop it from being overshadowed during the State of Origin period.
The interstate series was again among the most watched television programs of the year, despite a 12.7 per cent ratings drop year on year. The Origin spotlight, coupled with the absence of 34 of the best players in the game, results in an annual downturn in interest in the NRL, TV ratings and crowds during the middle of the season.
Wayne Bennett has called for a window during the premiership for the three-game Origin series, a proposal that has been endorsed by Blues coach Brad Fittler.
Regardless, Crawley believes additional content needs to be introduced during the flat NRL period to appease fans and broadcasters.
“The game has to find something for that Origin period that it hasn’t got at the moment,” Crawley said.
“While Origin is an absolute showcase, I think the wind goes out of the sales of the club competition too much.
“We’ve got to get together with our partners at the NRL and the clubs and work out, in a very entrepreneurial sense that’s good for all parties, what we can do to share the stage in some way with the showcase that is Origin.
“We came into the period with the best competition in modern times and if that competition is a sailing boat, the spinnaker is down. Now we have to start pumping and pumping again.
“We’ll get going again, we always do. This weekend’s round of matches is interesting and the run home to September is sensational. But we need to look at what we can do to keep that club competition going and keep interest in our game apart from Origin.”
Crawley said Fox had a strong relationship with the NRL and was confident all relevant stakeholders would be keen to get together to thrash out solutions. Asked what type of content he could envisage bolstering the schedule, Crawley said: “I’m not smart enough to work this one out. But I love the idea of a big prizemoney Challenge Cup-style thing. The clubs that don’t have a stack of Origin players could make some extra money.
“I like the idea of 100-metre dashes, finding out who the fastest guy in the comp and the strongest guy in the comp.
“I’ve got a million ideas that probably aren’t good enough, but I’d love to sit around a table with some people – and I’m sure we will – to discuss what we’re doing.”
Any additional player commitments would be frowned upon by the Rugby League Players Association, particularly if the toll on elite players increases. The Nines and the All Stars game are likely to be reintroduced next year and Global Media and Sports boss Colin Smith – who has previously helped the NRL broker its broadcast deals – said a case could be made for playing them during the Origin lull rather than the start of the season.
“One thing they could do is shorten the break from seven weeks to three weeks and look at having the All Stars,” he said.
“If you have Origin on each of the Wednesdays and then had an All Stars on one or two of those Saturdays, it would give the season a real fillip.”
Smith said the NRL could follow the lead of the NBA’s All Stars game and schedule a match in which two luminaries choose teams comprised of the best players not competing in Origin.
“You could have a captain select the team or one of the Immortals or great current players,” he said. “You could have say Cameron Smith selects his team and Billy Slater picks his.
“You could even look at rescheduling [the draw] to have the top teams for the first comp game back instead of fixing the whole schedule.”
A trade window during the Origin period could also become a televised event, boosting interest in the competition. The NRL has also been urged to consider staging a 100-metre race to determine the fastest man in league.
“It’s a question I’m asked all the time and something the Australian public would love to see,” said renowned speed coach Roger Fabri. “It’s something I’ve being trying to put together for a number of years.”
It is the conversation topic all sports executives dread. Rather than speaking about the results on the field – like the merits of the Socceroos' heartening draw with Denmark or Croatia's surprise 3-0 thrashing of Lionel Messi's Argentina – World Cup fans in Australia spent the first week of the tournament asking each other whether their technology had worked.
It was all down to the most unique broadcasting deal signed in Australian sports history, where for the first time a telecommunications firm in Optus telecast big matches exclusively via online streaming after clinching a sub-licensing agreement with SBS.
As the World Cup begun in the early hours of June 15, the plan was for SBS to show 25 of the 64 World Cup games live and for Optus to have the remainder. It meant fans of big teams like Argentina, Germany and Brazil could only watch games by being Optus phone or broadband customers, or paying $15 per month to gain access to stream games via the Optus app.
While the notion of watching a sporting event via the internet has quickly become an established part of the viewer experience in recent years, never before has that been the only option for Australian fans who have just about always been able to choose between free-to-air or pay-TV and apps.
It was an unprecedented deal in Australian sports history and a major test for Optus and its technology. It failed dismally. Fans were in uproar as their streams would not work, dropped out or, at best, buffered. It was a public relations disaster and even Prime Minister Malcolm Turnbull, who had been Communications Minister in the Abbott government when budget cuts at SBS led it to explore the on-selling of its World Cup rights, called Optus chief executive Allan Lew to ask what was going on.
Optus had backed down dramatically by the middle of this week, giving SBS the right to show the remainder of the group stage matches because the telco simply could not guarantee its technology would work. But it still may show some knock-out games on an exclusive basis, as per its pre-tournament plans, if it does not give back more rights to SBS.
So with the Optus debacle fresh in the memory and concerns about Australia's internet infrastructure, does this mean that sports will be reluctant to sell their broadcast rights in the future to online providers?
"Oh god no," one major sports executive told AFR Weekend. "You're in a situation now where you have to deliver the sport across any platform for anyone. That is just not going to change. But what you will find is that everyone will go back and test their systems now and make sure they will be okay.
"Optus will become a case study for us all. Everyone will learn from it and talk about it for years to come. But it won't stop the sub-licensing of sports [from free-to-air or pay-television to streaming services]. You'll just make doubly sure your infrastructure will be okay."
Optus is not the only Australian company to have problems.
Foxtel – which will launch a standalone Fox Sports streaming service, known within the company as Project Martian, later this year to tie in with its newly won cricket rights – had major problems with the release of the latest Game of Thrones series last July. When the online streaming service crashed Foxtel, like Optus did this week, blamed "the unprecedented rush for a subscription just prior to the telecast".
Yet in plenty of places overseas, the World Cup has been a relatively seamless online viewing experience. Streaming measurement company Conviva told British newspaper The Independent there had been a global streaming audience of 7.7 million for the match between Argentina and Iceland on June 16, which featured Messi memorably missing a penalty in a surprise 1-1 draw.
England's clash against Tunisia three days later saw the BBC attract 3 million viewers across the United Kingdom on its iPlayer streaming platform – making it the highest-ever live audience for an online BBC program.
Global sports are also clinching big "over the top" deals. Earlier this month, Amazon signed a deal to show some English Premier League matches in the United Kingdom on an exclusive basis, while the Professional Golfers' Association Tour in the US is beginning a 12-year contract with Discovery to show tournaments to viewers around the world, including Australia. Other sports like tennis and American football also have streaming deals for some games, including with the likes of Twitter and Facebook. Meanwhile, e-sports events can be streamed to millions of viewers.
In Australia, horse racing has tens of thousands of streams happening at once, though mostly spread across various betting websites and social media companies. Twitter helped with 350,000 concurrent streams for last year's Melbourne Cup, for example. The AFL and NRL have deals with Telstra, so do soccer and netball now, and Seven West Media shows dozens of tennis matches from the Australian Open on its app each year.
That strategy, in which a streaming service complements an existing TV telecast, is one designed to reach viewers anywhere at any time – not just when they are parked in front of a TV.
"TV consumption is changing, says Colin Smith, chief executive of Global Media & Sports, a sports rights advisory firm. "Among younger people there may still be strong interest in sport but not necessarily watching just on TV.
"They are watching on their phones, their tablets, via catch-up and other streaming services. Sports need to be aware of that, otherwise their audiences will drop away. The loss of the Millennials from TV is the big issue around the world that people are talking about. It is a real issue and sports need to go find them."
Optus certainly did try to do that. While its technology fail will linger for some time yet, the telco's entry into sport marks the beginning of a new era, not the dramatic end to an experiment.
A leading broadcast consultant has accused Super Rugby rights holders Fox Sports of neglecting the ailing competition and urged Rugby Australia to demand more of their broadcast partner in upcoming negotiations.
With Super Rugby and the SANZAAR partnership at a crossroads, RA chief Raelene Castle is deep in discussions with new hire, consultant Michael Tange, on what Australia's professional rugby footprint should look like beyond 2020.
With television audiences stable, but well down on years gone by, and game attendances continuing to fall, there are growing calls for Castle to push for a trans-Tasman competition or to pull Australia out altogether from the 15-team competition played across five time zones in five different countries.
But veteran consultant Colin Smith, of Global Media & Sports, says RA should not be working alone to save the domestic game in Australia and should have more direction from Fox Sports, the pay broadcaster owned by News Corp, which was the major backer of the original Super 12 competition in 1995.
"Right now, one would suggest Foxtel has its hands off the tiller," Smith said.
"One of the things broadcasters are generally good at in other genres is that they are actively involved in managing and producing the most attractive product to attract the most viewers.
"Rugby Australia can't do this on their own, they need the expertise of Foxtel in leading what is going to make Super Rugby more attractive for people watching on television. That includes having more people attend games live because we know there's a direct relationship between TV ratings and attendances," Smith said.
Fox Sports merged with Foxtel this year, with Fox Sports boss Patrick Delany taking over the merged entity. Smith said Delany and his team appeared to have given up on the product their predecessors designed and marketed to drive Foxtel subscriptions 23 years ago.
Rugby Australia maintains a close relationship with Foxtel management and formally consults with the broadcaster before each five-year rights negotiation, as well as any time they want to amend the broadcast agreement to add or change competitions. For example, Castle's predecessor Bill Pulver sought and gained Delany's approval on RA's plan to cut a Super Rugby team and move back to a 15-team competition last year.
But insiders say while the relationship is friendly, it is largely hands off on the big issues, with Foxtel preoccupied with its billion-dollar investments in rugby league and AFL, as well as its growing interest in motor sports.
Its $1.2 billion foray into cricket, announced earlier this year, leaves little room to spend big on rugby and, presumably, even less time to devote to resurrecting a professional competition that is struggling to deliver viewers.
But Smith said the game remained important to its subscription-based business.
"Rugby is still very important to Foxtel, because it's still a driver of subscribers in Sydney and Sydney is the largest pay television market by a significant proportion in Australia," Smith said.
"If they can get their house in order and invest some energy in rugby it will further strengthen their position, but the longer the game continues to under perform on the field in Super Rugby, or if the Wallabies' international standing continues to drop, that will be a big issue for them."
Ratings tend to support Smith's argument. Fairfax Media has been told that Super Rugby games played on Australian soil are averaging 60,000 viewers on Foxtel, a figure that has stabilised and is growing slowly after a horror two-year period.
The numbers are well down on the game's historic popularity. In 2011 Australian teams drew average audiences of 73,000, the Waratahs averaged 135,000 viewers and the Reds - the year they won the title - averaged 182,000.
But despite the rapid drop over the intervening seven years, they still sit well above ratings for the A-League, which has been a summer sport failure for the company and drove its big money pitch for cricket.
Foxtel was contacted for comment.
The next rights deal for Australian rugby is shaping up as make-or-break for the code as one prominent broadcast consultant has warned that Rugby Australia could end up "killing the sport".
"What you can't do with this is adapt the ostrich management style," Colin Smith of GMS told Sydney Morning Herald. "If Rugby Australia don't do their homework on what Super Rugby competition is in the best interests of Australia and its broadcast partners, then they're going to end up killing the sport."
