Global Media & Sports News—continued

Network Ten's future rides heavily on the outcome of sports contracts

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.

top of page

Ten's trouble to affect BBL rights: expert

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."

top of page

How the ARLC could dismantle the NRL's planned $150m investment in digital technology

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".

top of page

Ten's A-League TV deal a mixed bag: expert

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'."

top of page

Consultant warns Super Rugby killing the code in Australia

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."

top of page

Rugby bosses need to stand up for Australia

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.

Chopping block

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.

'What's best for Australian rugby'

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.

top of page

ASC's Winning Edge needs more than just extra funding

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.’’

top of page

State of the game: The future of watching sport in Australia

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.

Owning the product

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%.

TV ain’t dead yet

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.”

New stakeholders, new ground

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.

I fought the law

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.”

No such thing as a free sport

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.”  

top of page

NBL, A-League Tassie's best sporting shots

A Tasmanian AFL team is next to no chance in the next decade and the A-League has a golden opportunity to establish itself in the state, Australia’s leading experts on sports expansion say.

The AFL would gain little commercially from a Tasman­ian club, but the A-League would create the first truly national football competition and a National Basketball League side would be most affordable, the experts agree.

The Sunday Tasmanian asked Professor Heath McDonald – who has worked with the GWS Giants, Gold Coast Suns and Big Bash League on their set-up – and TV rights guru Colin Smith – who has negotiated deals with the AFL, NRL and international clients – to assess which code was most likely to set up in Tasmania.

Their comments come as wealthy former directors of the A-League’s Melbourne Victory confidently mount a bid to enter a Tasmanian team in the competition as soon as next year.

“AFL is the least likely,” Swinburne University’s Prof McDonald said.

“They’re probably the league that gets the least uplift in viewing, and money, from putting a team down there.”

Mr Smith, who runs Global Sports and Media agrees, declaring only massive AFL or government investment would see the long-held dream of a Tasmanian team in the nation’s biggest league.

“Clearly Tasmania should have another professional team and the logical choice for that would be AFL,” he said.

“But that would require significant funding from the AFL, like the money they’re putting into GWS and the Gold Coast.

“What the Government is funding for Hawthorn and the Kangaroos would have to continue. I don’t think you’ll see an AFL team in the next 5-10 years.”

Multi-millionaire former Victory directors Harry Stamoulis and Robert Belteky are leading a consortium bidding for A-League entry after th­e competition signalled it could expand from 10 to 12 teams.

It looks likely to be up against bids from Canberra, Geelong, Melbourne, Brisbane, Sydney, North Queensland and Adelaide, and a desire for more teams in big TV markets.

Mr Belteky has declared his bid the strongest ever delivered to the A-League, and Prof McDonald said Tasmania would prove attractive.

“The A-League is far and away the greatest opportunity,” he said.

“It would give the league a novelty there – it would be the first truly national code across every state.”

Interstate clubs would need to battle congested markets, Prof McDonald said, while a Tasmanian soccer team would need only negotiate the four games played by the Hurricanes.

But any club setting up in Tasmania would need to heed the lessons of the BBL’s runaway success if it were to survive, he said.

“You can’t just plonk the traditional offering into a new market and expect that ­people are going to turn up,” he said.

“You’ve got to compete against all the other things that they’re currently doing with their time. It’s about being able to find what the thrill is of going and making sure the team really represents the state, and then just being patient with it.”

TV audiences are a major reason for expansion, Mr Smith said, and developments such as online streaming meant broadcasters needed sport more than ever.

“Soccer would probably have the immediate benefit (for broadcasters) but, longer term, basketball could be right up there,” he said.

“Basketball’s a lot cheaper – the roster is smaller, the costs are significantly lower than the A-League.”

Hobart Chargers president, and former premier, David Bartlett is aiming to have the club NBL-ready within three years.

NBL general manager Jeremy Loeliger said the competition would be willing to look at sustainable business ­proposals.

“If Illawarra and Cairns can make a go of it with their relatively small populations, then I don’t see any reason why Tasmania couldn’t do the same provided that they were sensible about the scale they were proposing,” he said.

Mr Loeliger said domestic expansion was likely to come after the league investigated the possibility of teams in China and the Philippines.

“You look at Tasmania and its relationship with China and I’d certainly think there would be a prospect there of a Chinese investor potentially investing in a team in ­Tasmania,” he said.

Premier and Sports Minister Will Hodgman said ­Tasmania’s proud sporting history proved the state could compete with the best.

“I am often in discussions with major sporting organisations to see how we might get a Tasmanian team into national competitions,” Mr Hodgman said.

“How on earth can these competitions claim to be ‘national’ without a Tasmanian team in them?”

AFL clubs Hawthorn and North Melbourne have deals to play at opposite ends of the state until 2021, and a spokesman for the league said there were no immediate plans for that to change.

“The AFL believes in, and supports a one-team model in Tasmania,” the spokesman said. “However, there are no current plans to relocate a Victorian-based team or to establish a 19th licence.”

Football Federation Australia said a number of inquiries had been received from consortiums interested in bidding for licences and expressions of interest would be called next year.

For under-15s state representative Toby Herweynen, a Tasmanian A-League team would give rising stars something to aim for.

“It’s my dream,” he said.

“I can be with my family, it's an easier opportunity to play on a bigger stage that we don’t have in Tasmania.”

top of page

Cricket Australia may take a financial hit from Test team's disastrous spell

Nobody likes a loser especially not Nine Entertainment Co chief executive Hugh Marks.

"No one wants to watch the Australian team losing," he told AFR Weekend bluntly. In all the opprobrium heaped on a humiliated Australian cricket team this past week, Marks comments are perhaps the most worrying for Cricket Australia.

The Australian cricket team's disastrous performance – it's on track to lose every match of a home series for the first time – couldn't have come at a worse time.

Cricket Australia is preparing to negotiate its next round of television broadcast rights and also sponsorship deals. Last month, Commonwealth Bank of Australia revealed it would give up its deal to sponsor the side and Test series worth about $12 million annually. Instead, it struck a deal to pay $5 million annually to support women's cricket and diversity programs.

Cricket Australia is said to be targeting $200 million annually for a television broadcast rights deal that would begin in 2018. Under the existing five-year rights agreement signed in 2013 Nine has paid $80 million annually to broadcast Tests and limited-over internationals.

Nine and rival Ten Network split the rights, with the latter paying $20 million each year for the Big Bash League. That figure now looks like the best $20 million Ten ever spent, with the Big Bash delivering a summer ratings bonanza for the broadcaster.

In this upcoming round of negotiations Nine, Ten, Seven West Media and pay-television network Fox Sports, are all expected to bid for cricket broadcast rights but possibly for the first time Big Bash could be more enticing than Test matches.

"There will be real competition for the Big Bash and we will see a real increase in rights, but Test cricket and international limited-overs will be more challenged," says Colin Smith, chief executive of Global Media & Sports, a sports rights advisory firm.

There are some forecasts that the broadcast rights to Big Bash could leap in annual value to $50 million to $70 million.

I don't like cricket oh no, I love it

Nine's Marks is not saying if he will consider dropping international Test cricket for the shorter forms of the game. "We need to look at the financial return on all the different forms of the game. Cricket is Nine, Nine is cricket. It would be a big decision for us to walk away from that summer of Australia.

"But all of those things we'll have to consider hard because it's a financial challenging environment and we need to be very disciplined about our decisions. I think we're paying more than a fair price for the rights we're getting, with all of those factors in play."

Nine is beset with its own problems of declining earnings and a soft advertising market. This past week its board faced down a shareholder backlash against executive pay at its annual meeting. In the year to June, Nine's net profit fell 7 per cent to $120.3 million.

And if that isn't concern enough for Nine there are questions being asked if television globally has reached peak sport? Marks will no doubt be aware of the worrying ratings trends in two of the most successful sports leagues in the world. In football's English Premier League – the season kicked off in August – audience numbers in Britain are down by nearly 20 per cent. In America's National Football League, viewership during the first two months of the season was down by 12 per cent, though it did bounce back after the US election.  

While it's yet to be shown how deep Marks might reach into Nine's wallet for the cricket rights, some industry observers are already trying to temper down Cricket Australia's expectations. They say the sporting organisation could clinch a deal for all forms, including digital rights, for $150 million.

It's the typical argy bargy that goes on around such deals, but Cricket Australia appears to be playing the weaker hand. 

Then there is the sponsorship of the Test team. 

Cricket Australia had hoped to exceed the sum Commonwealth Bank had been paying by unbundling rights across the various national teams and repackaging them to sell separately at a hopeful combined higher price. The problem cricket has for what will be still be an expensive product is sponsors may rather be involved in the Big Bash, a series currently sponsored by KFC.

This past week, Australian cricket captain Steve Smith led the Test side to its fifth consecutive defeat. The team lost by an innings and 80 runs to South Africa in Hobart in less than seven sessions.

Smith described it as a "bit of a low point for myself and for Australian cricket". The chairman of selectors Rod Marsh brought forward by seven months the end of his tenure, after the Hobart defeat. Cricket Australia chief executive James Sutherland issued several mea culpas while conceding Australia was lucky to be a top 10 team at the moment – even if there are only actually 10 Test-playing nations in the world.

The change in Cricket Australia's fortunes in the space of a few months is tough for a sporting organisation, which has transformed itself dramatically as a business over the past decade. It has established a successful new and innovative Twenty20 competition in the Big Bash, has a digital joint venture with Nine and has broadened its audience base with innovative deals with technology giants Facebook and Apple TV.

As well, cricket also boasts that it has become the No.1 sport in participation terms across the country, and has increased its appeal by starting a new competition for elite female cricketers.

"The big picture is that the last three months have been a very poor three months for Australian cricket," says Sutherland. "Three months ago, we were the No.1 Test team in the world and the No.1 one-day team in the world. That's the reality of the rankings and it is a very significant fall from grace and we will need to ask ourselves some questions as to why or how this has happened?"

For now though Sutherland and the team have some breathing space as Cricket Australia is, in sporting terms, extremely financially healthy with $198 million in cash and interest-bearing deposits and $72 million in equities.

Uppermost in his mind will be improving the Test team's performance. Cricket Australia's financial future depends on it.

top of page

Why Winning Edge will be an Olympic medals loser unless changes are made

Following the Australian team's disappointing performances at the London Olympics in 2012, the then Gillard Labor government announced sweeping changes to Australia's high-performance sports system in a 10-year program they called "Winning Edge".

Unfortunately in the execution of Winning Edge – which transferred the Australian Institute of Sport elite programs and staff to each of the sports – it has relegated the AIS to a shadow of its former self.

It now acts more as a centralised funding agency (and has only guaranteed sports 80 per cent of their current funding going forward) and a high-end destination in Canberra for school camps.

The key questions that must be asked are: has Winning Edge provided a return for the Australian taxpayer investment and, has it provided a platform for our elite athletes to achieve their goals?

I believe that Winning Edge has not delivered and if unreformed will not do so in the future.

The stark reality is that Australia won fewer medals at the Rio Olympics this year than in London, albeit the same number of gold medals were won.

All of the four-year Winning Edge objectives were not achieved. The overall disappointing results are across many of the key sports and all the team sports other than women's rugby sevens.

This is notwithstanding that many sports in their lead-up events to Rio indicated medal-winning performances.

The Rio results highlight a system failure in the execution of Winning Edge. Many sports were ill prepared to undertake their new role of operating a world-class, medal-winning high-performance program.

The losers from the poor implementation of Winning Edge have been the Australian taxpayer and the athletes who have devoted their lives to winning Olympic gold.

A critical question is why, and on what basis, did the AIS believe that its objectives in Winning Edge would be achieved when handing over execution to each sport?

In the 1990s and early 2000s the AIS was a world leader in high-performance sport.

Leading up to the Sydney Olympics the Howard government invested in the Olympic Athlete Program (OAP), a co-ordinated Australia-wide high-performance strategy that was world's best and was clearly successful.

While other countries such as Britain – from which many of the elements of Winning Edge have been copied – spend far more on elite sport than Australia, a funding shortfall is not the cause of our current malaise.

The AIS' handing over of the high-performance responsibility to under-prepared sports without effective support has exacerbated the problems.

Winning Edge investment has required the sports to reach annual medal objectives or risk a 20 per cent reduction in AIS funding. This has resulted in the sports being focused on the current elite team with the unintended consequences of a reduction in support for development of future teams.

The sports' focus is the short-term annual event cycles (world championships) to protect their Winning Edge funding. The focus should be on the build-up to the long-term penultimate events at the Olympic Games or Commonwealth Games. This is unlike the highly successful US and British high-performance programs which focus on long-term goals.

What should be noted is that the AIS still has leading high-performance specialists with substantial intellectual property that could benefit programs in each sport. The AIS needs to return to its successful roots and be a partner with sports, enabling more funding for world-class coaches, athletes and development.

So what could the present Australian government do to address the execution failures of the Gillard government's Winning Edge?

They are actually relatively simple, but if we want to perform at the level we used to, they need to happen now.

  1. Re-establish an overarching agreement (like OAP) across the AIS, Australian Olympic Committee, each sport, and state sports institutes to prioritise the critical actions and funding.
  2. The AIS to have an oversight board with leading world-class multimedal high-performance directors and coaches to oversee the AIS and the funding and oversight of AIS-funded sports.
  3. Fund each sport for a four-year cycle, irrespective of annual outcomes with performance measures that would include development targets.
  4. Fund only sports that have an AIS-approved structure that includes a high-performance board or commissions. Each sport's board must include directors who understand world-class sport.
  5. The AIS should approve and have veto rights of high-performance appointments for funded sports.
  6. The AIS with each sport undertakes a "warts and all" review of the high-performance programs that includes a four-year strategy to achieve a world-class structure and where the AIS can assist in strengthening the programs.
  7. The AIS should appoint a "high-performance flying squad" to support and turn around underperforming or inexperienced sports programs.
  8. The AIS should create an events group to work with sports and government event companies in targeting and bidding for world events.
  9. Work with the AIS sports managers and the sports to ensure there are development pathways for emerging athletes.
  10. The AIS world-class infrastructure in Canberra (and other AIS locations) be fully utilised either for sport programs or development pathways for emerging athletes.

To support and guide the sports, the AIS should strengthen and rebuild its leadership including in sports science and medicine, funded by the sports and state institutes, Sports Science and Sports Medicine.

Future funding of the sports by the AIS should enable Australia to win medals in 13-15 sports at the Olympics, and the AIS should partner with sports such as volleyball, basketball, hockey, water polo and rugby sevens to strengthen, nurture and, where required, fund their critical domestic leagues to provide competition and a development pathway.

In essence what needs to be fixed is the poor execution and implementation of Winning Edge by the AIS, enabling a return to a world-class system.

Contrast the underperformance of Winning Edge with the so called "fairytale" wins in the recent NRL and AFL grand finals.

Far from being a "fairytale" both successes were the culmination of two years of first-class high-performance systems where the winning teams' goals were to develop a winning culture in training and competing.

Far from being intimidated by their fans' lofty expectations or media pressure, the teams embraced the challenge and ultimately were successful.

It is a big lesson for the execution of Winning Edge.

top of page

Netball deal shows future of broadcasting, one that could freeze out pay TV

Overlooked in Netball Australia's boast that it has achieved "the biggest TV deal for women's sport in the world" is their pointer to a future where top games will be shown live anywhere, any time on any device.

Telstra TV has chosen netball to launch its long-awaited entry into sports broadcasting as a major player, alongside the TV networks.

Although a half owner of Foxtel which buys games from Fox Sports, Telstra has broken from its long-term sports broadcasting partner to link up with Channel Nine to show the new eight-team Netball Premier League.

This groundbreaking media partnership exclusively between Nine and Telstra marries for the first time FTA TV and digital across the internet only.

The Netball Australia contract with Nine and Telstra TV is, therefore, the first where both have joined forces, cutting out pay TV.

Nine has previously partnered with Fox Sports in NRL and AFL broadcasting deals, with Telstra offering services on mobile phones and tablets.

It follows on from Nine sidelining Fox Sports in its clandestine dealings with the NRL last year, angering Rupert Murdoch whose News Corporation owns 100 per cent of Fox Sports.

Telcos, such as Optus, have previously purchased sports broadcasting rights, such as the English Premier League, but have not produced games. Telstra will produce two games per week, shown live exclusively on Telstra TV in high definition. 

All NPL and games involving the national team, the Diamonds, will be broadcast live on the Telstra Netball Live APP on mobiles and Tablets (iPads).