Current rights holder Fox Sports are thought to have less money in the coffers after their record-breaking $1.2 billion deal to secure cricket for the next six years in Australia.
"I think [Fox Sports] will want rugby but it's not necessarily going to be a significant increase if there'll be an increase at all," Smith said. "A whole lot of money was taken out of the system with the cricket deal and with massive increases in the deals for AFL and NRL, while they've clearly overpaid for football.
"There is more downward threat for Rugby Australia than there is upward pressure. The question is how do [RA] reinvent the [Super Rugby] model to make sure it's attractive, to bring back fans and eyeballs and therefore encourage broadcasters to pay."
Viewership has arrested it's decline in Australia this season, with a return to four teams seeing modest increases in reported viewership figures. The Waratahs vs Stormers round three clash drew an audience of 102,000 while numbers have weakened since the start of NRL and AFL seasons. The oldest Australian rivalry, the Waratahs vs Reds, attracted 61,000 viewers last week. Overall, there has been a four percent uplift over eight rounds.
SANZAAR Chief Executive Andy Marios added "it's certainly been a lot more positive than in 2017" and that the continual downturn looks to have finished. He's "reasonably happy so far, but there's still a long way to go in the season."
SANZAAR is understood to be considering a new operating model following its strategic review which looked at the future of Super Rugby, considering a wide range of factors including expansion. Whether the planned future aligns with Rugby Australia's national interests will raise the debate over whether Australia should go breakaway from the current competition.
Eyeballs are returning to Super Rugby but it will not be enough to guarantee a fat cheque from broadcasters after Fox Sports shelled out $1.2 billion for cricket, a leading broadcast consultant has warned.
GMS principal Colin Smith says the pay broadcaster will have less money to spend on rugby after smashing open the piggy bank to secure cricket's headline content for the next six years.
"I think [Fox Sports] will want rugby but it's not necessarily going to be a significant increase if there'll be an increase at all," Smith said. "A whole lot of money was taken out of the system with [the cricket] deal and with massive increases in the deals for AFL and NRL, while they've clearly over paid for football.
"There is more downward threat for Rugby Australia than there is upward pressure. The question is how do [RA] reinvent the [Super Rugby] model to make sure it's attractive, to bring back fans and eyeballs and therefore encourage broadcasters to pay.
Smith's comments come despite solid signs the move back to 15 teams in Super Rugby has arrested the ratings decline across the competition. Fox Sports is reporting a four per cent ratings uplift after eight rounds and a three per cent rise for Australian home games.
The early rounds were most promising, before numbers softened when the NRL and AFL started in March. The Waratahs' round two home game against the Stormers drew an average audience of 102,000, while the Rebels v Reds game in round three was the next highest rating game to date with 84,000. Last week's Waratahs v Reds game drew 61,000.
SANZAAR boss Andy Marinos said the uplift was also reflected in South Africa and New Zealand.
"What we've seen so far this year in terms of ratings is an adjustment and it's certainly been a lot more positive than in 2017," Marinos said. "There's been a renewed interest and the upside is that we've also seen a lot more competitive games from all teams.
"My initial engagement with the broadcasters has that it's been stable and steady on their platforms so we're no longer in a continual downturn. So we're reasonably happy so far, but there's still a long way to go in the season."
The gains, while modest, may prove crucial for RA. Its current deal with Fox Sports and Ten, worth $285 million over five years, does not expire until the end of 2020. But due to the Test and international components of the deal Australia and its SANZAAR partners will spend this year formulating a preferred model before taking it to market in about 12 months' time.
To that end, RA boss Raelene Castle has brought on board consultant Michael Tange, who forged a career with sports marketing firm Repucom before it was acquired by Nielsen Sport. Tange was presented to RA members at its annual general meeting last week and will draft Australia's response to the SANZAAR strategic review, which is understood to canvas a number of options for the next iteration of Super Rugby, including expansion, further contraction, and the status quo.
Smith says Tange has his work cut out given the broadcast climate at home and abroad. Much of the 148 per cent uplift in the current rugby rights deal was delivered by a fierce battle between UK broadcasters Sky and BT (Sky won). In a potentially ominous sign for southern hemisphere rugby, Sky and BT recently agreed a sharing arrangement for English Premier League rights and secured a 16 per cent cost reduction for their troubles.
"You would expect there will be reductions or a plateauing in the price of content across all markets," Smith said. "It [the EPL deal] is the first indicator that the UK market has reached a tipping point. That will have ramifications for Super Rugby."
The Super Rugby discussions will again raise the prospect of Australia going it alone or asking New Zealand to jettison South Africa at the provincial level and enter into a trans-Tasman competition. It is unlikely any of the unions would try to dismantle the Rugby Championship.
"What you can't do with this is adapt the ostrich management style," Smith said. "If Rugby Australia don't do their homework on what Super Rugby competition is in the best interests of Australia and its broadcast partners, then they're going to end up killing the sport."
Tennis Australia told TV Sports Markets its commitment to an open tender for its domestic rights allowed commercial broadcaster Nine to acquire them in a surprise deal.
Nine will pay A$60m (€37.2m/$46.2m) per year for the rights for five years, from 2020 to 2024. The deal includes rights to the Australian Open, the Australian Open Series of events leading up to the tournament, the Davis Cup and the Fed Cup. Its expenditure on the rights will be about A$65m per year when production costs are included.
It shocked industry experts as Nine's rival Seven has shown the event since 1973. Seven pays about A$40m per year in its current five-year deal, from 2015 to 2019.
Tennis Australia's decision to sell its rights via tender is likely to have been driven by criticism of its current deal with Seven, which it renewed directly in 2013 without allowing other broadcasters to bid. Allegations that a then-board member had a conflict of interest regarding the deal ultimately led to an independent review.
Richard Heaselgrave, Tennis Australia's chief revenue officer, told TV Sports Markets: "Transparency was crucial for us. As much as anything, it was vital to build relationships, particularly in a market where channels tend to have the same rights for long periods of time. We wanted to give all broadcasters the chance to express an interest.
"We didn't come to market last time, so there was no muscle memory and we had to build relationships with the other broadcasters in Australia. This was good for us, because we weren't attached to the past."
Nine's acquisition is seen as a shrewd one as it will pay far less for Tennis Australia content – which will now lead its summer schedule – than it currently pays for Cricket Australia rights.
Nine has a five-season deal with Cricket Australia for rights to Australia's home international matches, from 2013-14 to 2017-18, in which it pays a total of about A$490m; about A$98m per season. Nine is understood to have paid about A$120m per season with production factored in.
Tom Malone, Nine's director of sport, told TV Sports Markets: "Financially we're in a much better position than we were with cricket. Our cost base reduces significantly, allowing us to re-invest in other sport, or other parts of the business.
"With cricket, you don't control who Australia are playing, when they play them, team performance or the weather. With tennis, you get the top 256 players competing for a grand slam in the last two weeks of January, every year. And if it rains – they close the roof."
Colin Smith, managing director of the Global Media & Sports consultancy, told TV Sports Markets: "Tennis Australia has agreed a deal with a very experienced sports broadcaster and Nine should be ecstatic about it, as they have their summer sport content covered."
Seven was unable to agree a renewal with Tennis Australia during its exclusive negotiation period, which ran for four months between November and March.
Heaselgrave said: "We didn't feel we could reach a commercial deal that was right for us. We didn't feel Seven had necessarily answered our brief about bringing the Open to life with a new audience and optimising our opportunities around digital viewing.
"The financial outcome is also important, and we didn't get to a position with Seven that would stop us taking the rights to market. We talked to Seven after we issued the rights as well."
After Seven failed to renew, Tennis Australia tendered the rights on March 14 with a deadline of April 12, though it was willing to agree a deal before this date.
Rights were offered in two packages: one included rights to flagship matches to be shown one at a time; the other included rights to all matches.
Nine made an offer on March 28, and the deal – for both packages – was signed the following day. Seven was the only other broadcaster to make an offer and it was not prepared to match Nine's bid.
Matches of the Australian Open and Australia's home Davis Cup matches must first be offered to free-to-air broadcasters, in accordance with Australia's anti-siphoning law.
Nine does not plan to show matches across multiple channels. Under its deal it will have the ability to sublicense some rights to a pay-television broadcaster – it is highly like to agree a deal with Fox Sports. Fox is thought to be interested in acquiring these rights as they would provide a welcome boost to its summer rights portfolio.
Local rights experts believe Tennis Australia was clever to tender its rights at the same time as Cricket Australia, capitalising on the latter's inability to agree a deal following a first round of bidding for its rights, which closed on March 19.
The Tennis Australia deal reduced Nine's need to retain its Cricket Australia rights. Nine will however be left without either property to fill its summer content in 2018-19.
As TV Sports Markets went to press, Cricket Australia announced six-season deals with Seven and Fox, from 2018-19 to 2023-24, worth a total of A$1.182bn.
Cricket Australia rights are currently held by Nine and Ten in five-season deals, from 2013-14 to 2017-18, worth a total of A$590m. Nine shows Australia's home Test, One-Day and T20 Internationals for A$490m in cash and contra; Ten shows the domestic BBL T20 competition for about A$100m.
The good news for cricket fans is they will enjoy a fresh, innovative broadcast of the summer game; the bad news is they will have to pay for it.
Cricket Australia’s six-year deal with Foxtel/Channel Seven means the Rupert Murdoch-owned pay-TV network possesses the headline content, although Test matches will be simulcast on the free-to-air network, which will also show the bulk of Big Bash League games.
ODIs, international T20 matches and 16 Big Bash matches will be behind a paywall.
With production costs expected to exceed $200m over six years, the $168m rights fee per year means a $1.2 billion plus investment by Foxtel.
Seven, which recently lost its 40-year monopoly of Australia’s summer of tennis to Channel Nine, will pay Foxtel between $40m and $50m a year for the content it on-sells.
The FTA network has therefore achieved its twin aims of acquiring a replacement sport for its summer broadcast schedule and not over-spending, while Foxtel has made a major investment in content to complement its winter offerings of NRL and AFL.
Poor ratings for the A-League over recent months will also have forced Foxtel to pitch strongly for cricket.
Included in the deal is the broadcast of the womens’ Big Bash. Foxtel’s inclusive approach signals a major commitment to the sport. While Channel Ten laments the loss of the Big Bash and points to its role in popularising it over the past five years, its genesis was on Fox Sports. The pay-TV network presented the Big Bash in its inaugural season but lost it, perhaps arrogantly assuming Ten would not pay $20m a year.
Foxtel will recruit an attractive commentary team for its new six-year offering. Its head of TV, Steve Crawley, led Nine’s cricket coverage for more than a decade.
Foxtel will also manage data in a more exciting form, with cricket statistics presented in an innovative manner.
Contrary to earlier reports, Cricket Australia has surrendered digital rights to Foxtel.
Cricket Australia will still retain control of its own website and offer apps, but the rights to transmit live sport broadcasts via the internet will be held by Foxtel.