Nine will also telecast two games each Saturday night live in the double-header format Fox Sports recently showed the Storm v Cowboys and Broncos v Sea Eagles games from Suncorp Stadium, Brisbane.

Coverage will also be provided through regional Australia via Nine's recently acquired affiliate, Southern Cross. These games will also be streamed through the internet on 9Now.

All Diamonds games, plus the new Fast5 format competition, similar to rugby league's Auckland Nines, will be broadcast live by Channel 9.

The AFL, which signed a six-year $2.5 billion deal last year with News Corporation, Channel Seven and Telstra to show its nine weekly games, has been building a strong media department ahead of the day the code proposes to produce and distribute games via the National Broadband Network.

Unlike the Fox Sports package, where subscribers must purchase all games, it is not fanciful to suggest a future where, say, a Collingwood family would buy only Magpie games. Overseas subscribers to the NFL's Digital Game Pass are able to choose packages that show only an individual team's matches, regular season games, playoff games or the complete season including the Super Bowl. 

Anti-siphoning regulations commit a major sport to show two to three games per week on free-to-air TV, meaning the AFL and NRL would be required to partner with a network, continuing the relationships which exist between AFL/Seven and NRL/Nine.

The NPL deal with Nine and Telstra is also revolutionary in that it is a revenue sharing arrangement that enables joint selling of sponsorship and joint selling of all advertising that also covers all TV production.

It could point to a future for the NRL which has never been as ambitious as the AFL in producing its own broadcasting content and whose attempts to sell sponsorships have been underwhelming.

The NPL broadcasting deal was seven months in the making and was masterminded by Global Media and Sports' Colin Smith, probably Australia's foremost sports rights consultant.

Smith brought his experience with past AFL and NRL deals to render the new netball league innovative and comprehensive, integrating a team from the Sunshine Coast, formerly the biggest region in Australia without a team in a national league in any sport.

Queensland Netball, who initially threatened court action at the possibility of competition to their Brisbane-based Firebirds team, now enthusiastically support the two team rivalry in their state.

With two teams each in Australia's biggest regions – Sydney, Melbourne and south-east Queensland – netball will capitalise on the cross-town rivalries which have been the cornerstone of the AFL's expansion.

It is hoped the rivalry between the Sydney Swifts, closely associated with the Swans, and the new netball team backed by the GWS Giants – formerly located at Blacktown – will be more meaningful than the manufactured "Battle of the Bridge" contests between Sydney's two AFL teams.

The NPL season starts in early February, prior to NRL and AFL kick-offs, and will be a 14-round competition.

Smith says, "As each new year begins the women will remind us they are leading the way in sports broadcasting, producing a game we can see anywhere, any time on any new device."

top of page

Optus EPL deal backlash warranted: Smith

Fans of the English Premier League in Australia have been dealt a sizeable blow by telecommunications provider Optus with their production of the coverage, says Colin Smith.

The managing director at Global Media and Sports, which specialises in sponsorship and media rights, completely understands the outrage from fans after learning what must be done to watch EPL next season.

“Absolutely (I can understand the anger), because it’s actually a bit tougher than you described,” said Smith on SEN radio.

“If you’re not an Optus customer you’ve got to move across, but even more so, if you’re an Optus pre-paid customer you’ve got to uplift to a plan as well.

“You can understand to a certain extent why Optus are trying to do this, because they’re trying to recover their $75 million, but for the fan of English Premier League it’s a big issue.

“The cost impost is quite significant only to watch English Premier League, but you’re going to have to get the app, you might also have subscription television – so the costs are just rising dramatically.”

To watch the complete EPL coverage a fan must be on an Optus plan of more than $85 per month to access the coverage and will have to pay extra wholesale charges if they are not in designated Optus broadband areas.

One live game will be shown on free-to-air channel SBS every week with every team shown at least once over the course of the season.

“There is an issue here, I’ll emphasise I’m not a lawyer, on ‘full line forcing’ because what it’s actually doing – you could suggest it’s forcing a person who is acquiring English Premier League to either leave their current competitor or have additional costs over and above what they’ve got with a competitor,” explained Smith.

“The question is, does this substantially lessen competition? Now, you could argue it does because it’s forcing you to change telephone providers or having dual telephone providers.

“Now you could argue someone has done the analysis on this to say, ‘well we’ll pinch a lot of Telstra customers’ but I’m not certain that’s the case.”

top of page

Viewers may switch off Parramtta Eels matches if NRL hand down severe points penalty

Television ratings will nosedive if Parramatta is penalised out of finals contention, according to the man who consulted to the NRL on its television deals.

For the first time in two seasons, the number of people watching rugby league on the box is on the increase, a result of both Fox Sports and the Nine Network providing separate commentary on many matches.

However, the spectre of Parramatta being docked premiership points for alleged salary cap breaches is a concern for the host broadcasters.

The Eels, particularly when they are doing well, are a ratings winner and Brad Arthur's team have shown enough in the opening third of the season to suggest they are a genuine chance of breaking a 30-year premiership drought.

However, there are fears it could all be for nothing as the governing body prepares to hand down its findings into the embattled club next week.

Global Media and Sports boss Colin Smith, who has previously advised the NRL, ARU and AFL during rights negotiations, believes some footy fans will turn off their TVs if the Eels are no chance of making the finals.

"If they are docked [points] to the point they can't compete in the premiership, that will certainly take away the interest," Smith said.

"If a team is less competitive, and we saw that to an extent with Essendon in the AFL, the degree of watchability becomes less.

"People don't recognise how important Parramatta is – and Penrith isn't that far behind either – in terms of how the Sydney sports fan works.

"Loyalty will remain in western Sydney because of the tribalism of the region. Their fans will continue to watch. The issue will be the effect on broader Sydney and the broader rugby league market.

"Let's cut to the chase on this, you don't want this to be there. It will affect the person who only has a passing interest, no question."

Parramatta games, particularly blockbuster matches like Friday night's clash with Canterbury at ANZ Stadium, often attract more than one million viewers.

Smith believes those numbers will be on the wane if the Eels – the only side not to have played finals footy since 2009 – are no chance of progressing beyond the regular season.

However, Chris Walton, managing director of Nunn Media, believes the overall NRL ratings impact won't be greatly affected.

"With that many teams and that many games, from a helicopter point of view, I don't think the issues at one club will impact too much on things.

"The impact on fans will be dictated by whose fault they think it is. If they think it's a struggling club doing its best against a difficult league [little will change]. If they think 'just when we thought they got things right, management have gone and cocked it up', that could be different.

"If there is an impact it could be on Parramatta fans going to live games rather than Parramatta fans [switching off] the tele."

The final six rounds of the premiership are yet to be set in stone, with the broadcasters able to horse-trade games depending on their level of viewability. Walton believes Eels fixtures could be shifted to inferior spots if they are prematurely ruled out of the running.

"Later in a season they may get their games moved to other times, so they may not be the Thursday night game or the key game on a Saturday," he said.

"Those tactics may be employed."

top of page

NRL and clubs thrash out how to divvy TV rights spoils in marathon meeting

The NRL and the 16 clubs have taken a step closer towards agreeing how to divvy up the spoils from the record broadcast agreement after a marathon meeting at Rugby League Central on Wednesday.

The meeting between ARLC chairman John Grant and the clubs was viewed as one of the most important since the inception of the Commission, with the franchises believing they were entitled to increased payments from head office. Funding was one of the main issues on the agenda for clubs, most of whom are in the red.

NRL CEO Dave Smith was a casualty of the administration's initial broadcast agreement with the Nine network after Fox Sports was frozen out of negotiations. Grant, too, was in the firing line but his ability to bring the pay-TV provider back to the table and help secure a new deal has eased some of the pressure. It's expected that once international and naming rights are sold, the total broadcast deal could break the $2 billion mark.

Headlining the clubs' list of demands were calls for the annual grants to be lifted to a figure 30 per cent above the salary cap payments to players. That and other issues were thrashed out until late on Wednesday night.

"The club view is that today was positive and we all made meaningful progress on a whole-of-game funding model," said Melbourne Storm chairman Bart Campbell,  the spokesperson for the 16 clubs.

While there have been suggestions of a Super League-style breakaway competition, the ARLC's ability to negotiate a broadcast deal — described by media expert Colin Smith as being comparable to the one secured by AFL — has eased some of the pressure on the governing body and Grant.

top of page

NRL TV deal 'comparable' to AFL one: expert analyst

The man who masterminded the NRL's last broadcast deal has labelled the latest, soon-to-be-minted one a "great outcome" for rugby league and comparable to the one negotiated by the AFL.

The governing body was putting the final touches on Thursday night on a new deal worth an estimated $1.9 billion, a figure expected to crack the $2 billion mark once naming and international rights are sold.

The landmark agreement was made possible after Fox Sports came back to the negotiating table, triggered by the demise of former NRL chief executive Dave Smith and rival Optus' successful bid for English Premier League rights. All eight games will be shown in high definition on Fox Sports each round as part of a simulcast arrangement that resulted in Nine giving up the Saturday evening slot it had initially purchased.

Global Media and Sports boss Colin Smith, who worked for the NRL on the last TV deal and has also advised the AFL and ARU in previous negotiations, said the renegotiated contract was "comparable" to that brokered by Australian Rules. "Fox Sports needs the NRL and the NRL needs Fox Sports. The next round of rights, whenever that is, less so," Smith said.

"It's a great outcome for the NRL. My worry was, if the deal had stayed as is, the deal would have been $500 to $600 million behind the AFL, which is not good. If it had gone to some sort of streaming service the less popular clubs — the Storm, Raiders, Knights and Warriors — would have been on a less popular platform. So it's great for the NRL. The brilliant deal that comes out is Channel Nine, they bought themselves an option and got a Christmas present when Optus did the deal with the English Premier League. They now have the coverage they want and not paid much for it.

"What they have on-sold that to Fox Sports is a great deal for Channel Nine. As I understand it Telstra have the coverage they now need and it still keeps Fox Sports as the preeminent subscription broadcaster of the AFL and NRL.

"The term of the deal is great. Everyone's a winner other … [except fans without Foxtel]."

Smith believes the NRL's deal could have trumpeted that of rival code Australian Rules if expansion was undertaken. "They could have got more if they put another team into south-east Queensland or Brisbane," he said. "I know all broadcasters want it.

"You could argue the EPL was the catalyst that made this happen. If it stayed with Channel Nine as is, the rest of the product wasn't great."

The emergence of what Smith called 'disrupters' — including the likes of Google, Facebook and Netflix — were brought to the negotiating table for the first time. However, it's more likely they will become serious contenders for premium sporting content when the next set of rights are renegotiated.

NRL heavy hitters including chairman John Grant and commissioners Jeremy Suttcliffe and Graeme Samuel emerged from a second day of marathon meetings at Rugby League Central at 5pm on Thursday. While there was no official announcement, the deal is all but complete and the NRL is expected to formally sign off on Friday.

Smith described his namesake, the former NRL boss, as a "scapegoat" after Foxtel was initially left out of the loop in the Nine deal. "The commission signed off on it," he said.

top of page

A-League value to jump if Optus enters the fray

The value of the next A-League broadcast deal in the wake of Optus snaring the coveted Premier League rights could be enhanced rather than diminished, especially if the telecommunications company decides to add the local game to its war chest.

It's been mooted that the uncoupling of Fox Sports' A-League/Premier League package would tarnish the domestic competition's lustre amidst negotiations over what the FFA anticipates will be a far richer broadcast deal from 2017.

But Colin J Smith, the principal of communications group Global Media and Sports, believes Optus's $50 million dollar raid on the Premier League from under the noses of Fox Sports has created a new "competitive tension" which may soothe concerns the A-League could tailspin in value.

"For the A-League, the positives outweigh the negatives," he said. "There's no longer the exclusivity there was in Fox Sports having both the Premier and A-Leagues but that isn't necessarily a bad thing.

"Whereas before there was maybe only one bidder for the A-League - that being Fox Sports - with maybe a free-to-air game on Channel 7, 9 or 10, now you could have the entry of another player."

But even if Optus isn't temped to double up and A-League remains the primary domain of Fox Sports, the network could well beef up thier interest in the local game.

"You could mount the argument that too differentiates the network in terms of content and that could force whoever is the successful bidder to take a more direct role to making the league a success, as imposed to saying 'well we have all football and the A-League is just a part of that".

In a major shake-up of the media rights landscape, Fox Sports has taken a beating from subscribers over being blindsided by Optus.

"There's been a hugely negative reaction from public to Optus seizing the rights to the Premier League from next season ... in essence that means that established viewers will need a Foxtel box, a Netflix box for their movies, and now also Optus or Fetch TV (live streaming0 box to be fully covered," Smith said.

Optus, though, is to reveal how the game's will delivered into households, and whether they also undertake the costly move of also producing the content complete with commentators and promotional shows. It is likely to also screen matches through mobile phones and tablets.

Another option, said Smith, is for Optus to on-sell the rights to an existing pay-TV provider or through a free-to-air channel.

"Paying double what Fox Sports had previously paid is a milestone in itself and the question is if they were to on-sell matches, at what price?

"From Optus's standpoint, they don't yet have enough content and will want to acquire more, whether that's the A-League or the four NRL games that are up for grabs, though that's a long shot because it could cost the best part of a billion dollars."

top of page

NRL TV deal worth $1.9 billion if Nine sell out to Fox Sports

Should Channel Nine surrender the right to broadcast Saturday night matches, in exchange for a payment of $40m per year from Fox Sports, a $1.9 billion NRL TV deal from 2018 to 2022 is likely.

Fox Sports Super Saturday coverage is critical to the News Corporation owned network, allowing it to sell the same number of games to subscribers as it does under the existing deal, which still has two years to run.

The $925 million five-year deal Nine negotiated with the NRL in August meant four games per week would be seen on free-to-air TV, a potential tipping point for subscribers to consider a sporting life without Foxtel.

Furthermore, the Nine deal left unsold the other four games in the NRL eight games per week schedule.

The price the NRL will expect for the key 7.30pm Saturday time slot, should it be sold to Fox Sports and therefore no longer be available to every household in Australia, is critical to the final overarching deal.

Nine, keen to reduce costs, will demand $40 million per year, reducing by $200 million, the $925 million deal negotiated with outgoing NRL chief executive Dave Smith.

Fox Sports has offered $130 million a year for the other four games.

The NRL has indicated this is too low and presumably rejects the notion it is selling "bottom four" games.

It now controls all scheduling and won't necessarily devalue pay TV games by always programming the best ones for free-to-air slots.

Nine's costs could be further reduced by $100 million over five years if Fox Sports agree to simulcast Nine's Thursday night, Friday night and Sunday afternoon games.

This would mean Nine paying a total of $625 million, a still significant 39 per cent increase on the $450 million it paid for the same number of games in the current contract.

However, as leading sports media rights advisor Colin Smith points out, the NRL has surrendered competitive tension to Nine, allowing it to sell a game to a rival broadcaster and therefore becoming the effective holder of first and last rights.

This is an ironic twist considering rugby league's last TV deal was a desperate battle by ARL commissioners to successfully extricate themselves from News Corporation's first and last rights, which extended to 2027, a win that contributed to News Ltd boss Kim Williams losing his job.

NRL club warlords, such as the Roosters' Nick Politis and the Bulldogs' Ray Dibb, will be watching with Machievellian manouevering recent revelations in Rupert Murdoch's newspapers of a possible $1.8 billion deal from 2018-22.

Assuming Nine pays $625 million; Fox Sports outlays $200 million for the critical Saturday night match, $100 million for simulcast and $650 million for the remaining four games, the Australian TV total is $1.575 billion.

Telstra paid $100 million for digital rights last time and Optus' recent purchase of the EPL rights, will probably force the Australian owned telco to double its offering to $200 million.

Sky New Zealand can be expected to pay between $80 million and $100 million over the five years.

Nine, Fox Sports, Telstra and New Zealand payments add up to $1.875 billion, just over the projected $1.8 billion.

While the club warlords may declare this "get out of jail" money, it won't stop their politicking for a greater role on the make up of the ARL Commission.

The only meaningful comparison they will make is to compare the final NRL TV deal to the $2.55 billion over six years contract awarded the AFL by News Corporation, Channel Seven and Telstra.

This is equivalent to a five year term of $2.13 billion, or a 70 per cent increase on their current $1.250 billion deal which still has one year left.

It is not realistic for the NRL rebels to demand the same money as AFL, considering it has an additional game to sell (nine compared to eight) and its two-hour format over four quarters allows for more commercial breaks.

However, Politis and his cohorts will expect a 70 per cent increase on the NRL's current $1.125 billion, considering the last increase was 80 per cent and the code dominated top five Australian ratings in 2015.

That's a figure of $1.9 billion and there is no need for a rush to achieve it, considering there are two years left to negotiate in a world of rapidly changing technology, while the AFL has locked itself out of it for seven years.

Should Nine sell Saturday night to Fox Sports, it will end the dream of Nine's chief executive, David Gyngell, whose ultimate ambition is a four-quarter game of rugby league on primetime nights, going up against AFL.

Unless, of course, Gyngell returns as an ARL commissioner.

top of page

Fox Sports tipped to pay more in NRL deal after Optus returns to pay-TV market

Optus has emerged as a genuine bidder for the NRL's digital rights after paying $50 million to snatch English Premier League from Fox Sports in a move that is also expected to drive up the price of the next pay-tv deal between the NRL and News Corp.

Most in the industry were taken by surprise after Optus announced it was returning to the pay-tv market 20 years after playing in a key role in the Super League war by securing the broadcast and digital rights for the EPL for three years from the 2016-17 season, starting next August. 

However, Fairfax Media was told Optus had contacted departing NRL chief executive Dave Smith soon after negotiations were opened earlier this year for the broadcast rights and the manner in which the telco succeeded in gaining the EPL rights supports claims Fox Sports had been complacent and was caught by the speed in which Channel Nine tabled an offer too good to refuse for four games per week on free-to-air television.

It is unclear whether Optus had indicated to Smith it would bid for the subscription television rights or simply the digital rights, which are held by Telstra, but the production costs associated with broadcasting NRL matches would probably be prohibitive in the term of the next rights deal.

After missing out on the Big Bash League to Channel Ten and losing the EPL to Optus, Fox Sports cannot afford to also be without NRL as subscriber numbers would plummet in what is already a tough market following the emergence of streaming companies such as Netflix, Stan and Presto. 

"This will shake up Fox Sports and if I was at the NRL I would be cheering because the EPL is a big property to lose so it will put a lot of the tension back into making sure they secure the NRL rights," one analyst with an understanding of the negotiations said.

The Optus deal is also potentially good for the FFA, as Fox Sports will be keen to retain the A-League rights while Optus and beIN Sports, which broadcasts the Champions League, will want to add to their soccer portfolios.

However, Global Sports and Media chief executive Colin Smith said it was unlikely either would commit the resources needed to broadcast Australian sport. "Optus is now clearly back in the market place which is good for Australian sport and good for the NRL but whether that mean they will be a $1 billion bidder is an interesting question," Smith said. "By buying the EPL rights, Optus hasn't had to pay for production because they are buying content that all they need to do is broadcast whereas anything played in Australia has a massive cost.

"Nobody other than the free-to-air broadcasters, plus Fox Sports/ Foxtel/ Telstra, have indicated that they want to invest in production but I think you will see more deals like this one where they are broadcasting content that has already been produced."

However, Optus last month secured a multi-million dollar sponsorship deal to be Cricket Australia's mobile streaming partner and it is believed the company has also expressed interest in the NRL's digital rights.

Optus previously held the pay-TV rights to rugby league during the Super League war, which started in 1995 after Kerry Packer teamed up with the telco against Foxtel partners, Telstra and News, who responded by starting a rebel competition to provide content for their network.

top of page

Dave Smith 'sidelined' financial expert in TV rights talks

Outgoing NRL chief executive Dave Smith is believed to have sidelined a financial expert — who helped deliver a record $590 million broadcast deal for Cricket Australia — in the early stages of the broadcast rights talks with the Nine Network and Fox Sports.

The Australian was told yesterday that John Knox, the chief executive of leading financial services company Credit Suisse, had been recruited to advise Smith and NRL head of strategy Andrew Fraser on the negotiations before the pair elected to go it alone.

Cricket Australia had been tipped to get upwards of $400m when it was locked in talks over the next rights deal but the recruitment of Credit Suisse helped deliver a $590m windfall from free-to-air networks Nine and Ten in 2013 — a 118 per cent increase on the previous contract.

Smith announced his sudden resignation from the game on Tuesday after only three years in the top job. His handling of talks with the broadcast rights partners has been identified by critics as the major reason for his early exit.

Smith negotiated separately a record $925m deal with Nine, giving the free-to-air broadcaster four live games a week from Thursday to Sunday. Fox Sports was frozen out of the talks and was furious at losing its best two timeslots — Saturday and Monday nights.

The departing NRL boss’s heavy-handed approach has now put in jeopardy the expectations that the code might be able to net a record $1.7 billion for its next rights deal, which is scheduled to kick in after 2017, with Fox Sports wanting its Saturday night timeslot back.

Colin Smith, managing director of Global Media and Sports which assisted the NRL with the last rights deal, yesterday said the decision to release Dave Smith could be the catalyst the game needed to get the negotiations with Fox Sports back on track.

Dave Smith had already been taken out of the equation before he announced his resignation, with ARLC chairman John Grant and commissioner Graeme Samuel now conducting talks, but Colin Smith warned the pair might have to go back to the drawing board.

“The first thing they need to do is start rebuilding relationships and then start the process,” Colin Smith said. “I think a deal will be done with pay television, and I think a deal will be done with digital, but the question is at what price? They need about $1.1 billion (on top of the Nine deal) to be similar to the previous deal. Anything less than that, the code’s the loser.”

Grant went on Sydney radio station 2KY yesterday but failed to answer a question that Smith had to be moved on for talks to resume with Fox Sports.

“We’ve got the deal with Fox, we’ve also got international, radio and New Zealand rights to do as well and we’ve got two years to do that,’’ Grant said.

“These are pretty strategic discussions and the way the pay television landscape is playing out, particularly if you look at the overseas trends, there’s a lot of moving parts.”

Grant also confirmed the next chief executive would have a better knowledge of the game.

“I think you’re right in saying Dave’s appointment was a surprise to people,’’ Grant said. “Dave’s actually a businessman and has run multiple businesses around the world so he came with a huge wealth of experience as being a CEO, which on its own is quite a considerable skill.

“The next stage we’ll move the needle much more back towards making football the centre of the sorts of decisions that we make.”

top of page

NRL TV rights deal to fall $600m short of AFL according to experts

Rugby league has blown a hole in its ability to compete with AFL by as much as $600 million with its broadcast negotiating tactics, one of Australia’s best connected analysts of sports media rights believes.

Colin Smith, of Global Media and Sports, said the NRL would find it hard to do any more than gain the current amount of pay television revenue without renegotiating the $925 million deal struck with Channel 9 in August.

Smith forecasts the total NRL broadcast and digital rights being sold for between $1.4 billion and $1.6 billion for 2018-22.

He said giving Fox Sports an additional match from increasing the premiership to 18 clubs would assist the NRL in achieving the upper end of that range.

The AFL signed a $2.058 billion media deal with the Seven Network, News Corp, Foxtel and Telstra.

Smith told The Courier-Mail on August 28 that two new teams in Queensland would inject additional value to the remaining weekly NRL matches not already covered in the NRL’s free-to-air deal with Channel 9.

Smith said ARLC chairman John Grant, who will assume many of departing CEO Dave Smith’s duties after he cleans out his desk on November 30, had questions to answer about the properties sold off to Nine which were sold to Fox Sports and Telstra in the current deals.

Smith said he doubted a serious “wildcard’’ rival bidder to Fox Sports for pay television rights would emerge at the tender stage.

"The sport doesn’t deserve this,’’ said Smith, who has consulted on both NRL and AFL broadcast rights strategy.

"The NRL grand final outrated the AFL grand final nationally and rugby league has State of Origin and 11 million viewers for three games — the AFL doesn’t.

"Unless this can go back to the drawing board, you are talking about $1.4 billion to $1.6 billion and the gap between that and the AFL got is huge — and it’s of their own making."

Nine signed up for four games from 2018, up from two, and pay television has lost Super Saturday, with as many as three games, and Monday night football.

"For Telstra, Nine is able to put their games on (catchup service) JumpIn. The exclusivity which was built around the last deal is gone," Smith said.

"While Dave Smith clearly drove this and is the fall guy but the question has to be asked, ‘John Grant, you were there for the last deal. Graeme Samuel, you were there at the last deal and you are a commissioner now. How did you approve this?’."

Colin Smith said Fox Sports and Foxtel want NRL programming, but the matches left for sale will be "worth less than they are currently paying".

Nine has been willing to onsell the Saturday night timeslot, one of its four NRL games a week from 2018, to another broadcaster which could be one way for the NRL to stitch together a deal with Fox Sports.

"It certainly would, but the problem would be Nine’s reduction (in fee)," Smith said.

"We are pretty clear that if it’s all simulcast (on Fox Sports, the difference) is $150 million — what Nine pays would go from $925 million to $775 million.

Smith said the additional teams in Queensland would not be the financial "black holes" which the AFL have had with expansion teams GWS Giants and Gold Coast.

"The clubs are worried about money, but the NRL would be able to fund all the clubs with more money from the extra teams and games," he said.

top of page

Dave Smith was the scalp Rupert Murdoch wanted

In the end, rugby league did to Dave Smith what the British Army and international banking could not: exhaust his will with its brutality and force his resignation as chief executive of the NRL.

The game does that to you. It is relentless, ruthless and remorseless. After three years in the job Smith simply could not do another 12 months.

Smith's critics, particularly those at News Corporation, will boast that Rupert Murdoch got his scalp, only two months after Smith had negotiated a $925m free-to-air TV deal with Channel Nine, cutting Fox Sports out of Saturday and Monday nights NRL programming.

Murdoch did seek a head on a plate. He could not sack one of his own because that would be conceding Fox Sports had not kept its eye on the secret negotiations over TV rights taking place with Nine at a Sydney eastern suburbs hotel.

Rupert's response was to pay at least $300m more for AFL rights, believing the NRL could never get close to the $2.5b over six year deal he secured for his latest sporting love.

The fury of News' top executives was compounded when Smith and ARL Commission chair John Grant accepted a prior invitation to attend a lunch at Catalinas restaurant, hosted by Murdoch.

Rupert's lieutenants suggested Smith and Grant be seated "near the shit house", appalled that Smith would inform Fox of the Nine deal only hours before the Stock Exchange was notified.

But Smith was merely acting on the commands of key commissioners to separate the free-to-air and pay TV deals, rather than continue the Nine/Fox Sports alliance.

OK, anyone who had lived through the Super League war, which Smith had not, knows you don't piss off a man who, as former News boss John Hartigan once said, buys ink by the thousand litre barrel.

Nor did Smith have to execute the Nine deal more than two years ahead of the current contract expiring.

But he has allowed ample time for the Fox Sports and NRL executives to return to the negotiating table.

It just won't be with him. His resignation acts as what media rights consultant, Colin Smith, calls "a circuit breaker" for the stalled negotiations on the four NRL games per week yet to be sold to either pay TV or the big internet providers, such as Netflix.

The NRL club bosses circling the administration will want at least another billion dollars and Dave Smith is confident this is achievable.

He told a friend recently that the total package will be commensurate with the AFL's, even allowing for Rupert paying overs in "jilted love affair money."

So what is Smith's legacy? Significant growth in the value of broadcast rights. Billions secured in investment for Rugby League stadiums. Record club membership. New football pathways for recreational, female and elite players along with partnership with Touch football. Massive growth in digital profile and reach. Higher funding for clubs, states and grassroots than ever before. Improved response to poor player behaviour. Safer sport (shoulder charge, spear tackle, no punching.). Four clubs saved from administration and restructured.

His handling of the Cronulla supplements saga was also far superior to the AFL's approach to Essendon, with 34 AFL players yet to have their futures determined.

When Smith debated AFL chief executive Gillon McLachlan at a business breakfast in Melbourne in March, it was clear to neutral observers that the NRL guy won.

He was assured, confident, measured, yet passionate about a game he was yet to learn never loves you back with same ardour you give it.

Smith can't be accorded the code's highest honour, which is a survivor, in the sense that Wayne Bennett, Phil Gould and Roosters boss Nick Politis are survivors.

Sure, there are others at the coal face who have made rugby league their life-long career but these "have clip board, will travel" assistant coaches are spared the inexorable and incessant spotlight of the critics.

Nor are they exposed to the merciless carping on the fan's new platform, social media.

Smith appeared impervious to criticism, telling colleagues under siege "don't let them get you down" but the workload took its leaden toll.

Those who recall he did not know the name of the Australian captain when he took the job should remember it was players like Cameron Smith he cared for when he upset Fox Sports by taking the unpopular Monday night games out of the next TV rights deal.

He may have gone to the Rugby World Cup to watch Wales play but when he vacates his office at NRL Central, it will be as a leaguie.

top of page

Why a second Brisbane team could be the key to the NRL's pay TV negotiations

A second Brisbane team could add up to $200 million to the value of the overall broadcast rights and enable the NRL to do a deal with Fox Sports that rivals the AFL's.

That is the view of those involved in negotiating sports rights, broadcasting and consortiums preparing to enter a team in the NRL if the competition is expanded beyond 16 teams in coming years.

While there are fears that the NRL will not be able to get another $1.1 billion for the pay TV, digital and overseas rights to match the AFL's $416 million per year deal after selling four matches per week to Nine for $925 million over five years, there is speculation that News Corp wants an extra game to maintain the five matches Fox Sports currently broadcasts each round.

In order to provide nine games per week, the NRL would need to expand the competition to 18 teams by 2018 with the introduction of a second Brisbane team and another team, likely to be based in either New Zealand or Perth.

NRL chief executive Dave Smith strongly indicated to Fairfax Media during an interview last week that no new teams were likely to be added until the existing 16 clubs were financially strong but others believe the creation of an extra game each week would significantly increase the value of the broadcast rights.

"The NRL has got to get from Telstra and News Corp $1.1 billion or more and on what is available to offer them that is going to be tough," said Global Media and Sports chief executive Colin Smith, who was involved in negotiating the NRL's current broadcast deal.

"The grand final between the Broncos and the Cowboys reinforced how popular rugby league is and when you add State of Origin it is clearly a premium sport up there with AFL but what the NRL has done is sell all of the main content before they have got competitive rivalries to work across all of the [broadcasting] platforms.

"I would be.absolutely certain that News and the NRL will come to an arrangement. The question, though, is at what price? Whilst I am certain a deal will be done it is worth a lot less to Fox Sports than it was before because they have lost Super Saturday and they have lost Monday Night Football.

"The NRL has to think differently and if you think about State of Origin, if you think about television audiences, the solution to me is to have another team in Brisbane.

"If you had a second Brisbane team it means that you have got a live game in Brisbane every week and with the focus of the AFL now on the northern states I think it is even more important that the NRL address this for the future success of the game."

The grand final was the third-most-watched television program of the year behind Origin II and Origin I, with an average national audience of 3.667 million viewers, including 952,000 in Sydney, 788,000 in Brisbane, 433,000 in Melbourne, 152,000 in Perth and 1.230 million in regional NSW and Queensland.

An additional 141,000 viewers tuned in from 9.30pm in New Zealand, where the rights are valued by the NRL at about $30 million per year but could be worth more if there was a second team based in Wellington.

Other bid teams include Brisbane Bombers, Western Corridor (Ipswich), Central Queensland, Brothers Leprechauns, West Coast Pirates and PNG Hunters.

Nine boss David Gyngell has publicly supported a second Brisbane team and a provision was included in the new free-to-air broadcast deal enabling that to occur between 2018 and 2022.

Bombers bid team chairman Craig Davidson believes a second Brisbane team to rival the Broncos would add $200 million to the value of the broadcast rights - a figure that easily exceeds the estimated $10 million-$12 million in grants the new club would receive each year from the NRL.

"David Gyngell has confirmed not in dollar figures but certainly that he sees a lot of value in a second Brisbane team and I have got absolute confidence in the NRL that they will make a decision based on commercial common sense," Davidson said.

"They won't be scared to put a second team in Brisbane and we have got our business plan done and our model done to the point that if they come out with a tender we will be ready to put up a team."

Fairfax Media has been told that the NRL would be likely to consider expansion if the value of increased broadcast rights significantly outweighed the cost of extra teams.

With NRL head of strategy Shane Richardson having finalised a 106-page report on his  "Whole of Game Review", there will be much interest in the outcome of his presentation to the ARL Commission later this month.

Despite speculation that News Corp has not had any formal discussions with the NRL about the pay TV rights since the deal with Nine, Fairfax Media this week reported that Smith and outgoing News chief Julian Clarke have continued to engage about the rights package directly.

top of page

Golden point has become too valuable to get rid of

The media adviser who worked with the NRL on the previous broadcast rights deal believes that golden point has become too valuable a commodity for the code to consider getting rid of it.