This would mean Foxtel having an additional online over-the-top (OTT) offering.
“This will be very attractive to millennials who are increasingly watching less TV, preferring to follow sport on mobile phones and iPads,” says Colin Smith of Global Media and Sports.
It is likely Foxtel will launch an online cricket package, appealing to fans who wish to watch cricket but are not willing to subscribe to Foxtel.
ESPN is poised to launch a similar OTT service in the US.
Cricket Australia has fallen marginally short of its objective of doubling its previous broadcast deal of $100m a year but will be relieved it has survived the Cape Town controversy and the switch to tennis by long-term incumbent broadcaster, Nine, with a deal that covers its commitment to players.
Cricket Australia needs $150m a year to meet its obligations to players under last year’s fiercely negotiated CBA.
However, the only way to achieve this was to welcome a pay-TV network into the temple for the first time.
Cricket Australia’s challenge will be supplying a winning product for Foxtel to present in an attractive manner to a fan willing to pay for something which has been free for decades.
Australian cricket fans, already reeling from revelations of pre-meditated cheating during the third Test in South Africa, may face a double whammy of having to pay to watch future tests and ODIs on TV.
A combined Channel Seven/Foxtel bid for Tests, ODIs and Big Bash may result in top games being forced behind a pay wall.
While cricket is protected by the same anti-siphoning laws that apply to the NRL and AFL, the reality is fans of both football codes must subscribe to Fox Sports to watch all games. Less than half the weekly NRL and AFL games are shown on free-to-air broadcasters, Channels Nine and Seven respectively.
Cricket fans have not paid to watch any of cricket’s three offerings – Tests, one day matches and Big Bash – for five years but may now be forced to subscribe to Fox to view premium games.
Channel Nine, which held the broadcast rights to Tests and ODI’s for 40 years, was losing approximately $30m a year on its outlay of $80m for rights fees and $20m for production costs of Tests and ODI’s. Only in years where the Ashes series was played at home did Nine make a modest profit.
Channel Ten was paying $20m a year for rights to the Big Bash, which also expired in February, while production costs for an expanded competition in 2018-19 could be upwards of $12m a year.
Production costs are a major additional cost factor that TV networks must consider in acquiring broadcasting rights to a sport, such as cricket. Tennis Australia produces the Australian Open itself, meaning Nine, which recently acquired the broadcast rights for five years from 2020, will only pay these fees for the two week grand slam event and other major summer tennis tournaments in Australia. Nine paid $60m a year for the rights, up 50per cent on what Seven is currently paying.
A Seven/Foxtel consortium for cricket rights may shut Ten out of broadcasting any of the summer sport.
While relations between Seven and Fox have been strained for some time, they are not as poisonous as the feeling between Ten, now owned by American giant, CBS, and the Murdoch controlled Fox network.
CBS’s gazumping of a proposed Lachlan Murdoch/Bruce Gordon bid to rescue Ten from receivership has caused antipathy between the two US-based owners.
Cricket Australia, which earlier rejected a combined Nine/Ten bid, anticipated a 100per cent increase in rights fees to $1billion over five years. However, it was then hit with a double whammy of its own – the pre-mediated ball tampering scandal in Cape Town and Nine’s decision to buy rights to what was once Seven’s summer of tennis.
Nine, which will have no summer sport offering in 2018-19, ahead of acquiring the tennis, may still bid for cricket but it would clash with the Australian Open on its main channel.
Cricket Australia, which effectively lost a pay war with the Australian Cricketers’ Association last year, will require at least $150m a year in broadcasting rights fees to meet the players’ negotiated demands.
Like NRL clubs, which forced the Australian Rugby League Commission to guarantee them a lucrative annual grant, the ACA forced their headquarters body into agreeing to a CBA which may be unsustainable.
However, the ARLC and NRL clubs made their agreement after a $1.9 billion TV rights deal had been negotiated, while the cricket rights are yet to be sold.
One sign of a diminished demand by broadcasters for the sport is a recent deal Cricket Australia did with India, selling Tests and ODI’s to broadcasters for $16m, half the fees of the previous contract.
Ratings for the once highly popular Big Bash have levelled out, while interest in Tests and ODIs in Australia (other than the Ashes) has declined. However, Fox needs a summer sport to counter an embarrassing decline in rating for FFA’s A-League matches.
Colin Smith, Director of Global Media and Sports, provided an observation: "Cricket Australia now has a major task to rebuild its culture both on and off the pitch, play attractive successful cricket and maximize its media rights revenues. If they further alienate their passionate fans by forcing them to pay for their game on TV, this will be another challenge for the Management and Board of Cricket Australia".
In a little over eight months' time, Mitchell Starc could steam in to bowl the first ball of the first Test between Australia and India – and only viewers who have stumped up to watch sport on pay television operator Foxtel will tune in.
A year or so later, only Foxtel viewers are able to watch or stream every match of the Australian Open and its its lead-in tennis tournaments such as a mooted new World Tennis Cup, with just the big matches featuring heroes such as Roger Federer and Nick Krygios.
These are the scenarios that could soon unfold after the revelation this week in The Australian Financial Review that both Cricket Australia and Tennis Australia are suddenly both in the market to sign huge broadcast rights deals that will be worth a combined $1 billion to $1.5 billion by the time the dust settles, as soon as Easter.
There is plenty at stake for both sports. Cricket and tennis have both grown appreciably in popularity thanks to their existing rights deals with free-to-air broadcasters. Huge crowds have flocked to the Australian Open, the Ashes and Big Bash League in particular, thanks to the exposure TV brings, and millions of viewers tune in to both sports each summer.
But the sports now face a big dilemma: Can they keep extracting huge rights fees from the now cash-strapped free-to-air broadcasters or, in the quest for more money, do they go back behind the pay-wall and strike deals with Foxtel while risking the ire of the general public in the process?
Cricket and tennis have spent the past half-decade exclusively on free-to-air television, across Nine Entertainment, Network Ten and Seven West Media, and despite all the financial struggles of free-to-air TV and the shrinking advertising market, the platform remains pivotal.
Cricket wants bids by 5pm, Monday, while tennis bidders have until April 12 – though it will accept a knock-out offer earlier. And both sports have structured their tender documents in a way for pay TV operators to play a role in their upcoming deals, with cricket carving its Test match and Big Bash rights into two distinct packages.
"This is clearly designed to enable some international cricket and Big Bash to be behind a paywall by getting Foxtel directly involved in the bidding. And having the Big Bash in two packages could even entice Seven into bidding too," says Colin Smith, Global Media and Sports chief executive.
The question also is whether Cricket Australia's structuring of its rights in order to tempt Foxtel into bidding means it is merely using the pay TV operator as a stalking horse to frighten free-to-air, with the wild card being whether Ten's US owner CBS is prepared to write a big cheque for cricket rights.
On the other hand, Foxtel – which previously had Big Bash rights on Fox Sports – needs far better-rating summer sport than soccer and basketball are currently delivering. It also is offering a dedicated cricket channel, as it has done for NRL and AFL, a move both sports have benefited from.
Pay TV cash can be very tempting, and Cricket Australia is said to need about $150 million annually to pay for all wages and grassroots funding promises it made after its bitter pay dispute with players last year.
But given both codes' diversity and attempts to be more than just a sport broadcast on TV, reach could prove a more valuable asset to be able to capitalise of promoting ticketing, sponsorships, hospitality and events.
Industry sources reckon Cricket Australia and Tennis Australia could take a 5 per cent to 10 per cent discount for reach, while cricket's tender document says that "CA is not required to accept the highest financial bid". Sources say some Cricket Australia directors are concerned about a potential move away from free-to-air TV.
But, pay TV could still play a valuable role and is likely to work in partnership with a free-to-air broadcaster, like Fox Sports does with Nine and Seven on NRL and AFL, respectively.
Nine, which has been working with News Corp's Fox Sports on a potential joint bid, could keep all international Test matches exclusively, and simulcast both the 50-over and Twenty20 international matches with Fox Sports.
Ten could again buy all the BBL and keep it exclusively, or it could split it with Fox Sports. Nine, which is keen on the BBL, could also do the same deal with Fox Sports in addition to the international matches.
Tennis may keep its free-to-air rights with Seven and potentially sell all streaming rights to a telco or global streaming giant, given Seven's success with its Tennis app.
Whatever scenario unfolds, big changes could be coming for the two sports and its viewers.
Channel Seven and Fox Sports are expected to be the main players as the AFL for the first time seeks to sell broadcast rights for the women’s game.
AFLW has been screened for the past two seasons on Channel 7 and Fox Sports at no charge, but the league hopes to secure a deal from season three.
Monetising the game would have a flow on effect to players with the expectation a Collective Bargain Agreement would be drawn up to run concurrently with any broadcast arrangement.
The new pay deal would take affect ahead of the AFLW03 contracting period.
Media rights expert Colin Smith, who as director of Global Media and Sports has previously worked with the AFL and NRL during rights negotiations, encouraged the league to sign a long-term deal.
Smith helped secure a rights deal for Super Netball.
The netball deal is a revenue share model where Channel 9 pays the cost to produce the matches, but all revenue generated (from advertising and other commercial deals) is shared between the TV company and Netball Australia.
Smith said the AFL could strike a similar deal.
He said he doubted broadcasters other than Channel 7 and Fox Sports would bid.
“(Netball is) the only women’s sport that’s actually getting a rights fee,” Smith said.
“It’s a completely different model. Channel 9 and Telstra pay for all TV production and then they pool all the revenues — during the game and post-game — and they share the revenues between the two of them (Channel 9 and Netball Australia).
“There’s been a huge uplift for Netball Australia and then it’s also got the selling power of the Nine sales team.
“It’s really highly innovative. If I was the AFL I’d do a long term deal … seven or eight years.
“I think it could be a revenue type model. I don’t think it’ll be as valuable as netball.
“It’s still building. It’s gone to market really quickly, and I think it was right to do that, but it’s building the standard.
“They need to increase their depth. It’s really investing in the competition and I don’t think you’ll see the fruits of your labour until five to six years.
“Right now, the only bidder would either be Foxtel/Fox Sports or Channel 7, or a combination.”
AFLW ratings dropped considerably on the debut season in the first two rounds — Fox Footy’s average viewership was down 61 per cent — but round three and four have seen an increase in the average audience compared with 2017.
An average audience of 50,014 tuned in to watch Round 4 on Fox, the highest average AFLW audience Fox has seen this season.
Apart from the improved display of Nick Kyrgios at last month's Australian Open, the performance of Australians in recent grand slam events has been underwhelming.
The only recent exception was in 2011 with Sam Stosur winning the women's singles at the US Open for the first time in 38 years.
The underperformance is mirrored in other international competitions: in the Davis Cup, our last win was in 2003; in the Fed Cup, our last win was in 1974; and in the Olympics, our only gold medal was in 1996.
Leading media rights expert Colin Smith of Global Media and Sports argues TA should invest its mega Australian Open returns in high performance sport, where the presence of Australians in the second week of the grand slams will further boost TV ratings and attendance at home.
"It has been suggested that the challenges of Dokic, Tomic and Kyrgios are symptomatic of an underinvested high-performance system especially when young players start competing on the world stage in senior competition," he said.
Yet tennis officials will privately say investment in some of these players has been massive.
Not surprisingly, Australian Open tournament director Craig Tiley agrees. "But funding alone doesn't ensure great tennis players ... It is about having expertise and the right balance."
The battle for cricket broadcasting rights in Australia between the Nine and Ten networks and tech giants such as Amazon could result in content going behind a paywall, an expert says.
Cricket Australia is expected to begin negotiations for its 2019-23 broadcast deal this week amid talk its worth could soar by almost 100 per cent to about $1 billion over five years.
Nine, which broadcasts the national team, is understood to be keen on taking Big Bash League rights off Ten, which could mean putting together a bid with Fox Sports, according to Global Sports Media director Colin Smith.
Smith said Nine's future could hinge on continuing its hallowed summer cricket coverage as the threat looms from Ten's American owners, CBS, and digital powerhouses.
"I would find it extremely unlikely that Nine are going to bid much more than $110 or $120 million a year," Smith told AAP.
"And because of the underperformance of the A-League, Fox Sports really haven't got any compelling domestic summer content, so either they need cricket or tennis or some combination of both.
"That could either be Test/ODI or some Big Bash or some combination of the three. So I could see them partnering with Channel Nine for a joint bid.
"But then that means some of the content's going to be behind a paywall. There'll be exclusive content and then Fox Sports will be more than likely want to simulcast."
Smith said a joint bid would put Cricket Australia in a difficult situation.
"It would be controversial because Cricket Australia made a decision to not really push hard with Fox Sports at the last negotiations because they wanted it in front of a paywall," he said.
"And that's certainly been a successful outcome for them because TV audiences are substantive and attendances still are significant."
Smith was doubtful of the $1 billion figure but believed CBS was a wildcard.
"The question is what will CBS do. If Channel Ten bids on its own then it will try to hold the Big Bash," he said.
"But the question is Test cricket and ODI. If CBS decides they want to improve the position of Channel Ten to being the total cricket channel, it could go significantly northwards.
"But it's not a given either. I can't see it being anywhere near $200 million a year."
David Rowe, a media expert from the Western Sydney University, said interest from companies such as Amazon, Facebook, Google and Apple was unlikely.
"They've got the means, there's no doubt. Someone like Google can buy and sell Channel Nine several times over," he said.
"In a way, you might say they're more interested in driving their traffic and advertising than acquiring expensive content.
"That has been what's holding them back. You also have the anti-siphoning laws."
Rupert Murdoch and Frank Lowy saw the Four Horsemen of the Apocalypse charging towards their empires and reacted wisely with clever sales of assets, but the major spectator sports have opened the stable door to welcome these rampaging riders.
The original horsemen, as written in Revelations in the New Testament, were Conquest, War, Famine and Death.
Today, some observers use the Four Horsemen to refer to Apple, Amazon, Facebook and Google, the online streamers causing devastation to traditional media and retail shopping.
Cricket Australia's broadcasting rights expire next month but, to date, only one of the online behemoths has taken a charge at the sport worldwide and it was not for Test matches but the increasingly popular shorter form of the game, Twenty20. Furthermore, it was a bid in a market much bigger than Australia.
In India, IPL recently secured global rights (across all media platforms) in a $3.2 billion deal with Star of India, now owned by 21st Century Fox. There were 14 bidders for the rights and Facebook was the losing bidder for digital OTT rights in the Indian subcontinent (India, Pakistan, Bangladesh, Sri Lanka and Nepal) with a bid of $770 million.
Globally this was the first material bid by the Four Horseman for sports media rights and represented a 700 per cent-plus increase, across all platforms and markets, on previous rights.
Prior to the IPL bid by Facebook, the quartet have made small bids for sports, such as NFL and ATP tennis.
Murdoch's decision to sell the bulk of his main entity, 21st Century Fox, to Disney for $66.84 billion was another game changer for sports media rights. Murdoch was quoted at the time as saying 21st Century Fox was not big enough to compete with the Four Horseman. Disney have acquired 21st Century Fox to bulk-up its content offering and launch its own OTT service for sports and to compete with Netflix.
The reason? Massive cord-cutting, otherwise known as loss of subscribers, as people cancel their pay TV connections in the US.
Murdoch's Fox Sports televised the Big Bash League in Australia in its inaugural season but relinquished the rights to Channel Ten who pay Cricket Australia $20 million a year. Murdoch is likely to want this popular product back, with further evidence of the watchability of T20 coming from England with the ECB's sale of its new city-based T20 league from 2020 for £1.1 billion.
Some of the games will be broadcast for the first time in a decade on the BBC.
But Channel Ten's new owners, the American TV network CBS, may have a different view of BBL.
CBS is a leading sports broadcaster in the US that includes NFL, NBA and college basketball (March Madness).
Surely it will want to retain BBL as each game averages a million viewers and its production costs are only $12 million a year. Furthermore, BBL's average attendances at 35,000 a game makes it No.2 in Australia in terms of spectators and No.5 worldwide across all sports. Its attendances, as opposed to its TV ratings, are bigger than the NRL.
CBS may decide to partner with Fox Sports and acquire all of CA's content, including Tests, one-day internationals and international T20, held by Channel Nine for $80 million a year.
These rights also expire next month, along with CA's digital rights that are held and distributed by CA with sub-distribution by Optus.
Other than the A League and the NBL, Fox Sports has zero content of premium "must watch" Australian summer sport. With TV ratings for the A-League continuing to fall, Fox Sports can be assumed to be keen to acquire CA content, especially BBL.
Furthermore, Foxtel is likely to acquire Fox Sports this year and follow with a float, further evidence of the need for a summer sport.
Fox Sports will want live simulcast of all broadcast games just as it does with the NRL and the AFL. Channel Nine's experience with the NRL simulcast and fall in ratings makes it a far less popular proposition for the network.
However, Channel Nine, which also outlays $16 million annually in productions costs, as well as $80 million in rights fees, is reportedly losing $30 million a year on cricket.
It may well want Fox Sports as a partner for the internationals and BBL to help defray costs. Channel 7, with conflicts in scheduling between BBL and Australian Open Tennis, is unlikely to bid.
Early last year, CA indicated it wanted a 100 per cent increase to $200 million a year in rights, while retaining digital in-house.
In a traditional valuation of cricket rights, without the unexpected arrival of the Four Horsemen, BBL is likely to be worth $35-55 million a year with the expanded number of games.
International domestic cricket (Tests, ODI, international T20) is worth $85-100 million a year, assuming day/night Tests per season, which indicates an overall value of $120 million to $155 million.
CA chief James Sutherland's preference for the long form of the game was obvious late last year when he said he would be willing to bump BBL off four nights of prime viewing to accommodate a day/night Test against Sri Lanka next January.
The pink ball Ashes Test against England in Adelaide justified his view.
It had 200,000 attending over four days, a record for any sporting event in that city and peak TV audiences of 2 million each day.
But, unless it's an Ashes Test, or India versus Pakistan, viewer interest in Test cricket and ODIs is eclipsed by T20s.
This can be highlighted in the recent CA media rights deal in India for Tests, ODIs and international T20s, where the rights value for the new deal has halved to about $16 million. CA had only one Indian broadcaster as a bidder, being Sony.
The key for a very significant increase in rights revenue for CA, expected to be finalised midyear, requires:
Colin Smith, director of Global Media and Sports and Australia's foremost expert on media rights, warns: "Australia's small market size is unlikely to attract the Four Horsemen. CBS is an open question. Channel Nine, Channel 10, Fox Sports will depend on who broadcasts what and whether the games are exclusive.
"It should also be noted all cricket at present in Australia is on FTA, either Nine or Ten.
"If Fox Sports are successful, they will require exclusivity for some games behind their paywall and simulcast of other games. This will be a challenging decision for CA," Smith said.
Nor should it be ignored that anti-siphoning laws will influence the bidding for Tests, ODIs and international T20s. Paradoxically, the most popular form of the game, BBL, is not subject to these rules.
A veteran sports consultant who twice warned the Australian Rugby Union that under no circumstances should it agree to an expanded 18-team Super Rugby competition says the governing body has only itself to blame for "signing their death knell" despite talking up next year's new structure.
The comments come as former NSW Waratahs and Rugby Union Players' Association chief executive Greg Harris slammed the ARU for failing to take accountability for plunging rugby into a mess it could have avoided.
Colin Smith, managing director of firm Global Media & Sports, has been involved in sports media rights for 17 years and has advised the ARU, RUPA and New Zealand Rugby Union for over a decade.
Smith warned the ARU in 2009 and 2013 about the challenges of Super Rugby's model and made it clear the game's stakeholders needed to stand up for what was in Australia's best interest in order for the game to survive.
In 2014, Smith prepared a 100-page report for RUPA, which was passed onto the ARU, outlining reasons why giving the green light to a proposed 17- or 18-team model could send the game broke.
As it turned out, the ARU, which have the right to veto decisions made at SANZAAR meetings, agreed to the new arrangement for the 2016 Super Rugby season, which has now been changed two years on ahead of the 2018 competition.
The comments of chief executive Bill Pulver on Thursday, when he talked up an increase of local derbies next year and the benefits the new competition structure would have for Australian rugby fans, left Smith shaking his head.
"They're right when they say they're bringing back rivalries but why the hell did they drop them?" Smith told Fairfax Media. "They should have said 'no' back then.
"It's one of the saddest stories I've seen. This is one report I would have liked to be wrong on because the sport has put themselves in self-destruct mode. The reason why they've had to do what they've done is because the ARU is close to being bankrupt.
"They say this is all about putting money into grassroots, well frankly that's a play on words.
"The report highlighted then that if you went ahead with the new Super Rugby structure it was going to kill the clubs and it was going to kill the ARU. Even though they got more in their media rights deal than we anticipated, it has actually has killed them.
"[ARU chairman] Cameron Clyne said he wasn't involved in any of this process of going to the new competition. That's bullshit. He was there on the board when the decision was made by that board to go with a new Super Rugby competition and that's what frankly signed their death knell.
"They adopted the ostrich management style: head in the sand and hope it goes away."
Harris, who was boss of RUPA when the report was given to the ARU, is equally irritated there has been such a positive spin when the warnings were present a long time ago.
"It's just very disappointing at the end of the day that while Bill's acknowledged the way forward, he's knew about it three years ago," Harris said. "All of those metrics were provided to him in 2014. Nobody holds him or the ARU accountable for their mistake. It's incredible.
"It was never ever in the best interests of Australian rugby. I just feel pretty bloody disheartened. If he had any courage then we wouldn't be in the situation we were in."
On the day the ARU decided to cut a Super Rugby team, Pulver did concede Super Rugby expansion was probably not the answer at the time.
"In retrospect, that was probably a mistake," Pulver said on April 10. "I accept that was a mistake. That competition has not delivered the outcomes we wanted. I'm not convinced, however, that it's the 18-team competition that has led us to losing a team today."