Global Media and Sports managing director, Colin Smith, joined the debate yesterday over the merits of golden point, which was sparked by Brisbane coach Wayne Bennett after the Broncos lost the grand final to North Queensland in the first minute of extra time. It was 16-all after 80 minutes.

Bennett has never been a fan of the concept since it was introduced in 2003 and said it wasn’t the right way to determine a club’s season. He would have preferred to replay the game the following week.

Smith could not put a dollar figure on what golden point was worth to the code but said the excitement at the end of Sunday night’s decider would have been responsible for the gulf in television ratings between the NRL and AFL.

The NRL grand final was the second most watched program all season with a peak audience of 4.48 million for the Nine Network, while the AFL’s decider between Hawthorn and West Coast peaked nationally at 3.99 million for Seven.

“It’s a huge fillip because all of a sudden it’s must-watch television,’’ Smith said.

“It becomes absolutely critical and it not only increases the spike but it also increases the average.

“Quantifying that is more problematic but you would argue that the (number) they were in front of the AFL ... a key driver of that would have been golden point. It’s fantastic for television. It enthrals the fan. I was glued to it. You had to watch it.”

Bennett was invited to raise his objections to golden point at the next meeting of the competition committee, which determines the rules of the game, but the NRL has said it has no plans to change the current system.

Smith said he would resist any urge to tinker with the concept. Bennett suggested the return of grand final replays, while other proposals have included having extra time followed by golden point, or making it golden try.

He added that while the code could generate additional revenue from staging another grand final in terms of ticket sales, there would be no additional income from Nine, with the broadcast deal locked in for two more years.

It is understood the NRL would oppose the idea of a grand final rematch on the sole basis that thousands of interstate fans had already spent hundreds of dollars to visit Sydney expecting an outcome on Sunday night.

“I think it’s fantastic and differentiates the NRL from the other southern code,’’ Smith said.

“It’s highly valuable because it’s a key differentiator and the fans know there’s going to be a result coming out of it.

“In terms of the Australian sporting calendar, it is totally unique and it gives that special sense there is going to be an outcome, and whoever does it first has got it.”

The Cowboys continued to celebrate the club’s first premiership in Townsville yesterday amid speculation chairman Laurence Lancini could pay for the players to enjoy a whirlwind trip to Las Vegas as a reward.

top of page

TV rights: Two more Queensland teams can help NRL generate more income

One of Australia's best connected analysts of sports media rights says the NRL should consider adding two teams from Queensland to make an 18-club competition which maximises income from broadcasters.

Media analyst Colin Smith said a second team based in Brisbane and a regional Queensland club would unlock additional value on the remaining matches not covered in the NRL's four-game, free-to-air deal with Channel 9.

Smith, who has worked with rugby league, the AFL, rugby union and football on past broadcast deals, suggested a second Brisbane team at the start of the 2018-22 rights period in response to the AFL's $2.058 billion media deal announced last week.

Smith believes the NRL can only close in on a $1.7 billion deal now if it can offer News Corp, Telstra or other media companies extra content in the form of a ninth game per round.

"Rugby league has to grab its opportunity and strengthen in position in one of its key markets,'' said Smith, of Global Media and Sports.

"Rugby league does capture the regional Queensland audience, very significantly, and what you want to do is to reinforce that as you have this wall of cash coming in to be invested (by the AFL).

"I could envisage two new teams coming out of Queensland if they want to strengthen their position in Queensland and increase their rights value.

"Where the team other than one from Brisbane comes from is more an open question.

''It could be another team in Queensland, or the Central Coast or (Wellington in) New Zealand.''

Nine boss David Gyngell's enthusiasm for a second Brisbane team, to give his network a fourth Queensland club for its Queensland market, is long established.

The Western Corridor bid team intends to play at Suncorp Stadium for at least five years and the Brisbane Bombers would offer a private ownership alternative for Brisbane should the NRL want to go down that ownership path.

The Western Corridor, which aims to serve a band between Toowoomba and Logan, Central Queensland and Brothers are three Queensland bids which would aim to make regional Queensland even more of a league stronghold.

Chairmen of the 16 NRL clubs on Monday had a phone hook-up to discuss future funding by the NRL.

They later issued a joint statement claiming they were unified in wanting the whole of the game funded adequately, down to grassroots football.

Clubs have argued that more existing clubs need to be on a better financial footing before any expansion.

"Expansion is a question for the game and we'd argue if there is to be expansion that new clubs should grow the pie, not shrink it,'' Broncos chairman Dennis Watt said.

"You are asking a new team to stand on its own two feet immediately.''

Colin Smith said from feedback he had heard in the week since the AFL announcement he thought the NRL was not yet certain "what they want to do'' about expansion.

top of page

Sports TV broadcasting: goalposts shifting on viewing habits

Almost two years ago at a Google "Big Tent" event at the Sydney's Museum of Contemporary Art, then-Australian Football League boss Andrew Demetriou finished his session with an animation showing how the future AFL fan would consume their football.

The neat animation showed connected fans messaging friends, ordering their food, presenting tickets, editing clips from the game for their social media feeds and watching edited highlights on their mobile devices before, during and after the game. There was nothing particularly revolutionary about this connected future other than the AFL's final message: a future where you don't deal with "traditional media companies".

Demetriou and the AFL had their moments of hubris and empire-building. Many anticipated the AFL would move to broadcast and distribute the game itself, cutting out "traditional" broadcasters.

It hasn't panned out that way. Global sport needs linear television as much as television needs sport, and this week's AFL deal with News Corp Australia (publisher of The Weekend Australian), Seven West Media and Telstra, was further confirmation.

Despite the fragmented digital world, the competitive tension, and breadth, of multiple free-to-air and subscription TV broadcasters remain sport's saviour. And most powerful revenue stream. The one reliable mass aggregator of TV audiences today is live programming. Sport remains, with news and reality TV, the best live proposition. And their mass audiences remain a compelling advertising proposition.

AFL's format is particularly attractive, Seven chief executive Tim Worner said this week. "The AFL is a long game with more advertising opportunities than other codes, including 30-second stoppages. The 30 seconds after a goal is the most valuable screen real estate on television." Which is why Nine is hurrying to ad breaks every time an NRL player is lying prone on the ground. NRL doesn't have the regular ad openings.

The top TV event of 2014 (in metro markets) was the AFL grand final with a recorded audience of 2.828 million viewers likely dwarfed by out-of-home viewing. The NRL grand final, with its strength in the regional NSW and Queensland markets, was the top event nationally, with State of Origin matches close behind, interspersed with reality show finales for The Block, My Kitchen Rules and others.

But, as sports rights consultant Colin Smith says, only one in five reality shows "are successful and then they have a lifespan of five to seven years max."

"So you take in the costs of the other four and they get expensive, whereas sport is enduring and kids love it, they're just watching it in a different way," he says.

Predictions for the future of TV broadcasters appeared bleak due to the onset of digital global giants such as Netflix and YouTube (a Google company). Privately, they both say they have no interest in sport and earlier this year, Netflix's chief content officer, Ted Sarandos said: "Part of our core consumer proposition is on-demand....And I don't know that on-demand sports is markedly better than live sports. So that's why we haven't been that excited about it....There's economic reasons as well. I think in general, that sports is great for live television."

Also, TV broadcasters are changing their paradigm. "What media companies are recognising, it's no longer a pay or free-to-air TV thing, it's a game across all platforms," says Marc C-Scott, lecturer in digital media at Victoria University. "It's going to become less about who's broadcasting and more about getting what you want when you want."

Research shows that change is being driven by younger viewers. Daily TV viewing remains static at around three hours, yet, Smith says, "young people, the millennials and below are watching less linear television and watching more on mobile devices." And they're not watching less sport, just engaging platforms other than the lounge room TV.

"The positioning of linear TV will change and my view is linear TV is now going to be multiple platform," Smith says.

"Linear television, for young people, those days are over," he adds. "The question is, will they ever come back when they're 35 or 40 years old, back to the big TV as couch potatoes?"

Smith is not so sure, but, he says "FTA and pay have got to be anytime, anywhere and live. They've ticked the live box, not they've got to be anywhere, anytime."

Which is what the new AFL and NRL deals promise, ahead of some confusion.

In its new deal, Nine will screen its NRL games live on its Jumpin app while Foxtel has indicated its mobile platforms Play and Go will carry AFL matches, as will Telstra.

And this week Seven announced plans to make available its three channels, 7, 7TWO and 7mate, as live streams from December. Its openness to streaming was sparked by a sporting success: its streaming of the Australian Open tennis this year exceeded its most optimistic expectations.

"It's a case of coming down to a bit of a pricing battle between what Foxtel delivers and what Telstra will deliver in AFL, but they already know Australians want to watch sport on any screen, when they want," says C-Scott.

"I still can't see people sitting down watching a full game of football on a smartphone though."

TV networks globally feel the same way. They realise the appetite for live sport is undiminished

That's why the networks will still deliver the big sports live. Only now the battle is on to ensure they deliver it beyond the lounge room and broadcasters become digital players before the digital players become broadcasters.

top of page

NRL must add another Brisbane team to match AFL TV deal

One of the country's foremost experts on media rights has predicted NRL chief executive Dave Smith could yet emerge a hero from the battle for broadcasting dollars but only if he embraces expansion and adds another team in Brisbane.

Colin Smith, whose company Global Media and Sports was involved in the NRL's last broadcasting deal, warned the decision to alienate Fox Sports and Telstra meant the game was likely to lose significant ground to the AFL, which this week announced a new broadcasting agreement worth more than $2.5 billion.

However, he added a caveat.

"The NRL to solve this needs to do something really revolutionary, add two more teams and give them to Fox Sports," Colin Smith said. "One of those teams should be in Brisbane. The Queensland market is under-serviced. That's the work I did three years ago and it showed they should look at expansion.

"The commission put their head in the sand on that. That's what they should do. That gives better content — exclusivity of content — and Queensland is under-serviced. You would definitely add two teams. Then he (Smith) could come out of it being a hero."

In announcing the NRL's $925 million deal with the Nine Network for broadcasting rights from 2018, Dave Smith revealed there was scope for expansion.

However, the appetite for more teams has been suppressed in recent years by the need to financially support the game's existing clubs.

There was hope the NRL would edge close to $2bn from its next broadcasting agreement once pay-TV and digital rights were factored in, easing the pressure on clubs and ushering in a new era of financial security.

However, those hopes appear to be waning, fuelling discontent in clubland and vindicating some who privately questioned the NRL's decision to thumb its nose at Fox Sports and Telstra by keeping them in the dark over the deal with Nine.

The NRL's decision to announce a deal with Nine, which infuriated its other broadcasting partners, has stunned many within the media industry, particularly given the experience that resides on the ARL Commission.

Among the commissioners is former Australian Competition & Consumer Commission chairman Graeme Samuel, who was involved with the previous NRL deal and was a former member of the AFL Commission.

Only last year he warned against cutting out broadcasters at the expense of internet-delivered television — the NRL has held talks with Google and been linked with Netflix as an alternative to Fox Sports.

"If you're Foxtel you absolutely need top-line premium sport," Colin Smith said. "They will do a deal irrespective. But a deal won't be done with love and kisses. News (Corp) gave up its ownership (of rugby league) at the last deal and also gave up on first and last (rights).

"For that, you could argue they have been totally screwed over. The worst thing is this is the NRL's making. The NRL did this. It's a brilliant deal, fantastic for Channel Nine. But not so certain it is fantastic for the NRL.

"It is like declaring war. I had three years of my life in this sport, really enjoyed it and loved the people, but I think this has not left the sport in great shape.

"I think they will still do a deal, I am certain they will still do a deal. This will be settled at some stage. They (Foxtel) definitely need the NRL in Sydney especially, and to a lesser extent Brisbane. The biggest pay-TV market in the country is Sydney and that is driven a lot by rugby league. So there's a deal to be done. This will need some breathing space and they will be calling for some blood too."

Colin Smith also had more sobering news for the NRL in the form of New Zealand broadcasting rights. The NRL is yet to sell those and he warned they could be in for more disappointment.

"They're counting on this huge number from New Zealand — $150 million. The TV numbers in New Zealand are pretty dreadful. The games last weekend in New Zealand were about 30,000 (viewers). The All Blacks ... were 580,000."

top of page

NRL to fall short in bid for $1.7bn TV rights deal

National Rugby League boss David Smith is set to fall "significantly" short of the try line in his bid for a $1.7 billion payday for the code, with News Corp preparing to make a sharply reduced bid for the pay-TV rights.

Sources close to high-level discussions said News Corp executives would refuse to match the $530 million cheque the company's sports programming subsidiary Fox Sports signed for five exclusive matches a round under the existing five-year contract, which ends in 2017.

Rugby league is banking on a massive jump in the price of the rights but News Corp sources warned Mr Smith had devalued the remaining rights after agreeing a new agreement with the Nine Network following secret talks that sidelined Fox Sports and the code's digital rights partner and naming sponsor Telstra.

"The value of the remaining rights is significantly less," one source said, noting that a $400m price tag had even been proposed at one stage earlier this week in a sign Mr Smith's gamble was in danger of failing to pay off.

Last week, the banker turned rugby league chief executive announced a $925m deal with Nine for the second-placed free-to-air network to extend its broadcast rights until the end of the 2022 season. The deal gives Nine the right to screen the four best games each round.

The size of the deal was not only the biggest in Australian free-to-air TV history, it also marked a departure from the code doing the free-to-air components and pay-TV components in conjunction. Nine is now looking for buyers for the other four games and the right to simulcast the best four games each round on subscription TV.

Under the current broadcast deal with Nine and Fox Sports, Fox Sports onsells matches to subscription-TV provider Foxtel, which is jointly owned by News Corp, publisher of The Australian, and Telstra.

Fox Sports paid $530m for five exclusive matches under the previous deal, which including Nine's component was worth $1.025bn, including $100m in contra advertising.

The NRL was hoping to sell the 2018-22 rights for $1.7bn, suggesting it was seeking more than $700m for the subscription-TV rights. Sources say News Corp will not match the $530m figure, let alone pay $700m.

Under the terms of the new contract, Fox Sports has lost its two highest-rating timeslots — Saturday nights, which will now be shown on free-to-air although Fox has the option to simulcast, and Monday nights, which have been scrapped. Fox's four matches a round will also be in less than favourable timeslots — likely to be 3pm and 5.30pm on Saturday and 2pm and 6.30pm on Sunday.

Global Media and Sports boss Colin Smith, who worked with the NRL on its last deal, warned rugby league was likely to fall farther behind the Australian Football League in terms of broadcasting dollars after the rival code on Tuesday signed a $2.508bn TV rights deal with News Corp, the Seven Network and Telstra to cement its position as the nation's No 1 football code.

"They could be $500m-$750m behind because of the way the deal is structured," he said. "It's a real worry. When you sell media rights the general rule of thumb is you look at all your platforms and all your broadcasters and it is a bit like doing a jigsaw puzzle. What you're trying to do is maximise coverage, give fans a great opportunity and maximise the dollars for the sport. What they have done is picked off one part, get a big increase out of that, but my view now is Channel Nine is the massive winner out of this. For Fox Sports, the problem is their second prize is much, much worse than it was previously. They have lost one game, they have lost Saturday exclusivity, they have lost Monday and if they take simulcast, they have to take the Channel Nine dirty feed including ads."

Colin Smith said it was unlikely Fox Sports or any other provider would bid the sort of money required to close the gap between the codes. "Who is going to want to pay a billion more for the content that is available, whether it is Telstra or Fox Sports?" he said. "Not only is it not a great deal for Fox Sports, but it is not a great deal for Telstra either."

Foxtel chief Richard Freudenstein has accused the NRL of failing to follow the negotiation process it laid out at the outset of talks as he said the AFL's record TV rights deal would be a springboard for subscriber growth. "The NRL said they had a process and then at the end of the day they didn't stick to the process," Mr Freudenstein said.

Speaking to The Australian after delivering a speech at the Australia-Israel Chamber of Commerce, Mr Freudenstein added: "Fox Sports are leading NRL discussions so it would be premature for me to say anything about that other than to say we think NRL is a good product and we want a long-term relationship with the NRL. We will have to see how it plays out."

Mr Freudenstein was more candid about the AFL deal, saying the contract was a "great outcome for Foxtel", providing it with a key subscription driver.