Asked for a solution to save Australian rugby, Smith said there was merit in breaking free from SANZAAR once the new broadcast deal expired in 2020 and going it alone.
"We should be upgrading the NRC and make it our premier competition and maybe invite the Japanese and the Pacific Islanders to play in it," Smith said. "One of the Sydney teams becomes the Waratahs, one of the teams in Brisbane becomes the Reds, we create two great brands and you actually have an Australia-wide competition. That's the answer to Australian rugby.
"If we announce that, I'll have a real wager with you that New Zealand will want to re-think [their objection to a trans-Tasman competition]."
As for Andrew "Twiggy" Forrest's new Indo Pacific Rugby Championship, Smith is not convinced it can be successful.
"That competition is not going to work either because of the very things that we've talked about before [in the report]," Smith said. "I'd love it to work. Having countries like Malaysia, Singapore, Hong Kong; they don't have a professional rugby community. The thing that drives rugby is domestic rivalries and what they did out of the new competition is reduce rivalries.
"Over time it's going to be seen as a second-rate tournament. That's my concern."
If "content is king", as Microsoft founder Bill Gates once famously put it, then live sport must be something like a divine entity.
Decades after Gates uttered that oft-quoted phrase, today's tech giants are all investing heavily in video content. Now, there are mounting signs they want to get hold of live sport as part of that.
The question for local sporting bodies is whether this interest will extend to Australia.
Last week, it emerged Facebook bid $750 million to stream Indian Premier League cricket games in that country for five years.
The bid did not succeed – Star India, which is owned by the Murdoch family's 21st Century Fox – secured them as part of its $3.2 billion bid for worldwide broadcast rights.
Still, it was the clearest sign yet that Mark Zuckerberg's $500 billion social media behemoth is dead serious about sport as part of its broader video strategy.
Zuckerberg has made it clear video is where he sees the company's future. He has gone as far as saying he thinks the social media platform could be mostly video within five years.
Of course, India, the world's second most populous nation, is a critical market for the company. "New members joining Facebook from the Asia Pacific region [excluding China] account for half of Facebook's total membership growth," says Andrew Macken, a portfolio manager at Montaka Global, which holds Facebook stock.
Australia seems tiny by comparison. But Colin Smith, a director at Global Media & Sports, a Sydney based media rights agency suggests it's not unreasonable to think Facebook and other tech giants could be interested in acquiring sports rights in this country, most obviously cricket but also tennis (both up for renegotiation in the near future).
He says Facebook's bid for Indian cricket rights was (pun unavoidable) a "game-changer" for the industry, because it came just when it looked like the sports rights bubble was about to burst.
The economics underpinning ever increasing prices paid for sports rights don't seem to stack up anymore. The traditional bidders – free-to-air and pay TV stations – are struggling both here and abroad.
People don't watch as much TV as they used to, and subscribers are walking away from expensive pay TV packages in droves.
Ironically, one of the reasons for this is, consumers (particularly younger ones) are spending more and more time on the internet, much of that on platforms controlled by Facebook.
Whether the possible entrance of tech giants to the bidding fray offsets weakness of traditional players remains to be seen.
Facebook, which declined to comment for this column, is not the only tech giant interested in dipping its toes into streaming sports online at moment.
The company everyone in corporate Australia is talking about right now, Amazon, will be streaming 10 NFL games in the US in the current season, the first of those is this month. It paid $US50 million ($62.0 million) for this privilege, outbidding Twitter, which aired the same package of games last year.
The e-commerce giant, which according to Citi analysts could be up and running in Australia before Christmas, also recently spent a relatively small sum on second-tier tennis rights in the UK.
To understand why sports rights appeal to Jeff Bezos' internet giant, you need to understand its subscription membership program, Prime.
Amazon's streaming video service is offered as a free add-on to Prime subscribers, who pay $99 a year in the US for expedited deliveries and other perks. Prime subscribers tend to spend much more than non subscribers do. So for Amazon, video – and a sport as a subset of that – is really a way to get people to buy more stuff on its platform.
It might sound like an expensive way to do that, but tech giants have lots of money, and supportive shareholders. "If anything, what is surprising is how little Facebook is currently spending [on content]," says Macken. "This is a $575 billion company which generates around $5.5 billion in operating income each quarter."
Google was linked with bids for NFL and AFL rights a couple of years ago, but at the time, it had the whiff of sporting bodies trying to drive up competitive tension for their most lucrative properties.
Among internet giants involved in video, only Netflix has categorically ruled out bidding for live sport.
Ultimately tech giants don't just have deep pockets. They also have ability to monetise content spending in ways traditional media companies don't enjoy.
That's why it would not be a surprise to seem them play an increased role in sports rights auctions going forward. And the notion that this could someday include Australia no longer seems preposterous.
There are fears the value of the next broadcast deals for sports such as rugby league and cricket could plateau or even plummet after the Seven Network posted a $745 million loss for the financial year.
Global Media and Sports boss Colin Smith, who previously helped the NRL, AFL and ARU broker media deals, has echoed the view of Seven West Media boss Tim Worner, who claimed sports rights had reached a "tipping point".
Seven West Media's overall revenue was down 2.7 per cent to $1.6 billion in comparison to the previous year, which included the Rio Olympics. The free-to-air network invests heavily in sports, including the AFL and tennis' Australian Open, with the shock result raising fresh questions about the future broadcast value of those and other sports.
The Nine Network holds the broadcast rights for cricket and rugby league. Nine has had the rights for home cricket internationals since 1979, although the current deal will expire at the end of the 2017-18 summer. The Big Bash rights are about to be up for renegotiation and uncertainty over the future of current rights holder Channel Ten will likely decrease the competitive tension in the market.
Nine's new NRL contract kicks in for the 2018 season and runs for the next five years, a deal that – in partnership with those done with News Corp, Fox Sports and Telstra – will bring in $1.8 billion for the NRL. While that sum represents a 70 per cent increase on the previous rights deal, there could be a downside in the future.
"We are fast approaching the tipping point," Smith said.
"The broadcasters' costs are rising and by acquiring content such as AFL and NRL they're not getting more revenue. That's not sustainable long-term.
"Then you have the issue of whether one of the free-to-air networks survive, and if it does, in what form?
"It's not like there's a feeding frenzy out there attempting to acquire rights.
"The idea that there is going to be significant growth going forward is going to be challenged."
Rugby league is the only major sport without a collective bargaining agreement after cricket and AFL recently struck revenue-sharing arrangements with their players. The Rugby League Players' Association has been pushing for a 29 per cent slice of the pie, which would mean a share of any upside or downside in revenue in the ensuing five years.
Smith said the only way the NRL could ensure an increase in its next deal was by adding premium content. He suggested a team in the Brisbane or south-east Queensland regions could achieve this.
"If you're not increasing your television audience, and therefore making yourself more attractive, how can broadcasters continue to pay more money?" Smith asked. "It's not possible. One of the challenges you have in rugby league is that TV audiences have dropped. While AFL is up about 2 per cent, in the NRL, Fox Sports is slightly up, but channel Nine is significantly down.
"That makes it tough to think that come 2021-22, there will be significant increases.
"Television is more important for rugby league than AFL because their attendances, save for Origin and the grand final, are comparably low."
Worner's "tipping point" warning came on Wednesday morning as the chief executive blamed his company's poor performance on a "tough market".
"Given changes in the market, price rises are not sustainable. We have to reach a position where the economics stack up for all parties [and] where the power and reach that free-to-air brings [to sports]," Worner said.
He pointed to the popularity of the Big Bash as an example of why networks should be rewarded for growing the popularity of sports.
"These sports code have to start to recognise the power of what we bring to them," Worner said.
There are hopes that "disruptors", such as Netflix, Google, Facebook and Amazon, will enter the race for future sporting content, therefore pushing up the price.
While Smith said their entry into the market was inevitable, it might not happen in time for the next NRL rights cycle.
Cricket's unseemly pay dispute looks to be finally drawing to a close. The months-long public brawl has been blamed on many factors, from greedy players and big-spending administrators to a battle over funding for grassroots training and development programs. But underlying everything is the fear that this fight could also signal the beginning of the end of the sports broadcast glory days.
Sports that have become used to spending ever-increasing amounts face an epic belt-tightening. And the future for some codes is cloudy indeed. With broadcasters under more financial pressure than ever, there are serious doubts being cast on the ability of the big free-to-air networks to continue paying for huge increases in rights fees. The days of the big deals doubling or more every four or five years could be coming to an and.
Put simply, this could well be as good as it gets for the cricketers, the administrators and so many of the sport's big strategic plans.
As the cricket pay stoush hopefully nears an end, with players and administrators locked in intense talks this week that could finally lead to a resolution, Cricket Australia's attention will soon turn to its next broadcast rights deal.
Every sport in Australia will be watching with extra intent this time. And expectations of deflating revenues have all the big sports caught up in internal squabbles.
"Sport is heading for a period of unremitting turbulence," one director of a large sport told AFR Weekend. "We could look back on this year as being a remarkable moment of real contention for sport. The commercial models that underpin big sport are collapsing ... and there's a chance one or more sports could cease to be a major player in this market."
The revenue of the big sports has surged over the past decade thanks to huge broadcast rights deals. The AFL's revenue in 2006 was $215 million and last year it reached $517 million. In between, the league has spent tens of millions expanding into new markets with its GWS Giants and Gold Coast Suns teams, and last year clinched a $200 million deal to buy Etihad Stadium in Melbourne.
In the same time, Cricket Australia's revenue has risen from $79 million to $339 million while the NRL has more than trebled its revenue to $350 million. Cricket has in the past decade established the successful but costly Big Bash League, while the NRL plans to spend up to $30 million annually on a new digital media and data business.
Those huge income rises have come from massive broadcast rights deals. Cricket doubled its domestic annual TV income to $100 million when it clinched a deal with Network Ten and Nine Entertainment Co in 2012. The AFL's $2.508 billion deal with Seven West Media, Foxtel and Telstra was signed in 2015, just before the NRL signed a $1.8 billion deal with Nine, Fox Sports and Telstra. Those deals compared with previous contracts of $1.25 billion and $1.2 billion respectively. They may represent the high water mark.
As the big broadcast rights deals have rolled in all sports have rapidly increased their spending – on player wages, staff at headquarters and other business strategies – but that is now at risk with the balance sheets of the free-to-air broadcasters stretched, Network Ten in administration, and Fox Sports faced with the challenge with Foxtel of growing the pay-television market above 30 per cent of the population.
One need only look at the impact of broadcast rights to the Olympics and AFL and how it will hurt Seven West Media's earnings this year. Seven is expecting earnings before interest and tax to fall between 15 per cent and 20 per cent in the 2016-17 financial year.
Cricket, and to a lesser extent tennis, loom as big test cases. Cricket's current deal expires at the end of the upcoming summer, so Cricket Australia will be in the market by the end of 2017 and hopefully sign a new deal in early 2018. Nine chief executive Hugh Marks has said he wants all cricket rights, but also that "it's a financially challenging environment and we need to be very disciplined about our decisions".