AFL chief executive Gillon McLachlan said the AFL had briefly considered structuring the pay-TV and free-to-air components separately as the NRL had done, but it was "challenging" to fit the two elements together.

In response to a question from Foreign Minister Julie Bishop during his appearance at the National Press Club yesterday, Mr McLachlan said he was confident the new media arrangements would benefit consumers with "an unprecedented level of free-to-air coverage".

"I believe that we have got blanket coverage across Foxtel, every game live, we've got the Telstra app, every game live," he said. "I believe the opportunity for our supporters to enjoy their football and watch their team has never been better."

top of page

TV networks pay up big for sport but internet threatens

All the talk may be about billion dollar deals for the free-to-air networks to broadcast the AFL and NRL, but the digital future is already taking shape and, with it, a threat to the networks' supremacy.

One recent threat comes from the clubs themselves, which are seeking to capitalise on the interest and loyalty of their large fan bases.

"We produce now five panel shows every week. That's sharing the information, allowing our supporters to get into the change rooms, into the training facilities, to see the news about Collingwood before they see it in the traditional media," said Collingwood AFL club chief executive Gary Pert.

Collingwood TV already gets 600,000 viewers a month on the web and generates a million dollars a year in revenue for the club.

Gary Pert said those numbers are only going to get bigger.

"We have to go where our supporters are. We can't say we're going to do it on this one platform and you've got to follow us. We need to follow them," he explained.

For now, the biggest platform remains free-to-air TV, but the question is for how long?

The AFL Grand Final is the most watched program in the country, with nearly three million viewers, with the NRL Grand Final and the three-match State of Origin series not far behind.

Which is why, like Channel Nine with Rugby League, Channel Seven will pay up big to keep the AFL.

"It's fundamental for the success of free-to-air, that drives them and guarantees them ratings, is sport," said Global Media & Sports chief executive Colin Smith, who negotiates television deals on behalf of major sports and represented both the AFL and the NRL in their current agreements.

However, times are rapidly changing and Colin Smith said the disruptive influence of the internet is casting a big shadow over the future of free-to-air TV and sport.

"I could see it having a major share, and a larger share than free-to-air television in say, 10 to 15 years time," he said.

The sports world already knows it.

In announcing the new $925m deal with Channel Nine, NRL boss Dave Smith pointed to a very different future for free-to-air TV.

"We are developing our own streaming capabilities. We are building the contemporary future for the game and that's going to be as much about the digital media world that we are going to live in," he said.

Which is why, according to media strategist Steve Allen, Channel Nine has acquired the internet streaming rights to every NRL match it will screen from 2018.

"Nine jumped on the digital rights so that they've got a foot in the door, so they can show their prowess and show their commitment in the hope that garners a fairer deal on the digital front in the next round of renewal," he said.

Nine would also be aware that young people, who are already getting their video content from the web, are not going to switch back to free-to-air TV as they get older.

As the march of the internet continues unabated, Collingwood's Gary Pert thinks Pies matches will be 'live' on Collingwood TV within five years.

While Collingwood and other AFL and NRL clubs are likely to work with the free-to-air networks, other internet players will not.

The latest broadcast deals will keep the web at bay for now, Colin Smith from Global Media & Sports, and others, believe it is the next deal where the digital world will really start to hit the TV networks hard.

"The likes of the Netflixes I could see definitely considering and using Australia as a test market for sports rights," he said.

However, potential internet bidders have at least one major hurdle to overcome.

The controversial anti-siphoning rules are designed to keep most AFL and NRL matches on free-to-air TV and Fusion Strategy's Steve Allen said the laws will not be changed any time soon.

"Any government of any colour that suddenly tells the public that they're going to have to pay for their sports content, a whole bunch of sports content, that they used to get for nothing, will be voted out, absolutely guaranteed,  at the next election," he argued.

However, if Netflix, or another web streaming giant such as Google, offered matches free to the public, using an advertising-driven model similar to free-to-air TV, that may address anti-siphoning concerns.

Which could mean the latest broadcast deals are simply postponing free-to-air TV's day of reckoning.

top of page

Why the NRL will be 'lucky' to get within $1 billion of AFL's $2.5 billion TV deal

The man who negotiated the last rugby league broadcast deal believes the NRL have "outsmarted themselves" at the negotiating table and would be "lucky" to finish only $1 billion short of the mammoth AFL figure.

The NRL's $925 million deal with the Nine Network was welcomed with much fanfare a week ago, but the blindsiding of Foxtel has come back to bite them with the AFL hitting back with a $2.508 billion deal over six years from 2017.

Global Media and Sports boss Colin Smith, who worked for the NRL on the last TV deal and has also advised the AFL and ARU in previous negotiations, believes rugby league executives erred by alienating News Corp during the process and will now have to pay the consequences.

"The value of the rights, they will be lucky to get $1.4 or $1.5 billion," Smith told Fairfax Media.

"The NRL has brought this on themselves. What's left for the NRL to sell to pay television and digitally for exclusive content is not great. This has proven to be a brilliant deal for Channel Nine but not so for Fox Sports or Telstra.

"The problem they've got is all of the things important to Fox Sports have been lost. They've lost Saturday, they've lost Monday and the simulcast they get from Nine is what we call a dirty feed, with their ads. That's far less attractive.

"I would have thought there are some people at Rugby League Central thinking 'Oooooh, what have we done here?! We've rushed into it.'

"Frankly, they have outsmarted themselves.

"The clubs would have been basking, thinking this is fantastic last Monday. I bet they wouldn't be saying the same thing now. There is going to be a massive shortfall, back to the old days, between the AFL and NRL rights."

Smith believes the size and the haste of the AFL deal is a pointer to how angered Rupert Murdoch was about his treatment in NRL negotiations. Industry insiders claim Fox Sports CEO Patrick Delany wasn't informed of the Nine deal until it was announced via press release and that the Seven and Ten Networks weren't included in the official tendering process.

Requests for an interview with NRL CEO Dave Smith were declined, with a spokesperson saying: "The TV rights negotiations are still continuing.

"Dave has indicated he will not be discussing them further until they are concluded."

Club CEOs and chairs are privately concerned about Tuesday's AFL announcement, believing rugby league has again sold itself short. There was already some resistance in club land about signing new participation arrangements and the latest development wouldn't have helped the governing body's cause.

Speaking just hours before the AFL deal was trumpeted, Canterbury CEO Raelene Castle reserved judgment when asked if the NRL had negotiated a good deal.

"You'd have to think that it looks like good number, but only half the deal is done, so let's see what happens with the other half," Castle said.

"Let's not get the champagne out until we see what the rest of it looks like and until we, from a club's perspective, see what that means in terms of salary cap amounts for player implications around contract negotiations and also what the grant will be for the clubs, it's hard to say ...

"Until you're at the negotiating and behind the scenes, you don't know what's happened. You're presuming there is a good reason why we've ended up in this situation and Dave certainly thinks he can deliver the other half of it. I hope that's the case."

Colin Smith predicted "disruptors'' such as Netflix would be more prominent in the next broadcast deal but would likely only pay "low fees" if involved in this one.

"[The NRL] are between a rock and a hard place," Smith said.

"They need to pull some rabbits out of a hat. Frankly, the only one they could do, and should do, is look at expansion in Queensland.

"To me, there is no other answer. That could also be threatened because they might have done a deal with Channel Nine where they have first option on that as well. Dave was smart to negotiate the rights early, but then he's outsmarted himself."

top of page

NRL broadcast rights: Fox snub puts cash target in doubt

The media adviser who worked with the NRL on the previous broadcast rights deal has warned that the decision to sign a new agreement with the Nine Network, blindsiding Fox Sports, has put at risk the code's hopes of an expected $1.7 billion payday.

Colin Smith, an adviser on sports media rights who has worked with most professional sports, including helping the NRL net a then record $1.25bn for the last broadcast rights deal, said yesterday Fox Sports had been disrespected and left with "crap content".

"You can't say this is entirely respectful of them, being a long-term broadcaster, by the NRL,'' Smith, managing director of Global Media and Sports, said of Monday's announcement.

"A deal has still got to be done with Fox Sports and everyone has been predicting — me included — that it could be up to $1.7 billion. And if people are mad it could even go up to $2 billion, but that's going to be a lot tougher now. It's a massive gamble. As I understand it, they hadn't even got an offer from anybody else so they've gone with a deal without ever going to market properly.

"The totality of the deal is more important than the deal is for the huge amount that Channel Nine are paying. The dumb thing is they could only get a marginal increase (from the last deal) out of this.''

The NRL announced on Monday that it had signed a $925 million deal — the largest in free-to-air Australian television history — for Nine to extend its broadcast rights until the end of the 2022 season.

The free-to-air (Nine) and subscription (Fox) parts of the previous deal were done in conjunction.

The new deal starts in 2018 and will see the Nine Network broadcast live free-to-air matches four nights a week — Thursday, Friday, Saturday and Sunday — while the NRL will regain full control of the draw and match scheduling.

While it was a good day for Nine boss David Gyngell, the same can't be said for Fox Sports chief executive Patrick Delany, who was reportedly left stunned by the speed of the negotiations. The current deal doesn't expire until the end of 2017.

The Australian was told yesterday that Fox Sports did not know that a deal with Nine had been done until the NRL issued a press release on Monday, and that Delany has subsequently met with NRL chief executive Dave Smith.

The NRL is banking on Fox Sports to take up an offer to simulcast the matches being shown on Nine to help push the deal out to $1.7bn and believes they will have little choice not to as rugby league is crucial to their subscription numbers.

Fox Sports paid $530m for five exclusive matches under the previous broadcast deal but has lost considerable ground in the new one that has been signed off on with Nine.

For starters, the pay-TV network has lost its two highest-rating time slots — Saturday nights, which will now be shown on free-to-air although Fox has the option to simulcast, and Monday nights, which have been scrapped.

Under the last deal, Fox received five exclusive matches but this has been reduced to four in less than favourable time slots (they are likely to be 3pm and 5.30pm on Saturday and 2pm and 6.30pm on Sunday).

Colin Smith warned that Fox might ask for exclusive streaming rights to compensate for losing games but there was still a danger that they might not pay as much as they did for their rights last time. That would leave the NRL well short of the $1.7bn mark.

"It would be a very difficult position for Fox Sports because they're damned if they do and they're damned if they don't,'' Colin said. "They have to have rugby league because Sydney is the biggest pay-TV market in Australia by a long way.

"On the other hand, for what they now know they've got to buy — and in essence I'm saying they're the only buyer — as the NRL will decide what events are going to be broadcast on pay and when, they've got second prize.

"Simulcast hasn't proven to be a huge driver of subscribers, so for Fox Sports it depends on what content they're going to get. If they're going to get the crap content and allocated the bottom four games, they'll price that accordingly.''

The Australian attempted to contact Delany yesterday but was unsuccessful.

A spokeswoman said he would not comment on the deal while talks were ongoing.

top of page

Nine's media deal to undercut naming rights partner Telstra

The Nine Network has secured a chunk of streaming rights to the NRL's marquee games as part of its bumper new broadcast deal, in a move which raises questions about the code's naming rights and digital partnership with Telstra.

Nine and NRL today announced a new five-year broadcast agreement from 2018, worth $185 million a year - more than double the previous $95 million the network paid the NRL.

But importantly, Nine shores up control of digital streaming of key games and will also double its regular season live coverage to four games per round. As previously, the deal includes all finals football and representative fixtures, such as State of Origin and All Stars.

Nine's move to include streaming rights of all the above games, effectively undercuts Telstra, the code's current digital partner, which monetises digital rights through its $89-a-season 'Live Pass' initiative.

The Live Pass allows fans to stream up to seven games per round, as well as archived games, finals series and other representative games. Telstra's naming rights partnership with the code, which has been in place since 2000, is packaged with the digital deal.

NRL chief executive Dave Smith confirmed negotiations were ongoing with "Fox Sports and other providers" over future arrangements.

Colin Smith, principal of advisory agency Global Media and Sports, told Sponsorship News he was unsurprised that Nine was looking to cut Telstra out of the deal.

"All the broadcasters, including pay-TV, want to acquire digital content - millennials are watching less television and more content on their smartphones and tablets� Nine has increased the value of their rights by 205% and will have to sell a lot of advertising to recover that cost," he said.

A statement from Nine Entertainment Co said its costs under the deal would be reduced depending on arrangements made by the NRL to grant pay simulcast rights for certain games.

"NEC's average cost over the new rights period amounts to $185m per annum, inclusive of contra, which will be reduced if the NRL elects to grant pay simulcast rights for certain games," said Nine's statement.

The deal will potentially be worth $925 million, including contra, and runs to 2022. The NRL is likely to significantly improve on the $1.025 billion it will collect over the current rights cycle, with pay-TV, international rights and digital deals still to be factored in.

"As the audience for television fragments, the value and marketing power of free, live premium sport across multiple media cannot be underestimated," said Nine chief executive, David Gyngell.

Telstra currently holds a monopoly of digital rights across the major codes, with a similar deal with the AFL in place for the current rights cycle.

The telco has recently shored up its position with Football Federation Australia and expanded its digital coverage of netball, while also making a live music streaming play.

Telstra had not yet replied to press enquiries by time of publication.

top of page

Broadcast talks "progressing" as NBL launches rebrand

The National Basketball League has launched a comprehensive rebrand with a new website and logo, and league manager Jeremy Loeliger says broadcast discussions are also moving ahead.

The new website, built by online sports network Fox Sports Pulse, went live today and will host a revamped online merchandise store as well as videos, statistics and social hubs.

NBL general manager Jeremy Loeliger said the new website would host far more content than the previous one. Loeliger also said that NBL management was "progressing" towards a new broadcast deal after an agreement with Network Ten's ONE HD channel expired.

The website and rebrand, by advertising and communications agency Publicis Mojo, comes after a number of tweaks to the competition's image since venture capitalist Larry Kestelman took over the competition earlier this year.

Kestelman's LK Group will also be a major sponsor of the competition, which has been without a naming rights sponsor since iiNet departed in 2012.

Former NRL strategy boss Shane Mattiske, now of Repucom, has been drafted in to assist with broadcast discussions. A trio of experienced sport administrators, including media rights agency Global Media and Sports chief Colin Smith, have been appointed directors.

The NBL has also adopted a new schedule list including mid-week games in a bid to appeal to broadcast partners.

top of page

Concerns Ten deal could give News Corp too much power over AFL, NRL

Foxtel's purchase of 15 per cent of the Ten Network could give Rupert Murdoch's global media conglomerate News Corporation too much power over Australian sport, opponents of the deal say.

Any terrestrial television network bidding for the right to broadcast sporting events would have to co-operate with pay-TV network Foxtel, which is 50 per cent-owned by News Corp, and there are fears in the media industry and professional sport that Foxtel would want to include Ten in any deal.

A source suggested that the two main football codes might receive only one offer each: a joint bid from Ten and Foxtel or Fox Sports, which is 100 per cent-owned by News Corp, and either Nine Entertainment Co or Seven West Media.

The Australian Football League and National Rugby League would like record-breaking broadcast deals of $1.5 billion to $2 billion each over five years. They hope for intense competition between free-to-air networks, Foxtel, Telstra and other companies keen on gaining some digital rights.

Foxtel chief executive Richard Freudenstein has said previously that the potential stake in Ten would not have much of an impact of sports rights negotiations and the pay-TV provider would work with whoever had the best deal.

Competition lawyers have suggested that if the Australian Competition and Consumer Commission approves the Foxtel-Ten deal it would increase the level of scrutiny of sports rights contracts to make sure Ten would not be given an unfair advantage.

The NRL and AFL want at least one more match a week shown on free-to-air television, up from the three and four Nine and Seven respectively show under current arrangements.

The sporting codes had hoped Ten would bid for an additional match but fear a consortium would bid for only the current number of matches but change the mix across the networks.

Global Media and Sports chief executive Colin Smith, who worked for the NRL on its last TV deal, said if the Foxtel-Ten tie-up was vetoed by the ACCC sport could suffer, given Ten's financial future would be called into question.

"What you would have then is a cosy duopoly with Seven and Nine for free-to-air rights and I don't think you'll ever see anti-siphoning (which guarantees prominent sports for the free-to-air networks) disappear completely."

Another source said Nine could be keen to bid for large portions of both the NRL and AFL, in an effort to overtake Seven as the highest-rating network.

top of page

NRL TV rights deal: Channel Ten to get games as five-nights-a-week coverage planned

Channel Ten is likely to gain a share of the rugby league television market in the next broadcasting deal, with matches to be played over five nights and networks paying more for less.