Tennis Australia is also about 18 months away from the end of its rights deal with Seven, worth about $35 million annually. It has used the increase in its deal, from $21 million per year previously, to pay for a broadcast production business for the annual Australian Open.
It and cricket have been extremely confident in getting large increases for their rights. But that increase may end up coming from overseas markets rather than Australia as competition between local broadcasters diminishes due to financial problems, such as Ten being in administration.
Broadcasters are being hit by streaming services such as Netflix and Stan, which are growing in popularity. This crimps their ability to use sport as a loss-leader to attract audiences to other programs.
"In the current environment with fragmentation of audiences, what is the true value of the 'halo effect'," says Colin Smith, chief executive of Global Media & Sports. "There is a view it is going to be significantly lower. The traditional broadcast model was you could run your sports broadcast at a loss but you can make a profit from the halo effect. But that value is going to be diminished now."
Smith says he can see a time nearing when the streaming services will bid for rights, but has doubts over whether they will pay big money.
Cricket, the AFL, NRL, Victorian horse racing and rugby union have also established their own digital news and broadcast services. Cricket would like cricket.com.au to become the main portal for digital subscribers and the NRL has big plans for its digital media play which will take over all the production on its websites from Telstra at the end of 2017.
But big spending when sport is only a few years away from the big pie not growing any bigger could be problematic.
"Doing your own service is a very costly exercise," says another large sports board member. "You'll see that the sports that have a bit of money set aside now and are prudent in their expenditure are probably going to be OK. The ones that keep fighting and don't have clear strategies to engage with fans, I'm not so sure."
Live sport and the fate of Network Ten are intrinsically linked, as is the network and the market for broadcast rights for Australia's biggest sports.
A good chunk of the reason for Ten's slide in the ratings in recent years can be traced back to Ten's then chairman Lachlan Murdoch's fateful decision to leave behind its AFL rights for an all-in bid for the NRL contract in 2011. Ten was left with neither of the big domestic football codes, after Nine Entertainment Co kept its free-to-air rugby league rights.
More recently, cricket's Big Bash League has been a big success. Ten pays $20 million in cash and contra annually for the domestic Twenty20 competition, which has turned into a summer ratings winner and seen Ten lauded for the quality of its coverage. Production cost are at least another $7 million on top of that.
But Big Bash and sport in general is expensive, owing to both paying for the rights and the production costs. With Ten now in voluntary administration, there will be repercussions on both fronts that could once again change the face of sports broadcasting in this country.
Cricket Australia, in the last year of its deal with Ten for BBL and Nine for test and limited-overs internationals, will not put its rights to market until Ten's ownership structure is resolved. Without Ten joining the bidding, it would be likely Nine would win free-to-air rights for all facets of cricket, potentially in concert with pay-television network Fox Sports.
Nine could go to Cricket Australia soon though – in the event there is a break clause in cricket's contract with Ten if it was to enter administration – and suggest it take on BBL rights this coming season and at the same time lob a knockout bid for all cricket in the future.
Alternatively, in the event Ten emerges as a leaner structure, Fox could join with Ten to bid for rights. But uncertainty over Ten's future puts a cloud over any clear strategy for cricket for at least the next few months. In any case Cricket Australia is not sure what the international cricket calendar will look like for the next few years. And it is distracted by the bigger challenge of signing up Indian TV networks to coverage of games played in Australia, a valuable contract yet to be decided.
"It would be a gutsy call for any sports administration to go with Ten under its current circumstances," says broadcast rights expert Colin Smith, the managing director of Global Media & Sports.
In the meantime, Ten's administrators, KordaMentha, will begin the search for savings, and Ten's expensive sports deals is more than likely to be one of its targets.
Apart from cricket, Ten has free-to-air rights to the Supercars motor racing series, Formula One and the MotoGP motorcycling. Supercars rights cost about $10 million, which illustrates the high value of rights across the sports spectrum, also the importance of selling them successfully. Ten also broadcasts Wallabies rugby union matches and will put one A-League soccer match a week to air from October onwards.
Intriguingly, all those deals besides cricket are in conjunction with Fox Sports, wholly owned by News Corporation. If cross-media ownership laws change, Fox Sports and Ten could do a lot more joint bidding for future rights and share more costs.
KordaMentha might quit most of Ten's motor racing contracts early in order to save money. They would revert to Fox Sports and would then presumably be on-sold to Nine or Seven West Media.
"You could see them trying to get rid of Formula One and MotoGP because they don't rate very highly anyway," said one media executive this week. "They would probably look at not doing shows such as RPM [a Sunday motor racing show] and other highlights packages. Fox would probably look to do with Nine or Seven."
That would be the scenario for A-League if Ten collapses. Football Federation Australia's contract with Fox Sports has the pay-TV operator on-selling one match to "a free-to-air commercial network". Fox Sports recently clinched the deal with Ten, which is 15 per cent owned by Foxtel, to take the Fox feed and production of the A-League game.
Ten could do a similar deal for its rugby union and Supercars broadcasts, essentially taking the Fox Sports commentary and pre- and post-event coverage in order to save costs (it currently does those itself).
But potentially even more important is how the sports themselves deal with a scenario in which Ten, or a wounded low-cost network, rarely bids for any rights and lowers competition in the market, forcing down the value of sports rights overall.
"I think you'll see the sports doing their own production and try to slice it up in several different ways to sell to different broadcasters," one television network executive said. "That is probably the best way they can still get big rights fees because production is very costly for the networks."
In return, sports and the networks could cut deals to share in advertising revenue and other associated income. The NRL is set to launch its own digital service from next year, and it is rumoured the AFL is also going to ramp up its production capability in the next five years, including a rumoured deal to take some digital assets from Telstra and share in advertising income.
Supercars already produces its own races, while Tennis Australia has invested tens of millions of dollars in its own production service that tailors Australian Open coverage for networks around the world, while cricket has contemplated doing the same.
The question is whether any of this will be a money-spinner for the sports themselves, which until now have relied on competition from Ten and others for the big broadcast dollars. The future is getting more uncertain.
Network Ten's precarious financial position could compromise the looming battle for Big Bash League broadcast rights that are set to fetch $250-300 million.
Colin Smith, one of the nation's eminent sports media-rights strategists, believes Network Ten's precarious financial position looms as a serious issue for Cricket Australia.
Ten entered a trading halt on Tuesday and could yet tumble into voluntary administration. The future of the free-to-air broadcaster has been placed into fresh doubt as it attempts to refinance a crippling loan.
Billionaire shareholders Lachlan Murdoch and Bruce Gordon have confirmed they will not guarantee Ten's $250 million debt renewal due in December.
Network Ten secured TV rights for the Big Bash League on a five-year deal worth $100 million. That contract expires next year.
The Twenty20 league has been one of Ten's greatest success stories in recent years, attracting bumper ratings.
However, with the asking price expected to reach about $250-300 million, it is becoming increasingly hard to imagine how Ten will hold onto the BBL and women's BBL.
The Nine Network has already made it clear they want to tap into the T20 bonanza.
"I can't see how Cricket Australia could do a deal with Network Ten under the current circumstances," Smith told AAP.
"You won't want to sell your rights to an organisation without some sort of bank guarantee if there's ongoing concerns.
"That's a serious issue for Cricket Australia. It wouldn't surprise me if they either delay the rights or have some other party underwrite it."
CA is preoccupied by protracted pay talks with players and won't turn its attention to the TV rights deal until later this year.
The sorry state of Ten could potentially comprise negotiations and help Nine become the competition's new home. However, broadcasting and bidding for a money-spinner like the BBL is likely to remain one of Ten's priorities even if it is put into receivership.
"No receiver-manager would want to pass up the Big Bash because it's so important to their summer ratings and therefore their summer advertising revenue," Global Media and Sport director Smith noted.
"But Ten will most likely require a big brother (to help bid for BBL rights).
"Foxtel already owns a slice of Ten and BBL isn't on the anti-siphoning list, so where will Fox Sports sit in the picture?
"Equally, Cricket Australia's desire will be to have the major portion of the BBL on free to air."
The Seven Network boasts the broadcast rights for the Australian Open tennis until 2019 and is yet to show its hand publicly on BBL rights.
"They could be serious bidders for Big Bash. I have no inkling they are going to but, in the past, they have been interested in cricket," Smith said.
"How you program that with two weeks of the Australian Open, I don't know."
A new ARLC, no longer with chairman John Grant, with club and state representatives, could dismantle the NRL's planned $150 million investment in digital technology, leaving Fox Sports as the only bidder for TV rights and thereby returning the game to the control of News Corporation.
This is the fear of some of rugby league's long-term strategists, with lobbying intensifying for a new commission that includes board members opposed to the NRL administration's plans to invest $30 million a year in technology designed to deliver games direct to subscribers.
Following the declaration from Grant that he will not seek reelection in February, the QRL remains the only entity to approve a revised ARLC constitution, which would see two club and two state representatives sit on a nine-person board.
Grant, as well as former ARLC commissioner Graham Samuel, are strong advocates of the NRL's plans for Over The Top (OTT) technology, where a sporting code produces its own games and delivers them directly to subscribers, effectively traversing any middlemen such as commercial TV providers.
With NRL ratings on Channel Nine dropping 16 per cent this year and fears the free-to-air TV industry won't be a competitive bidder when the broadcast rights expire in 2022, the game may be at the mercy of only one bidder, pay TV, unless it copies the AFL and cricket and invests in its own supply service.
A leading News Corporation journalist has contacted Sydney clubs promoting the candidature of Racing NSW chief executive Peter V'landys as an ARLC representative of NSW-based clubs.
Because V'landys has strong ties with News Corporation via investment in form guides, some administrators fear he could be sympathetic to a proposal to abort the planned investment in OTT technology.
After all, Bulldogs boss Ray Dib has also been lobbying clubs to support V'landys.
Cancelling the NRL's OTT plans would deliver $150 million to clubs and the future of the game to Fox Sports.
V'landys was once a candidate for the position as chief executive of the NRL and has strong business credentials, having led the campaign for bookmakers and Betfair to pay a fee for the use of racing's product as a betting medium. The case was eventually won in the High Court and delivered hundreds of millions of dollars in revenue for both racing and sport, including the NRL.
He insists he has not been using the media to promote his candidature for an ARLC role.
"I have not sought the position," he says. "A number of clubs approached me to determine my interest in the role."
In response to claims he would be a News Corporation puppet, V'landys says: "I'm 100 per cent baggage-free and a puppet to no one. As someone who has played and followed the game my loyalty is to the game, the fans, the clubs and to the players. I've made it no secret that my objective is to maximise returns to the clubs and to the players."
Asked his view of OTT as an alternative to pay TV, he offered an equivocal response: "This question can only be answered when analysing the financial models of both cases. A substantive financial sensitivity analysis would be required to have the necessary information to answer the question. There would need a good business case that can be substantiated. Any investment must not only have minimal risk and a commercial return on the moneys invested, but it must [also be] both user-friendly and cost-effective to fans."
Colin Smith, one of Australia's leading sports media-rights strategists, endorses this view, pointing out that no definitive business case has been done to determine the merits of direct delivery of games to fans.
He suggests the NRL would need 2.5 million subscribers merely to break even and many more to deliver the $1.2 billion over five years currently paid by Fox Sports.
"The OTT model will be in Australia in 2022 and by then, the consumer will be agnostic to the platform [on which his or her] sport is delivered, be it FTA, pay TV or OTT," Smith predicts.
The AFL is well advanced with OTT plans, employing 150 staff, while the NRL's investment is nascent, basically providing digital content for a service for which they once paid Telstra.
Perhaps the NRL merely has to flag its OTT plans to gain a seat at the negotiating table for the broadcast rights post-2022.
After all, it could form a joint venture with Telstra, or even with Channel Nine/Fairfax's Stan, to ensure Fox Sports is not the sole bidder.
But with the upheaval over a new ARLC and NRL clubs seeking a share of the $150 million set aside for digital, the argument for a business case has been ignored.
As Smith says, "The debate is political, when it should be financial".
Far from landing the big pay day it hoped, Football Federation Australia may at best have broken even in a new arrangement to broadcast A-League matches on free-to-air TV.
Network Ten will live simulcast Fox Sports' coverage of Saturday night games on its One channel after SBS2's Friday night coverage ended last season.
It essentially means FFA failed to sell free-to-air rights to a major commercial network's main channel.
Instead, it went back to Fox Sports under its six-year, $346 million deal to broadcast all games.
Fox Sports are understood to have on-sold the free-to-air rights to Ten in a deal likely to be worth significantly less than SBS was paying.
"The benefits for FFA are mixed. I don't think it's champagne and caviar out of this," said sports broadcasting expert Colin Smith from Global Media and Sports.
"They do tick the box of having it in free-to-air.
"It is better than being on the secondary channel of SBS, but not being on the main channel of one of the free-to-air broadcasters really says where A-League sits compared to other leading sports in this country.
"It is not what they were hoping for - a huge deal. The market doesn't value the A-League to that extent."
Ten will also broadcast Socceroos games once the current World Cup cycle has ended.
The FFA has described the arrangement as a win for fans, with drawcard A-League matches, including derbies, that are usually held on Saturday night broadcast free-to-air.
Smith said the FFA has an opportunity to negotiate a better deal if the arrangement, reportedly to last at least two years, proved a success.
But that was dependent on a strong commitment from Ten, he said.
"If it was on Ten's main channel, that would be much, much more attractive. Channel Ten has got to attract people across to One to build it.
"Unless they do some massive cross-promotion, it's not necessarily going to be a huge winner."
Smith said Fox Sports was the biggest benefactor from the deal.
"In essence, it's not going head-to-head (with a rival network)," he said.
"Clearly the strategy of Fox Sports is different to what it used to be and it's saying, 'we'll put some content on free-to-air as an enticer to subscribe'."
An 18-team Super Rugby should never have gone ahead and needs to be blown up and rebuilt – on Australia's terms.
That's the view of the veteran sports consultant who designed the Super Netball concept and twice warned the Australian Rugby Union it was jeopardising its very existence by going down the expansion path with South Africa and New Zealand.
Colin Smith, whose firm Global Media and Sports warned the Australian Rugby Union about the challenges inherent in the Super Rugby model in 2009 and 2013, said rugby in Australia was at an "absolutely critical juncture" and would not recover if the game's administrators did not stand up for what was in the sport's best interests at home.
With a cone of silence enveloping the four-nation SANZAAR joint venture and speculation strengthening that the agreed position was a reduction to 15 teams, Smith said he had not seen rugby in worse conditions since his first involvement with the code in 2005.
He said there was merit in calls for an independent Super Rugby commission to replace the SANZAAR joint venture as competition administrator.
"The [Super Rugby] competition has a fundamental design problem. It should never have gone ahead," he said.
"There's an argument in my view that an independent commission running Super Rugby, as opposed to each country having a veto, needs to be considered. In addition to this Australian rugby should be considering going it alone with a revamp or re-casting of the NRC. That's controversial but all options have to be on the table. How do we make Super Rugby work for Australia?"
Smith's thoughts are not news to the game's administrators. He first warned then-ARU boss John O'Neill in 2009 that growing competition for broadcast rights in the northern hemisphere meant Australia and New Zealand would become a hunting ground for European clubs. Four years later he advised O'Neill's successor, Bill Pulver, and Pulver's New Zealand Rugby Union counterpart Steve Tew, in a joint-ARU and NZRU-funded report, that broadcasters and fans in both markets wanted more local derbies.
In 2014, with expansion talk on the cards for the then 15-team Super Rugby competition, GMS compiled a 100-page report for the Rugby Union Players' Association. It warned that a proposed 17- or 18-team model would affect television ratings and stadium attendances and recommended pursuing a 10-team Australasian competition.
RUPA handed over the report to the ARU, but in the following months it became apparent that southern hemisphere rugby would be a major beneficiary of a bidding war between UK broadcasters BT Sport and Sky Sports, which promised to rain down cash on the SANZAAR joint venture. It did just that, but true to the predictions of Smith and others, the ARU's record $275 million broadcast deal only papered over the cracks.
The 18-team Super Rugby format, which features fewer local derbies than earlier iterations, has resulted in weaker domestic television ratings in Australia and South Africa and, most damagingly, less revenue for the five Australian Super Rugby clubs. With more money than ever before flowing into the game from cashed-up overseas broadcasters, clubs are still going broke. The ARU, obliged to operate five licences under the terms of the SANZAAR agreement, is still the lender of last resort.
In the meantime, Smith was commissioned by Netball Australia to plot netball's strategic future. He looked at the Trans-Tasman Netball League's television ratings – weaker when New Zealand teams were involved – and results – a New Zealand team won the competition just once in its nine years – and recommended Australia go it alone.
The result was Super Netball, a $3.4 million per year, five-year broadcast partnership with Nine, a new naming rights sponsor in Suncorp, three new teams and a groundbreaking new pay deal for Australia's professional players. Early in its first season, the competition is drawing crowds and rating strongly nationally.
Smith characterised as "gutsy" Netball Australia's move to re-imagine its future and said it was time the ARU did the same. He warned the forthcoming SANZAAR strategic review would not have Australia's interests at its core.
"We've got across the ditch from us the most powerful rugby nation in the world, in New Zealand, and they are utilising this to their advantage to maintain that," he said.
"This is a 'now' problem, not one over which we can adopt the ostrich management style and hope it goes away."
The current travails in rugby union, as it goes on a seemingly endless search to fix the problems of the unnecessarily complex Super Rugby competition, are a cautionary tale for any executive.
The issue is that if you have a pretty obvious problem and basically hope it goes away without really doing something about it, well don't be surprised if that problem gets bigger and bigger and never goes away.
Three years ago this month the Australian Rugby Union, at that stage taking part in negotiations with its counterparts in New Zealand and South Africa regarding the future structure of Super Rugby from 2016 onwards, coinciding with a new broadcast deal, received a report from the Rugby Union Players Association (RUPA) and consultancy Global Sports & Media.
Rugby's southern hemisphere leadership had by then planned a new 18-team competition, adding a team in South Africa and new franchises in Argentina and Asia, which ended up being Tokyo's Sunwolves, to the existing five teams each in New Zealand, Australia and South Africa.
But the RUPA report, which considered five different operating models for Super Rugby in a document stretching to 100 pages, warned: "If the ARU were to support the currently proposed Super Rugby competition model...then they would arguably not be looking after the best interests of Australian rugby."
The report went on to predict that although the 18-team structure could attract more broadcast revenue around the world, that positive would be offset by Australian teams suffering by a decline in sponsorship and ticketing income.
History shows the 18-team league was just about a disaster in 2016 for the Australian sides, all of whom lost money as fans struggled to understand the expanded and unwieldy competition.
And now, just a little over a year into the new broadcast deal, rugby is at the crossroads. SANZAAR (South Africa, New Zealand, Australia and Argentina) officials met in London at the weekend to consider the best structure for Super Rugby.
Yes, rugby has suddenly realised that the format predicted by many to be unworkable is essentially, well, unworkable. Not to mention costly and confusing. And, by the way, many sports fans probably haven't figured out yet that the 2017 competition has been underway for three weeks.
All SANZAAR would say after the meeting was there had been "robust" discussions, but any big decisions would happen in the "coming weeks".
In Australian terms, there are strong rumours the ARU – which reportedly poured an additional $3 million into the Western Force last year and also provides additional funding to the new private owners of the Melbourne Rebels – could cut one of the five teams.
Also potentially on the chopping block are at least one team in South Africa and the Japanese Sunwolves team, even though the 2019 Rugby World Cup will be held in Japan.
While that would be a blow to Japanese rugby, it is in Australia where the situation is most critical. Amazingly, the ARU agreed to the new structure even though it actually cut the number of games Australian teams played against each other.
The game here is now bleeding financially as all states and the ARU in particular struggle to balance the books. That is before considering rugby having to compete with three rival football codes, cricket and the like for sponsorship and membership dollars. It is a situation administrators in rugby-mad New Zealand and South Africa simply don't have to deal with.
So it is clear what the sport needs in this country – and yes Australia's position is complicated by the fact it has to get agreements across all of SANZAAR – is for the Australian Rugby Union to put Australia first at the expense of everything else.
It is time for the ARU's all-star business board, which includes such respected names such as chairman Cameron Clyne, Ann Sherry, Pip Marlow, Elizabeth Broderick and John Eales, and chief executive Bill Pulver not worry about the good of rugby on a global basis but only in its own backyard.
If it means playing a bit of brinkmanship with New Zealand and South Africa, so be it. Because if Super Rugby continues on its present course Australian rugby is in serious trouble.
As RUPA CEO Ross Xenos says: "We need five teams. And there are models to sustain five teams. This isn't about what's best for SANZAAR, it's about what's best for Australian rugby."
The 2014 RUPA report found a competition of just Australian and New Zealand teams would be most attractive to broadcasters and ticket-buyers. It is time for that to happen, even if it means angering South Africa.
Threats would fly around, but surely South Africa would still want to meet the Wallabies in Test matches and New Zealand teams would still surely want to play against Australian ones.
Xenos has come up with more diplomatic options, including six conferences that adds the Sunwolves to the five Australian teams and other that sees Australian teams in one conference and two others of five with three overseas sides cut.
The ARU is keeping its cards close to its chest and is said to have several options ready to go, including the dreaded idea of cutting one local team.
But urgency action is needed. Change is hard, but irrelevancy would be much worse.
As new chief executive Kate Palmer takes the reins at the Australian Sports Commission today, one of the supporters of the commission’s controversial Winning Edge philosophy has warned that the ailing high-performance system needs further reform as much as extra funding.
Former Rowing Australia president and sports events and broadcast rights expert Colin Smith has cautioned Australia’s Olympic sport leaders not to assume that extra funding alone will resolve the issues that led to Australia’s medal slump at last year’s Rio Games.