The NRL's next TV deal, to begin in 2018, will be the last contract under which viewers will be able to see all games on free-to-air and pay TV, before some games are streamed exclusively on the internet, via mega-rich overseas interests, such as Netflix.

It represents the last opportunity by cable TV and the free-to-air networks, including a commercially secure Ten - should its partnership with Foxtel be approved - to use live sport to ward off the voracious internet challengers.

The AFL is also expected to benefit from the networks' desperation to secure their future, although the southern code is a step ahead of the NRL in guaranteeing its own, with a staff of 150 engaged in plans, concurrent with the rollout of the national broadband network, to produce games on

The intense bidding for rights to both codes, with the AFL's expiring a year earlier, is producing very complicated scenarios, with the most likely being Ten winning a game in both the NRL and AFL.

The NRL's program cover could see a Ten game on Thursday night, a Nine game on Friday night, three Fox Sports games on Saturday, two Nine games on Sunday and a Fox Sports Monday night game.

This would mean the end of Nine's Friday night double-header, which sees one game being shown live in the Sydney market at the same time as another is shown in Queensland.

Because of Queensland's entrenched parochialism, demonstrated by the bias to the northern teams (Broncos, Cowboys, Titans), as well as the Storm, Nine's Friday night game would have a Maroons flavour.

Nine's two Sunday games would be played live on Sunday afternoon and twilight, separated by the only other guarantees of ratings success, the nightly news or reality shows.

This schedule would not interfere with Fox Sports' Super Saturday, nor their Monday Night Football, which are essential to retaining subscribers.

Fox Sports would be surrendering its early Sunday afternoon game, effectively to Ten, and would seek something in return if the Rupert Murdoch-owned network is to pay more for less product.

It may demand a simulcast of all eight NRL games, as it currently does with Channel Seven and the AFL's nine-game coverage.

If Fox Sports was to lose a game in either NRL or AFL, it would pass it only to Ten, in which it now has a 15 per cent share, subject to ACCC approval.

Global Media and Sport's Colin Smith said: "The risks would be too great to surrender additional coverage to either of the other free-to-air incumbents. If Nine had more exclusive NRL or Seven had more exclusive AFL, Foxtel would lose subscribers, which is exactly what they must avoid.

"Foxtel/Fox Sports passing over one game per code to Ten in its weakened position, both in terms of TV ratings and financial performance, would be far less detrimental, especially if it is simulcast."

Nine would object to a simulcast but if Foxtel pays a hefty premium to get the rich rights deal over the line, it may agree.

Fox Sports, which is determined to do the best deal for itself independent of any future tie ups with Ten, will likely insist Ten receives the last pick of the eight games on offer per week.

The NRL will not want its Thursday night opening game beginning with a historically low-rating match, such as the Raiders, Knights or Warriors, but it has studied betting spreads in matches and is convinced it is producing the most even competition ever.

Nor would the AFL want its weekly coverage to begin with the Giants, Suns or Lions, although digital channels allow networks to broadcast games on their main channel to its primary market, while another program is shown on a digital channel.

For this reason, Nine's interest in AFL, or Seven's in NRL can't be discounted.

Nine has indicated it will bid for a Sunday afternoon AFL game, to be shown in the south on its main channel and in northern states on its digital channel, flip-flopping with its NRL game.

However, Fox Sports would strongly resist moves by Nine into AFL territory and Seven into NRL land, just as Nine will never surrender State of Origin to Seven.

"These will be the richest rights ever for both codes, but also the most complicated. If the ACCC do not approve News Corporation's investment in Ten, there may be no Ten," Smith said.

"This would leave only two FTA networks and Foxtel bidding, depressing the price and the investment both codes can make in their games, ultimately to the detriment of the viewer."

top of page

State of Origin shouldn't be changed, warns ARLC chairman John Grant

NRL chairman John Grant has warned of the dangers of tinkering with State of Origin as powerbrokers consider the impact of the next broadcast rights deal on rugby league's marquee event.

The governing body is weighing-up whether to sell off the interstate series to TV networks as a separate entity at a time when new executive appointment Shane Richardson determines its place in the league schedule.

Global Media and Sports boss Colin Smith, who worked for the NRL on the last TV deal, believes the next league agreement could be worth up to $2 billion. By his estimation, Origin could account for up to 25 per cent of that revenue � meaning each interstate game could be worth up to $416,000 a minute.

At the same time, clubs are concerned about the toll Origin is taking on its marquee players while there are also fears the series results in a lack of interest in the competition proper.

Bulldogs coach Des Hasler, whose club provided five NSW players for game III, addressed the burnout issue again on Friday. The premiership-winning coach said the recovery process was harder than ever given the physical and mental demands on those participating.

"You look at how the game has changed, both at a club level and origin level - it is just the intensity of the games has increased enormously," Hasler said. "That's the cry, that I gather, from the clubs and the players, that they are asking be addressed. To [play] on Wednesday and back up on Friday, to back up Saturday. It's a toll on the players and probably not a fair one. That's something they have to work through."

Wayne Bennett has floated the prospect of 10-day breaks for Origin, which would result in one of the fixtures being played on a weekend. Roosters coach Trent Robinson, who is also on the NRL's competition committee, backed the proposal and said it was time to put player welfare before financial and broadcasting demands.

Grant said the ARLC was aware of all the viewpoints and that decisions would be made in the best interests of the game. However, he said all stakeholders must tread cautiously to ensure changes didn't adversely affect the game's flagship product.

"You have to be careful about mucking around with things," Grant said. "When you think about our broadcast rights compared to other sports broadcast rights, it is the unique difference. It has been a franchise that has been built up since 1980. It is fantastic so you have to be very careful with it. We know what it is worth to the broadcasters. The advertising bucks behind this and the brand value behind this is enormous. So you can expect us to leverage it and maximise the returns we can get from it."

Grant said the current broadcast rights deal limited the scope any meaningful scheduling changes until its expiration.

"The best indicator of the future is how things have done in the past," Grant said. "If you just think of it as a football property, it has been an appreciating property since 1980. You keep saying to yourself, 'Can this keep going, can this keep going, can this keep going?' And it does. The players live up to everyone's expectations �If we come up with a decision to change State of Origin than we will, because there will be good reason for it."

top of page

NBL chief hopes to bounce into new TV deal

The new executive director of the National Basketball League is "cautiously optimistic" about securing a broadcast rights deal, but has revealed plans for each team to have an Asian player sit outside of the salary cap.

Larry Kestelman, the multi-millionaire owner of Melbourne United who has taken a controlling interest in the NBL after a $6 million takeover, is working feverishly to secure a major broadcast deal in time for the new season, beginning in October. The partnership with Channel Ten ended after the 2014-15 season, with Ten indicating it was not interested in renewing the contract.

The NBL has sought the help of leading media rights consultant Shane Mattiske to help broker a deal. Mattiske had a key role in the National Rugby League's record-breaking $1.2 billion contract. He quit as the NRL's head of strategy last year.

The league will also announce on Wednesday that creative agency Publicis Mojo has taken on the role of rebranding the league.

Kestelman, stressing the importance he was placing on restoring "credibility and strength" to the struggling league, said a TV rights deal was crucial.

"I am cautiously confident ... I really believe whoever will take this on will look at this as a longer-term proposition," he said on Tuesday.

"Even though I do believe I am not in any position to make demands, I would like to see a longer-term partner, longer than a year."

Kestelman would like to have all matches in the eight-team league broadcast live.

A new deal is a must if Kestelman is to truly shed what he says has been a "scariness" among potential sponsors and investors to be involved in a league which has struggled for major media attention since the late 1990s.

As part of his 100-day turnaround program, of which he is about 30 days into, Kestelman has announced three additional appointments to the board.

Bob Elphinstone, a former president of the sport's world governing body, FIBA, and a foundation NBL board member, Laura Anderson, an international company director and adviser to government and industry who sits on the board of the Australian Grand Prix Corporation, and sports media rights specialist Colin Smith have joined chairman Graeme Wade and leading accountant Adrian Garrone. The new board begins on July 1.

The NBL has also revealed Jeremy Loeliger will be its new general manager. Loeliger was a Melbourne-based partner at leading commercial law firm Holding Redlich.

In a bid to tap into the Asian market, where the league believes much of its future lies, Kestelman said there were plans from the 2016-17 season to allow each team to have an Asian player sit outside of the salary cap, as is the case with the marquee player rule.

"That is something that has been tabled and will be looked at by the basketball commission to allow an extra player from each team with an Asian origin," Kestelman said.

"We have a big vision of both delivering our product into Asia and also a longer-term vision of attracting a number of Asian clubs to play as part of our competition."

top of page

NRL engages Google in revolutionary broadcast negotiations

Google has a seat at the negotiating table for the NRL's broadcast rights in a shock development that could revolutionise how sport is consumed.

The governing body has approached the multinational about the prospect of streaming live games as part of an expected shift towards digital coverage. Traditional free-to-air and pay-television broadcasters have been engaged in negotiations since late April – well before the current rights deal expires in 2017 – in a bid to create competitive tension and to get in before rival code AFL.

However, the inclusion of Google in discussions shapes as a potential game changer, although the anti-siphoning laws present potential challenges in live streaming.

"The NRL is talking to a range of parties about broadcast rights but we will not be commenting further while the process is under way," an NRL spokesperson said.

However, a Google spokesperson confirmed to media publication Mumbrella that talks between the parties had begun. "From time to time we do talk to organisations about what they might do in the online world," a spokesperson said.

The NRL is considering several approaches to the current negotiations, including selling separately the highly lucrative State of Origin series. The three interstate games alone are estimated to be worth up to $500,000 a minute, although a separate sale could devalue the worth of the competition games proper. Global Media and Sports boss Colin Smith, who worked for the NRL on the last TV deal and has also advised the AFL and ARU in previous negotiations, predicted Google's entry into the fray would put "upward pressure" on the asking price.

"If you have the view that young people stay with smartphones and tablets [in favour of traditional television], digital in the next 10 years becomes the pre-eminent media," Smith told Fairfax Media from Malta on Tuesday night.

"The challenge is capturing these young people, which plays into the likes of Google either through YouTube or their Chromecasts.

"The other players in that are Telstra but also the likes of Netflix as well. It could happen in this round but, if not, certainly in the next round [of rights]. The only question is when, because it's absolutely critical.

"Australia would be a great test market because it is yet to happen in Europe or the US that one of these 'disruptors' enters sports rights."

Even before the latest developments, Smith predicted the next agreement could be worth up to $2 billion – a marked increase on the current $1.2 billion contract with the Nine Network, Fox Sports and SKY New Zealand. Telstra, currently the digital rights partner, will have several new competitors to retain rugby league.

At present, NRL matches, Origin and Tests involving the Kangaroos are on the anti-siphoning list. However, if the offering is provided free there could be an argument that it complies with the laws, as long as significant download costs don't arise.

Smith described the NRL's negotiations as a canny way of increasing the value of its product.

"It's an interesting series of negotiations … and whatever happens in the NRL, the AFL will follow," he said.

"If you look at some of the deals done in the UK, with 400 per cent increase in Super Rugby, it shows you there has been a whole re-pricing, northwards, of sports media rights."

top of page

Nine to target Sunday AFL while Seven chases State of Origin TV broadcast rights

Channel Nine will make a bold bid to broadcast one AFL game on Sunday afternoons, precipitating a retaliatory move by rival Seven for the highly prized State of Origin series.

The two networks are desperate to increase their ratings in their non-traditional sports states, with Nine's State of Origins guaranteed to deliver 12 million viewers nationally, principally in NSW and Queensland where Seven's AFL coverage, other than Swans matches, competes with the test pattern for viewer numbers.

Should Nine acquire an AFL game for the popular Sunday afternoon slot and Seven buy Origin, Australia's two dominant free-to-air networks would have stakes in territory where they struggle for advertising dollars.

Nine's bid for an AFL Sunday afternoon game would not be at the expense of its coverage of an NRL match in the same time slot.

Multi-channelling allows networks to broadcast games simultaneously where, for example, southern viewers would see an AFL game on Nine's main channel on a Sunday afternoon, while northern viewers would watch it on a digital channel. The reverse would apply for the NRL match, which would be shown live in NSW and Queensland, while Victoria and the south and west would access it via minor channels.

"Both codes could co-exist on Nine by flip-flopping [between stations]," an executive close to the negotiations said. "Wherever you live in Australia, you could watch Sunday afternoon football on Nine.

"That's a valuable franchise and a bragging right."

The ARL Commission has signalled a willingness to sell NRL games and Origin as separate packages, a move designed to draw Seven and Ten to the broadcast rights auction.

Wednesday night Origin matches would not interfere with Seven's AFL coverage.

However, Nine is confident the ARLC will not separate Origin from its NRL home and away programming.

"The problem with splitting Origin is that it devalues the remaining premiership season, meaning there is no net gain in the separation," the source said.

Should Seven acquire Origin, it would ignore the NRL premiership season on its AFL coverage, nor would Nine promote Origin during its NRL broadcasts.

Nine has no interest in bidding for Saturday night AFL games which, while not conflicting with Nine's existing Friday night and Sunday NRL cover, could destabilise Nine's relationship with Fox Sports.

Any free-to-air network acquiring either AFL or NRL must have a pay for view partner to take half the AFL's nine games per week and the NRL's eight, plus contribute to the expected $1.75 billion to $2 billion fee for the broadcast rights.

Channel Ten's bid for NRL Saturday night games during the last broadcast negotiations threatened Fox Sports "Super Saturday" programming.

It caused a rift between Ten chairman Lachlan Murdoch and the then chief executive of News Ltd, Kim Williams who had control of negotiations on behalf of Fox Sports.

It cost Williams his job and he is now an AFL commissioner where he will presumably assist the AFL in its media rights negotiations which officially begin this month.

The AFL's existing deal concludes at the end of 2016, with the NRL contract expiring a year later.

However, both codes have gone to the market at the same time, precipitating fierce lobbying.

It is the first time in the history of broadcast negotiations where a first and rights option does not exist for either code.

Seven exercised its first and last right to win back AFL coverage from Nine who held it from 2002 to 2006, while Nine used its option to scuttle Ten's bid for the current NRL deal.

The absence of a first and last rights clause raises the possibility of a network making a killer, long-term offer which is finalised quickly.

Unlike Seven's minimalist cover of rugby league, Nine has maintained its AFL programming, with popular shows in prime time on its main channel in Melbourne.

Global Sport and Media's Colin Smith, who has worked for both the AFL and NRL on past deals, says, "The bottom line is that these will be the most complex negotiations ever undertaken in Australia.

"Live mainstream sport is the only guarantee of ratings success. Ten have had success with Big Bash cricket and will want winter sport programming.

"The fundamental questions are: which networks will win and who will lose? Who will partner with Fox Sport and will that vary by AFL/NRL?"

Smith says Nine's pre-emptive strike for Seven's Sunday afternoon AFL reminds him of the Al Capone character in The Untouchables.

"You get more with a kind word and a gun than you do with just a kind word."

Nine has fired the first shot but the NRL, by joining the gunfight early, seeks to ensure all the ammunition isn't spent on the AFL.

top of page

South African Rugby Union integrity questioned over TV revenue

The head of the joint venture governing Super Rugby and the Rugby Championship has defended its integrity heading into sensitive negotiations over the value of the new competition.

Figures compiled by a leading sports consultancy firm and obtained by Fairfax Media show South African broadcaster Super Sport pays roughly the same amount of money for Super Rugby as its domestic competition, the Currie Cup.

The Global Media & Sports report, commissioned by the Rugby Union Players' Association and distributed to all Australian Super Rugby franchises and the ARU, calculated that on a cost-per-viewer-hour basis, Super Sport paid $10 million for 33 Currie Cup games in 2013, compared with $10.9 million for 125 Super Rugby games. That is despite the Currie Cup attracting 18 million viewers, 23 million fewer � or less than half � per year than Super Rugby's 44 million in South Africa.

In contrast, New Zealand broadcaster Sky Sports paid the New Zealand Rugby Union roughly double the amount for the rights to Super Rugby ($11.9 million) as its domestic competition the ITM Cup ($6.3 million), which attracted half the television audience (six million compared with 12.5 million).

The figures back up long-held concerns the South African Rugby Union negotiated a richly sweetened deal from Super Sport for the Currie Cup knowing that under the terms of the joint venture, it would not have to share the revenue with its partners Australia and New Zealand. Greg Peters, chief executive of SANZAR, rejected suggestions South Africa had not negotiated in good faith.