“I think Winning Edge (which prioritises those sports with the best medal chances) is the right concept, but I think the execution hasn’t been as good as it could be,’’ he said.
“If we had won as many medals in Rio in 2016 as we did in 2015 (at the equivalent world events) we would have finished fourth on the medal table.
“To me that indicates problems with the high-performance system because the underperformance was systemic across most sports.
“In my view, we have only got two outstanding world-leading high-performance programs at the moment, and they are in netball (where Palmer came from) and sailing.
“Leading up to the Sydney Olympics, most of the key medal sports had world-leading programs.’’
Smith said the lack of secure funding also affected the ability of the sports to hire and keep world-leading coaches and staff but he argued that there were reforms that should be undertaken regardless of more funding being made available.
“Funding is a huge issue because the leading sports have only been guaranteed 80 per cent of their funding for the next financial year, and if they have to headhunt the best coaches in the world that’s a real problem because they don’t know how much money they have to spend.’’
Smith argues that while Winning Edge is based on the successful British model, it omits at least two crucial pillars of that system, where funding is locked in for a four-year Olympic cycle, and then reassessed, and sports are required to raise a percentage of funding from alternative sources.
He believes the biggest problem with the Winning Edge program, as it currently operates, is the requirement that sports maintain their level of performance every year in order to retain their funding.
He said that had led sports to sacrifice future development for current performance.
He said the dismantling of the Australian Institute of Sport as the nation’s key high-performance centre, devolving many of its responsibilities to individual sports that did not have the expertise to maintain standards, was poorly executed.
He argues that the ASC should now provide more expert support to those sports to bring them up to speed.
The central philosophical difference that has fuelled the rift between ASC chairman John Wylie and Australian Olympic Committee president John Coates is in how sports funding is distributed.
Wylie and AIS director Matt Favier want to go narrow, funding medal-winning programs only, while Coates believes in the broad approach, arguing that the wider the base, the higher the peak.
Smith believes the narrow approach will be more effective given the limited funds available.
“You can either give loaves and fishes to everyone or you pick winners like New Zealand does,’’ he said. “At the moment we are betwixt and between. I am not suggesting we dump the (more expensive) team sports for the multi-medal sports, but I think there has to be a far more disciplined approach to the whole program. Sports that don’t have topline athletes and a development program should be cut. Those that do should be funded for the quad (the Olympic cycle) and set realistic goals to achieve at the next Olympics. Then if they don’t deliver they should be cut.’’
Welcome to the brave new world of watching sport in Australia, where, just like the games themselves, there are going to be winners and losers.
A quarter of a century ago following sport was a relatively uncomplicated affair. Watch it live; catch it on TV; or listen to a broadcast on the radio — then read about the denouement in the next day’s newspaper. The key broadcast deals done back then were seemingly as modest as the consumer offerings: Channel Seven paid $100 million dollars to cover the Australian Football League (1993–98) while Kerry Packer’s Channel Nine handed over $80 million to the National Rugby League (at the time known as the Australian Rugby League) to lock up telecast of the 13-man game from 1995–2000.
These days, consumers are rather more spoilt in getting their sporting fix. Traditional viewing platforms have been augmented by everything from streaming services on laptops, phones and tablets, to podcasts and live blogs.
There are options aplenty but they come at a cost. The two biggest sporting codes in Australia both had their broadcast rights deals renewed in 2015, with the AFL ($2.508 billion; 2017–22) and NRL ($1.8 billion; 2018–22) each logging record sets of figures that almost doubled their previous arrangements. With so much money on offer it’s no wonder that sporting bodies with enough clout are considering cashing in by taking on part or all of the broadcasting themselves.
The concept of a sport producing coverage of its own competitions has been around for years, with the likes of the National Basketball Association (NBA) and Major League Baseball (MLB) in the US, but in Australia it’s been a little slower to take off. Seen as prohibitively expensive by some, the move requires the sport to either outsource production or have the skills in house to deliver a product on multiple platforms, and potentially to multiple stakeholders.
In 2014 Tennis Australia (TA) took this leap in a deal with Seven West Media. By keeping the production rights of the Australian Open, TA has been able to package the broadcast for particular markets and deliver key messages about its sport through its own coverage. By all accounts it has been a shrewd move.
As early as 2011 the AFL’s then-boss, Andrew Demetriou, spoke of “selling direct to the consumer” for the ensuing rights deals for the code. That hasn’t happened yet but with its own production house and news website — the latter the most popular sports site by visits in the country — it seems like a logical step for the AFL.
For Cricket Australia (CA) the idea is something it is considering closely as its new 2018 rights deal approaches. While pleased with the exposure gained via its premium products from Nine Network and Network Ten (test cricket, one-day internationals and the Big Bash League), Ben Amarfio, CA’s Executive General Manager – Media, Communications and Marketing, admits they “can’t satisfy our total broadcasting needs”. With cricket all but a year-round proposition these days, CA is looking for more extensive broadcasting of the state and women’s game.
“The opportunity is there for us to fill that void, even if it’s only via streaming,” says Ben. He also cites the ability to customise content for overseas markets, in much the way Tennis Australia does. “There are many economic and strategic reasons why host broadcasting may make sense and it’s something that we have to look at.”
Economies of scale seem to make this the best fit for the biggest sporting bodies in Australia, but smaller players are ready and willing to have a crack too.
In 2016 the National Basketball League (NBL) started selling its matches through the streaming service ‘NBL TV’. It offers unlimited access to all live games and a cache of other older fixtures for just $5 a month in a bid to get greater exposure for the sport.
Yet, as if to prove how splintered the field is, Netball Australia has gone in the other direction. The peak body had covered the costs of television production of the defunct ANZ Championship through sponsorships; but, with a new competition for 2017 and soaring interest in the sport, it subsequently stitched up a five-year broadcast rights and revenue-sharing agreement with Nine Entertainment. The deal brings the sport to prime time free-to-air television and has ensured average player pay rises of almost 70%.
While they are small relative to overall broadcast deals, digital rights for streaming have been central to recent contracts in the space (Telstra for instance paid about $300 million in the recent AFL deal to broadcast matches over its Telstra TV service, and to handsets and digital devices). As the streaming technology improves, this part of the pie is expected to grow accordingly. But those predicting the death of sport on traditional TV may have to wait awhile yet.
“Commentators have been far too quick in talking down TV and talking up the swing to digital channels,” says Ben. “TV is still overwhelmingly the most effective medium for aggregating large audiences. Major live sport and the marquee reality shows dominate when it comes to attracting large viewing audiences.
Just look at the ratings of our day/night test match last year (3 million), our T20 internationals (regularly 1.6 million) and the recent AFL and NRL grand finals and the State of Origin series. Nowhere online will you see anything approaching these types of numbers.”
The current state of technology too plays its part, particularly for the main sports in Australia. While there’s the modified National Broadband Network still being rolled out, and increased internet speeds with it, Australia had dropped to sixtieth in the world for average peak connection speeds by the end of 2015, according to online content delivery specialist Akamai.
In theory, even the average (non-peak) connection speed of 7.8MB/s here should be enough to stream a live sport event in high definition; but the reality for a top-drawer event, such as rugby league’s State of Origin, would currently be rather different according to Colin Smith, Director at Global Sports, a specialist sponsorship and media rights company. “If you had three or four million people at the same time trying to stream then technically that would fall over,” he says.
Channel Seven trumpeted a free and subscription-based stream for the 2016 Rio Olympic Games but social media was bombarded with complaints about slow download speeds and technical errors. Still, Foad Fadaghi, Managing Director of technology research firm Telsyte, believes the day is not far away where a mass-streamed sporting event would work in Australia.
“Networks are definitely working towards being able to distribute mass content simultaneously,” he says. “We saw it with the Olympics — there was a large spike in data during, say, the Olympic 100m final. Telstra claimed the network was only at quarter capacity. Broadcasting on a mass scale is being looked at … we are close if not already there.”
Until recently the fundamental broadcast space for sports in Australia had been controlled by the more traditional stakeholders of free-to-air and pay television. Then Optus broke the nexus.
In a move that raised many an eyebrow, the telco slipped under the guard of Foxtel to snare Australian rights for the English Premier League (EPL) in a three-year deal worth an estimated $200 million. With a blind auction for the rights, Foxtel didn’t see what was coming and it was thought to have been outbid by more than $100 million.
While there’s been a mixed response to Optus’ EPL packages and service provision since it launched in August 2016 — complaints have centred on tying viewership in with either having Optus internet/mobile services, and there’s been some technical issues with the coverage — it is clearly just the first shot across the bow from the telco, and presumably other non-traditional sports-rights holders.
With the A-League requiring a new broadcast deal by mid 2017 (it’s expected to be finalised by early in the year), Optus may yet throw its hat in the ring to claim another piece of round-ball action. Then there’s reason to think other players such as Google, YouTube (which broadcast Indian cricket’s 2010 Premier League) and even Facebook or media streaming company Netflix might stump up for Australian sports in the future.
Australia’s anti-siphoning laws limit what both pay television networks and streaming services can own and show. Some of the tightest in the world, they include an extensive list of sporting events that must be offered for free in the first instance, such as the Olympics, AFL, rugby league and domestic cricket tests.
While the assumption is that ‘free’ means free-to-air television, Colin raises a fascinating and very modern conundrum: if an online service provider streamed a sporting event on the anti-siphoning list for free — assuming it could raise enough revenue from advertising and elsewhere — would that meet the requirements under the Broadcasting Services Act? “If I stream and it is free — is that actually regarded as a free service?” he asks. “One school of thought says it is. Another says, because you have to pay for the streaming service and they have limits on them, then that is not free.
It will be an interesting one going forward. I’d say the pollies are going to be in a muddle with that one, and at some stage someone will push it.”
With so much at stake it’s inevitable that there’ll be winners and losers. Consumers who had been shackled by the bundling of services from Foxtel discovered that the grass wasn’t necessarily greener after Optus roped in customers to enjoy the EPL via their internet and mobile packages. But recent history has also shown that digital disruptors (think Netflix) can provide different models at more competitive prices that will invariably keep the more established players honest.
Ultimately, lovers of the game should finish in front. “Sports fans will hopefully get more choices with what they want to watch, when they want to watch and where they want to watch it,” says Merryn Sherwood, lecturer in sports journalism at La Trobe University. “If the technology catches up there should be almost unlimited options as to the sport you can watch every day.”
As for the different sporting codes themselves, it could prove a bit of a mixed bag. “At the moment you have the dominance of the NRL, the AFL and cricket. The two losers at the moment are rugby and football (A-League),” says Colin, who adds that a good pay TV deal for Super Rugby in the UK was the one bright spot for a code that’s struggling with a muddled multi-nation competition, and for viewers in Australia. But Foad has a different take — that the real winners will ultimately sort themselves on the field of play.
“A lot of it has to do with the performance of the teams,” he says. “I don’t think a lot of it will come down to the delivery mechanism but more so the level of quality and the strength of the sportspeople who are competing on a global scale. That will generate the most amount of interest and viewership.”