"Under the terms of the joint venture all three unions are obliged to act in good faith. The Currie Cup is a very valuable property and Super Sport pay accordingly," Peters said.

"At the time of the last deal (2009), SANZAR had not determined what Super Rugby would look like at the time so South Africa took the domestic product to market, which it was entitled to do at the time.

"There is no doubt they got good value but the most important thing for us now is to be considering what Super Rugby and Rugby Championship are worth and putting those to broadcasters. If we get the right money from those it's almost irrelevant what those domestic products are worth."

But two weeks after South Africa, New Zealand and Australia agreed to go ahead with an expanded 18-team competition from 2016, it is understood SANZAR is considering beefing up its governance protocols.

It is understood that when a union is finalising its Super Rugby deal with a broadcaster, a member of one of the other two unions will need to be present. It is hoped the measure will guarantee better oversight of countries' individual negotiations and lead to increased trust among the joint venture partners.

Peters was in Dublin this week, where the International Rugby Board has its headquarters, with the three union chief executives, including ARU boss Bill Pulver.

It is this next phase of negotiations that will be the hardest fought, despite agreement being reached on the most public aspect of the new competition - its structure.

A key battle front is how the pooled broadcasting revenue will be divided among the three unions. Each country will still take its domestic competition to market first (Australia has already secured a reported $1.5 million for the National Rugby Championship) and be entitled to keep the proceeds to itself, before going a second time to broadcasters with Super Rugby and then the Rugby Championship.

The proceeds of those two deals made between unions and their respective broadcasters will be pooled and divided between the SANZAR co-signatories. But with no ongoing agreement on how that is done, the ARU is not guaranteed the one-third share it currently enjoys, which was secured by then-chief executive John O'Neill in 2009.

Australia must fight all over again for an equal or greater share with its partners and rivals. And it is here that the ARU is readying itself for war, since SARU can be expected to use its sixth mouth to feed (the Southern Kings) as a justification for demanding a greater share, while Australia will demand a larger piece of the pie, having broadly submitted to every one of South Africa's demands on the structure of the expanded Super Rugby competition.

"We all play together and need each other's teams to turn up and we need rugby to be funded in each of the three countries, but we also need a recognition of the value of each of the markets and that is not resolved yet," Peters said.

This is all assuming that a bigger pie is possible this time around. And there is worrying speculation the new two-division, four-conference model that leaves six South African teams in one division with Argentina and an Asian team, will in fact be less palatable to Super Sport, who already have a competition with a strong South African flavour (the Currie Cup).

Peters said SANZAR was confident it could secure "uplift", despite the format's implications for the most lucrative market.

"We're confident in the value of our product in the market place and we are hearing positive noises from the market that indicate we will extract the correct value," he said.

top of page

A fourth-free-to-air game and Origin auction on the cards for new rugby league TV deal

A fourth free-to-air match, on Saturday nights, is one of the key battleground issues in NRL television rights talks which have accelerated fast.

Three free-to-air NRL games a week are now screened by the Nine Network, with commercial networks to lobby hard for a live Saturday night game.

This could be the timeslot for a second free-to-air network for rugby league which misses out on the Friday night properties and rights to the all-important State of Origin series.

Fox Sports, which presently broadcast all Saturday NRL content in most weeks, would have to pay a premium price to keep all matches on that day exclusively.

Despite strong Monday night ratings for Fox Sports' NRL games this year, a free-to-air network would much prefer a Saturday night NRL property rather than the first night of the working week.

The Courier-Mail revealed on May 19 that NRL broadcast rights for up to five years from 2018 onwards could be signed this year despite two years on the existing contracts of Nine and Fox Sports still to run.

One central issue with the NRL rights has become whether one network will be able to afford to buy all free-to-air rights. Industry analysts told The Courier-Mail the NRL could expect to receive at least $1.5 billion for a five-year term, up from its current $1.025 billion.

Another matter central to these talks is the ownership of the Ten network.

NRL chief executive David Smith confirmed last week the rights for different timeslots each round and the plum State of Origin matches could be divided between networks and won by the highest bidder.

Networks heard the same message from the previous NRL administration in 2012, but the difference is that Channel 9 was able to bid to retain all free-to-air properties with a first and last refusal condition. It's an advantage Nine relinquished for the next rights negotiations.

The Seven Network is said to be keen to cherrypick the three Origin matches at what would be a massive mark-up.

Nine would like to gain the rights to broadcast an AFL match from the suite of timeslots commanded by Seven until the end of next season.

When final bids are made to the NRL and AFL, we will know exactly how much the Seven and Nine networks wanted programming from outside their primary football codes and how much was shadow boxing.

With video streaming services moving in on the Australian market, sports programming is an outstanding way for a network to retain the attention of lucrative demographics for five more years.

The television industry sees as common sense that the NRL must first decide how many teams will be in its competition long term. NRL head of strategy Shane Richardson is examining the worth of expansion to the composition in among other aspects of future planning for the sport.

Sports media analyst Colin Smith, managing director of Global Media and Sports, named the NRL, AFL and cricket as the three "absolute must-carry sports" for commercial networks and subscription television. Most expect the AFL, which comes out of contract a year earlier than the NRL, to reach a decision before the NRL does.

A television executive said one network had submitted its bid for AFL programming two weeks ago. Nine, with the NRL rights, and Seven, with the AFL rights, will try hard to keep all current programming. This allows them to package advertising across multiple days and nights as a "one-stop shop".

top of page

State of Origin worth up to $500,000 per minute if sold separately in broadcast deal

State of Origin could be worth almost $500,000 per minute if the NRL opts to sell off the marquee interstate series separately in the next broadcast rights deal.

The governing body will start negotiations with networks this week to get in well before the current rights, and those of the AFL, expire at the end of 2017. The move will ensure the maximum number of bidders are engaged in the process in a bid to trump the rival code.

The NRL considered splitting its properties for the last deal, which netted about $1.2 billion – a figure that was similar to that of the AFL. However, sources close to negotiations believe this is likely to happen during the current discussions, meaning Origin, the Auckland Nines, international matches and the World Club Series and even the home-and-away competition itself could be sold individually to a variety of networks.

"I assume there will be no rules," a network insider said. "They wanted to do that last time, so I don't see why they wouldn't discuss that."

Global Media and Sports boss Colin Smith, who worked for the NRL on the last TV deal and has also advised the AFL and ARU in previous negotiations, believes the next league agreement could be worth up to $2 billion. By his estimation, Origin could account for up to 25 per cent of that revenue – meaning each interstate game could be worth up to $416,000 a minute.

"There is no other event in Australia like State of Origin, which averages about 10.5 to 12 million viewers a year," Smith told Fairfax Media from the United States.

"You take 12 million viewers out of the audience of the NRL, that's a big deal. It could be [worth] in the hundreds of millions per year. If you think about a finals series, you could argue it's worth 30 to 40 per cent of value. You could then apply that [Origin] is is worth about 20-25 per cent of value.

"Channel Seven will absolutely want to buy Origin. It would be more challenging for them to buy NRL home and away because they would have to put that on Seven Mate and I don't think the NRL would agree to that, nor should they."

However, Smith warned that if Origin was sold separately, it would likely "devalue" the NRL competition proper, as free-to-air networks would pay a premium for exclusivity.

"What they could do, and what the AFL has done, is simulcast home and away," Smith explained. "In other words, for AFL Fox Sports broadcasts every game and they take Channel Seven coverage for four of those games."

The three Origin games were the top-rating programs of last year, with 4,118,000 tuning in when NSW finally returned the shield. A further 3.965 million witnessed South Sydney's drought-breaking premiership win against Canterbury. The fact that Nine's Sunday afternoon games are shown live – something not negotiated in the last contract – is another reason why the rights values will rise for the next deal. The NRL will also clarify its position on expansion by the end of the year, with Smith believing broadcasters will up the ante if there was a team in south-east Queensland.

The Ten Network, narrowly pipped by Nine last time, is likely to again be in the mix after experiencing a ratings spike during its Big Bash cricket telecasts.

"If you track Channel Ten's share price since they lost the AFL, it's been going downwards the whole time," Smith said. "This time they have to get some AFL or NRL games. Without them, they are in trouble."

Satellite broadcaster Sky paid a mammoth £4.2 billion to retain the rights to the English Premier League, a pointer to the value placed upon marquee sporting assets. The great unknown is the worth of digital rights, with consumers increasingly expected to watch live football on devices in the future.

"That could be [digital rights holder] Telstra or it could be broader than that," Smith said. "Down the track, there will be what I call the disrupters, it could be google or Netflix or somebody else coming into the marketplace as well."

The NRL is also exploring strategies such as playing the games in quarters to allow broadcasters more advertising windows.

top of page

Seven-point plant for NRL's TV rights windfall

With the NRL season kicking off this weekend, Fairfax Media asked Global Media and Sports boss Colin Smith how the code had to innovate to yield $2 billion in broadcast fees.

With the existing deal expiring at the end of the 2017 season, Smith said 2015 was a critical year for the NRL to initiate the changes necessary to deliver this windfall.

"The NRL has to explore new opportunities, like Cricket Australia, which is currently working on plans to have a day-night Test," he said.

"Australia, unlike the USA, is a highly concentrated professional football market across four codes with 47 professional clubs, many struggling to break even. The NRL is currently supporting the Knights and Wests Tigers and last week, the Titans. Broadcast fees are its lifeblood."

In order to win $2 billion, Smith makes the following recommendations:

1. "All games need to be live on TV, with opportunities for broadcasters to have more advertising. Swapping the Friday night games, where Brisbane sees a Queensland team at the same time as NSW sees a Sydney game and then flip the two games, works. But Channel Nine can't delay its Sunday coverage any longer."

Smith revealed that he once sat with three top coaches - Wayne Bennett, Tim Sheens and Des Hasler - to explore ways to find more advertising time in games. "They were very supportive. We found you could get four or five more ads from a one-minute break in play, but nothing eventuated."

2. "An additional team in south-east Queensland, which is either a new team or a relocated team from Sydney. The NRL must add another Queensland team to the Broncos, Cowboys and Titans to expand their TV programming options.

Queenslanders love watching Queensland clubs first, then the Storm, then the other clubs. A second team playing out of Suncorp Stadium would give Nine and Foxtel the opportunity to gather more audience from Queensland."

3. "The very successful Auckland Nines must be the season kick-off for the NRL."

4. "Build a World Club Championship of up to four teams between England and Australia." In the same way the ARU gained a financial bonus from Britain paying a fourfold increase for SANZAR rights, any added exposure of NRL in England will add value.

5. "Develop a specific window for an annual Tri-Nations between Australia, New Zealand and England to build an audience.

6. "Protect and grow the game in Melbourne, if only to enhance the ultra premium product, State of Origin. This will grow the current 12 million-plus TV audience."

7. "Ensure there are annually NRL games in Perth, Adelaide, Wellington and possibly Port Moresby and regionally Wollongong, Cairns and Rockhampton."

top of page

Why English Premier League matches are worth $20m each

Ten billion dollars, eight times the cost of AFL rights, ten times the cost of NRL rights and 63 times the cost of the A-League's free-to-air rights.

That is the staggering amount British broadcasters Sky and BT paid for the rights to the English Premier League for the next three seasons, a 70 per cent increase on their previous deal.

It will cost them $20 million per game, a figure that has left many observers in shock.

So why did Sky pay the lions share of $10.1 billion for the rights to the world's second most expensive competition? Live sport is the last frontier in television's battle with online streaming, the lifeblood of the all-in-one pay-TV package. It is the last mass justification, particularly for the all important 20-35-year-old male age bracket, to pay more than the $10 a month it costs for streaming services.

In a world where viewers are fragmenting it is the only spectacle where you can virtually bank your audiences.

"For anybody who is involved in broadcasting, sport is a must have property," said Colin Smith, who has been arranging sports broadcasting rights for Global Media and Sports in Australia for the past decade.

The evidence is in Channel Ten's recent experience, without a major code on its screens it has struggled to maintain audience numbers against its rivals.

The other form of live TV, Reality, has a shelf-life of two to seven years, while major sporting leagues return on their investment year after year for the duration of the deal.

Globally, sport accounts for approximately half of the programming costs of TV networks, according to Price Waterhouse Coopers [PWC]. Television has maintained a stranglehold on perceptions of "live" programming for decades and as the medium faces the biggest challenge in its history, it is the last thing it can afford to let go of.

Sky, which is 39 per cent owned by Rupert Murdoch's 21st Century Fox Inc., has used the lure of the Premier League with teams including Chelsea, Manchester United and Arsenal to become Britain's biggest pay-TV provider.

According to PWC the value of TV sports rights in the US alone increased 18.7 per cent in 2014. In Australia it is a similar story, the upcoming 2016 AFL deal is expected to net $1.6 billion, a $300 million increase on the current arrangement.

It is a relationship that is mutually beneficial, television economics and sport economics are intimately intertwined. Just as sport accounts for half the expenditure of television networks, television networks account for the largest source of revenue for most professional sports, according to the World Intellectual Property Foundation.

Such is the zeal with which sports receive the cash injection it can inspire anthropomorphism.

When the A-League received its $160 million from SBS in 2012 it prompted Football Federation Australia chief David Gallop to say: "The former sleeping giant of Australian sport is awake. He's out of bed, he's in the street and now has some cash in his pockets."

But don't expect the cash injections into Australian sport to push up to anywhere near the levels of the UK or the US.

Australia's anti-siphoning laws mean that all the major codes have to show at least half of their content on free-to-air TV.

"A pay-TV operator can afford to pay at least two to three times more than a free-to-air operator due to multiple income sources beyond advertising dollars," said Mr Smith.

Nevertheless, the debate about whether the millions of dollars end up in players' pockets or in grass roots organisations re-surfaces at each new deal, as it has again in the UK.

"These are incredible sums of money and it would be nothing short of criminal if none of this extra money goes to expand participation at the grassroots of football," said UK labour politician, Clive Efford.

When the NRL's last deal was sealed for over $1 billion in 2012 it was clear who the winners were going to be.

"The players and the clubs are all going to get a drink out of this," Channel Nine chief executive David Gyngell said at the time. "There is nothing surer."

Free-to-air deals in Australia may be safe but the relationship between sport and pay TV is about to get a bit more complicated.

As the cost of rights increase, so does the cost of subscriptions, while online streaming services continue to proliferate and slash their fees.

Eventually, the moves could push the justification for a subscription beyond the lounge room and into the pub.

In the race to the top, the two biggest beneficiaries of the TV world's "special relationship" could be about to cannibalise themselves.

top of page

Super Rugby should run through June Tests - RUPA

Super Rugby should run through the June Test window, to retain the "integrity of the competition" and improve "the continuity of fan-engagement", Australia's Rugby Union Players Association (RUPA) says.

A strategic report conducted by consultancy firm Global Media and Sports, commissioned by RUPA, delivers a strong message that Super Rugby must do whatever it can to embrace the fan for the competition to be successful; and that includes "a simpler game with more action and less stoppages", and the simplification of franchise names for the public to understand the team names.

The RUPA-commissioned report argues there must be "geographical links within team names and branding", as a high percentage of the general public has no idea about the identity of the franchises. Names such as Blues, Hurricanes, Stormers, Rebels confuse the public.

"Whilst rugby cannot control its product as dynamically as AFL and NRL, it can invite a global audience and leverage its international brands,' the review says.

"The AFL is limited to 22 million people or so, and unashamedly follows the NFL as a domestically focused model. Rugby league has slightly more reach than AFL; interestingly in every market [in] which the codes competes, with the exception of Australia, rugby dominates league.

"However, for reasons dictated by our SANZAR partners, the promotion and marketing of Super Rugby within Australia is unable to capitalise on one of our game's key differentiators. Without them being the Auckland Blues or the Cape Town Stormers, rugby's internationalism is unable to be packaged and sold to fans.

"Without these identities including their geographical heritage within their brands, this opportunity is lost and rugby fixtures merely add to the cluttered mire of professional franchises in Australian sport."

RUPA, meanwhile, said the inbound Test June window, during which Super Rugby is put on an extended pause "gravely distorts the integrity of the competition" and reduces "the continuity of fan-engagement". And this limits the "capacity for teams to maximise their pre-Test momentum in match-day and TV audiences, and impedes in allowing the competition to culminate to a meaningful finals series crescendo".

"On the contrary, those teams who have struggled prior to the break - and then disappear from the fan radar for almost a month - only to return for two further Super Rugby matches have the impossible challenge of attempting to re-engage their supporter bases for two futile rounds. The disappointing performances - on and off the field - of the Force and Rebels in recent seasons illustrates this concept."

The review said the NRL was able to handle this issue effectively during State of Origin series each season, as the premiership continues throughout that period with State of Origin player exempt from competition rounds. (Interestingly, NRL clubs often push for an Origin window in which the premiership pauses.)

"The NRL experiences have shown that, whilst there may be some change in the competitive balance of the teams, the State of Origin period is highly beneficial in exposing developing players to the top-level of competition. From a 'whole-of-game' perspective, the capacity for more emerging players to be exposed to Super Rugby could be a major strategic improvement in growing the mass of developing players."

It is also imperative that Super Rugby improves the live "in venue" match experience, the report suggests. 'Rugby has the challenge of having to differentiate its live 'in-venue' match experience from the live broadcast in order to drive and maximise match-day revenues. In order to do so, the rugby product needs to be adapted - preferably as a simpler game with more action and less stoppages - in order to compete within the entertainment marketplace.

"Developing match-day innovations and improving the ability of the general public to understand and appreciate the complexities of the game is required. These complexities lend themselves better to reliance upon a commentator's explanation."

The report added that the six-team finals format was "competitively and commercially flawed for Australian Rugby".

"In the best interests of the Australian rugby economy, it is essential that the Reds and Waratahs consistently make the finals. The size of their markets and the financial spin-off to those Super Rugby clubs and the Wallabies through increases in media ratings, ticket and licensed product sales attests to this. There is a significant difference to the finances of Australian rugby between the Brumbies hosting a Super Rugby final, or the Reds and the Waratahs. The differential is in the order of millions of dollars.

"An example of this was the Brumbies in 2013. Their on-field successes did not translate into any significant revenue growth. Compare this with the Reds in 2011.

"The majority of professional players also originate from Sydney and Brisbane. This provides the Waratahs and the Reds with a significant recruitment advantage, which is reinforced through the fact that in excess of 70% of the ARU's current national contract is currently paid to players in those two teams. There is no level playing field within Australian Super Rugby or across the entire Super Rugby competition.

"In order for all of the Super Rugby clubs to be competitive and commercially viable, there needs to be a competition structure which provides all teams with an equal chance of making the finals. Currently the game in Australia cannot afford for this to occur. As it currently exists, the Waratahs and the Reds are handicapping certainties while the racing careers of the other three contenders appears to be very limited.

"Towards the end of the competition, the lowly positioned teams play too many dead rubbers which have a significant negative impact on interest in the competition. A 10-team Australian/New Zealand competition, with a final six would have integrity and would provide some corrections to these imbalances."

top of page

Players fear ARU not acting in Australia's best interests

The Australian Rugby Union is hoping for a considerable financial boost from its new broadcasting deal, but still it will not be flush with funds.

The ARU is understood to be close to finalising a broadcasting deal with Fox Sports Australia, which could see the code receiving around $A40 million per year; this compares well with the current deal of $A25 million per year, but some insiders argue the new deal, which starts in 2016, may be closer to $A30 million per year - in which case, the ARU, which has already intimated that it may be insolvent by early 2015, is in enormous financial trouble.

ARU officials have been eager to take credit for any increase, but the reality is that any substantial boost in the broadcasting deal fee will be due to overseas content - in particular from Europe. Sky Sports in the United Kingdom is the major source of the increase, and high-ranking television sources have told ESPN that Australia's involvement, in particular the role played by ARU chief executive Bill Pulver, has been "minimal".

ARU sources, meanwhile, have told ESPN that a great deal of the anticipated extra television rights money - around $A8 million - is required to "balance the books". This includes around $A3-4 million for the ARU to continue propping up the ailing Melbourne Rebels organisation.

The Rebels, who are looking for a new private owner after the departure of Harold Mitchell, have for some time been a major blot on the ARU financial landscape. Any money left over will then be required to keep the Australian Super Rugby franchises on side, as their ARU funding has dropped dramatically in recent years. After being around the $A4.3 million mark for each province in 2011, the funding has collapsed by around $800,000 per Australian team.

The situation whereby Australian rugby continues to be short of cash deeply concerns the Australian Rugby Union Players Association (RUPA), whose officials believe fervently that better planning would have averted this problem. As a senior rugby official said this week: "It is like watching a train wreck about to happen."

RUPA officials, meanwhile, are underwhelmed by the SANZAR decision to expand Super Rugby from 15 to 18 teams in 2016, with new sides from South Africa, Argentina and Japan. There is confusion how much these three new teams will receive from the SANZAR coffers, and whether it will cut deeply into Australia's revenue stream.

RUPA officials argue the confirmed tournament expansion is dreadful for Australian rugby, spelling out their argument in intricate detail in a 100-page report that was presented to the ARU before the SANZAR decision.

RUPA commissioned the report, titled 'Strategic Review of Super Rugby Competition Models' from the consultancy firm Global Media and Sports, and ESPN has obtained a copy of the report. The report says: "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 argues that the new format will lead to a slide in TV ratings, match-day attendances and interest in the competition in Australia; hence the report suggests the new format of the competition will prompt increased financial losses for the Australian Super Rugby provinces and the ARU.

RUPA, instead, argued that a 10-team Australasian conference, involving just Australian and New Zealand teams, would have been a smarter option for Australian rugby, and more financially viable, as it would entice, rather than turn off, local viewers.

The revamped Super Rugby competition sees the Australian teams play one less home game every second season, which is another major concern. The franchises rely heavily on the home gate, and one less home match will hit them hard; it could easily determine whether they make a profit or a loss for the season.

The revamped competition will also reduce dramatically the number of Australian Super Rugby derbies, which the RUPA-commissioned report says "are critical for the financial viability of the Australian Super Rugby teams, in terms of attendances, sponsors, merchandising".

The report, which emphasises that the Australian professional football market is saturated with 47 teams from four different codes, includes a quote from Clyde Rathbone player to push its argument. The former Brumbies and Wallabies winger wrote for Fairfax Media in March that: "Supporters want to watch matches that connect them with human struggles - few things bring about this struggle better than contests between bitter rivals. So it's concerning that SANZAR has mooted reducing the derbies that form the lifeblood of Super Rugby in Australia."

The report continued: "RUPA has material concerns that the SANZAR Super Rugby competition model has not been comprehensively analysed either as a business case or with respect to fan engagement. The competition model may also have a detrimental impact on New Zealand Rugby as well. Data advises that Australia and New Zealand Super Rugby TV ratings would increase by up to 48% (Australia) and 55% (New Zealand) if an Australasian Conference model was adopted."

The report includes figures of Australian Super Rugby live pay-TV ratings between 2010 and 2013, with Australian derbies attracting the highest ratings of around 115,000. By contrast, games featuring Australian teams playing New Zealand teams in Australia produced ratings of around 97,500; games featuring South African teams playing in Australia produced ratings of around 85,500. Australian teams playing New Zealand teams in New Zealand produced average ratings around 84,750, while Australian teams in South Africa attracted a paltry 19,750.

The report also stressed it was "imperative" that Super Rugby in Australia involved "free-to-air coverage in suitable time slots to maximise the game's exposure". The report said: "Without free-to-air coverage, rugby's growth will forever be limited by the penetration rate of pay-TV in Australia."

The report delved into Australian rugby's parlous financial state, describing it as "an erosion".

"One of the principal reasons for the degeneration of the game's finances has been the game's inability to provide a substantial and sustainable mix of products to the Australian sporting marketplace. Another principal reason is the limited investment into Super Rugby either by the ARU, the Super Rugby teams or external investors, as compared to the AFL, NRL and A-League."

The report referred to a 2013 financial report commissioned by the ARU, which highlighted the "perilous position of the ARU, with a forecast negative cash balance in 2015" and showed consolidated losses for Super Rugby around $A15 million per annum. There was an estimated negative ARU cash balance in 2015 of $A6 million.

"Australian rugby is now at the point where it appears that the only Super Rugby franchise that is profitable is the Queensland Reds, with the Rebels being a significant loss maker. The current financial position of the other three franchises is quite challenging, especially with the position of the Waratahs and the Western Force continuing to decline quite dramatically. However, after community rugby investments, all Super Rugby teams are in loss.

"The impact of the decline in revenues, over nearly every year for the past six years, excluding the Lions tour, on the Australian rugby economy, has been further exacerbated more recently by rising costs to the addition of an extra franchise. These declining revenues have also been responsible for an under-investment in the future of the game through the reduction in community and state rugby payments and a substantial reduction in working capital.

"Australian rugby's perilous financial position is reflected in the fact that it is now the fourth-ranked football code in Australia … it trails the other football codes in participation, audience and broadcast revenues. The A-league is now a larger TV sport than Super Rugby.

"Television audiences in Australia are higher when the Australian teams play at home, with the Reds being the standout, and the Waratahs has the largest potential TV market. While the Rebels' financial performance is very poor, its TV ratings are higher than the Western Force. Attendances are also decreasing in Australia and New Zealand. South Africa continues to be a standout.

"One positive statistic is that the Wallabies, especially against the All Blacks and the Lions, continues to be 'must watch' TV."

The report also delves into the Australian player drain, arguing that "the ARU needs to seriously consider the adoption of a more realistic and flexible approach to player selection and contracting in order to accommodate the impact of the international player marketplace."

top of page

Why Australian rugby may win the Bledisloe Cup and lose everything

A previous time the Australian Rugby Union was negotiating with broadcasters over a new television rights deal, its then-chief executive Gary Flowers got short shrift from the sport's longtime free-to-air broadcaster.

Before he left the ARU in 2007, Flowers met with then Seven West Media boss David Leckie, a rugby fan who was awarded an honorary "Blue" from Macquarie University, where he played the game during his studies.

Flowers leaned towards Leckie and said earnestly: "What can the ARU do for Seven?"

Leckie, a renowned character, replied: "Can you take your sport to another network?" Leckie went on to hammer Flowers, insisting that scrum interpretations and too many penalties were ruining rugby.

The ARU eventually signed a deal for its free-to-air rights with Nine Entertainment in 2010.

Yet as national team the Wallabies prepares for its clash against its great rival, the New Zealand All Blacks, on Saturday night, a wave of optimism has swept rugby's ranks.

Fans' hopes are high that Australia can win the Bledisloe Cup for the first time in 12 years and go on to win the four-nation Rugby Championship, which includes South Africa and Argentina.

However, in business and financial terms, the game's standing and popularity are arguably lower now than when Flowers met Leckie, highlighting the huge task for the current ARU boss Bill Pulver.


The real game is now off the field, with the ARU in talks for a new and more lucrative broadcast rights deal and plans to expand the Super Rugby competition potentially jeopardising clubs' financial viability.

Rugby union coverage has bounced around the networks in the past decade. While Super Rugby and Wallabies matches have been a constant presence on pay-television provider Fox Sports Australia, all three free-to-air networks have shown Wallabies games.

After a long stint on Seven, the new five-year rights Fox signed in 2010, worth $25 million annually, saw the free-to-air component on-sold to Nine for about $5 million each year.

But last year Nine gave up on rugby, passing the rights to Network Ten at the same cost.

What Pulver can extract out of Australian broadcasters and potentially his SANZAR partners in New Zealand and South Africa is crucial because the very financial viability of the code in Australia depends on it.

Pulver and the ARU have set the bar high, saying the sport deserves a significant increase in the $25 million Fox Sports and Ten currently pay, perhaps as much as a $40 million cash and contra deal soccer receives each year.

But can the code get back to the glory days of the early 2000s when the Wallabies regularly attracted TV audiences around the country of between 1 million and 1.5 million?


Steve Allen, managing director of media firm Fusion Strategy, is not so sure.

"It'll be a great effort if they get [a national TV audience] of 800,000 on Saturday night.

"It just isn't one of the top-tier sports on TV any more."

Even at Allen's 800,000 mark, Wallabies matches are an attractive proposition and may well be worth more than the $5 million Ten pays annually.

The real problem for the broadcasters and the ARU is the provincial Super Rugby competition that the NSW Waratahs won in such thrilling fashion only weeks ago.

Pulver wants Super Rugby to have some free-to-air exposure but ratings on Fox Sports have fallen in recent years even if the NSW grand final win attracted 375,000 viewers.

Changes are coming that could stunt its growth in Australia even more. From 2016 onwards, a team in South Africa and new franchises in Argentina and Asia, most likely in Singapore, will be added to the existing five teams in New Zealand, Australia and South Africa.

Crucially though, the new 18-team competition would deliver fewer local derbies or matches between the five Australian teams.

It is a prospect that is worrying Australian broadcasters. Matches between Australian teams rate well; games between Australian and New Zealand teams slightly less so. However, viewer interest in matches between Australian and South African teams drops alarmingly.

Broadcasters, therefore, question how the ARU can achieve an increase in broadcast revenue from local operators when the competition will, in effect, be delivering less high-rating Australian content.


Fox has said it wants to renew its TV rights at the right price; Ten boss Hamish McLennan has indicated Ten wants Wallabies matches but is unsure about the new structure; and Seven is said to be at least interested in chatting to Pulver.

Those involved in rugby are also worried. The Rugby Union Players' Association commissioned a report that says the mooted 18-team competition would spell financial disaster for Australian rugby, with many franchises already losing money and the ARU set for big losses this year and next.

"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 says. At the moment, the Queensland Reds and Waratahs are profitable; the Canberra-based Brumbies and Western Force are heading for a small loss, but the Melbourne Rebels a multimillion-dollar loss.

The report, seen by The Australian Financial Review and titled "Strategic Review of Super Rugby Competition Models" by consultancy firm Global Media & Sports, says ratings, match-day attendances and interest in Super Rugby in Australia would all slide under the new model.

Based on historical figures of ratings up to 2013 (viewership for Super Rugby dropped a further 10 per cent in 2014 on Fox Sports), the report says the current competition attracts an average TV audience for each match of about 60,000, games played in South Africa and overnight Australian time.

The report forecasts that figure could drop 13 per cent to about 52,000 per match if the planned 18-team model is adopted.

For the five Super Rugby franchises, it would be a financial disaster. Match day revenue – which accounts for about 25 per cent of income – would fall with fewer matches against other Australian teams, as well as a drop in sponsorship. Overall losses for the franchises could treble to a combined figure of about $6 million annually.


However, those figures assume that Pulver and the ARU are not able to gain a considerable increase in broadcast rights or more income of the overall SANZAR pool.

Pulver says the ARU will have two negotiations, firstly with Australian broadcasters and then with his South African and New Zealand counterparts, where he hopes to gain a greater share of income when the three pool their broadcast revenue.

The Rugby Union Players' Association's (RUPA) chief executive, Greg Harris, says his organisation has been supportive of the Australian Rugby Union.

"To date, RUPA's dialogue with the ARU has focused on the need to ensure that the best interests of the game and the players in Australia are the priority in any future competition," Harris says.

Harris says what RUPA wants, instead of just criticising current strategy is to offer more financially viable alternative strategies.

"Realistically, if, following the ARU's media values negotiations and other financial assessments, the proposed model does not generate sufficient capacity for the ARU and the Super Rugby clubs to viably fund their businesses then they will be forced to look at alternatives."

RUPA's big plan is for Australia to effectively ditch South Africa for Super Rugby and team up with New Zealand for a cross-Tasman competition, or even go it alone and expand into Asia.

Under the modelling in the report, an Australia-New Zealand Super Rugby competition would attract 48 to 55 per cent bigger television ratings in both countries – with no matches involving unpopular South African teams.


The five Australian franchises would also be better off, with match day revenue forecast to grow by about 14 per cent and sponsorship to at least maintain its present level. Overall, the five franchises would at least break even in fiscal terms, even with an increase in team wages.

Should New Zealand not want to take part, the RUPA report recommends the radical option of bringing in at least two Japanese teams to an Australian competition, with the hope of attracting more television and commercial income. (Japan is hosting the 2019 World Cup.)

New Zealand Rugby Union, with tens of millions of dollars in the bank, has so far supported the 18-team push.

Either way, splitting from South Africa – which has the strongest domestic competition underneath Super Rugby – is a vexed issue.

Australia still needs to play the national South African teams, and the All Blacks for that matter, regularly every year. A split at Super Rugby level could put that at risk.

However, RUPA argues that without Australia competing in The Rugby Championship, which also includes Argentina, the value of local rights for South Africa and New Zealand would fall.

In short, RUPA says Australian rugby cannot afford to stay with South Africa in an expanded Super Rugby competition, but South Africa and New Zealand need Australia at national level. If beating these great rivals on the field was not difficult enough, the rucking and mauling off the field is sure to be just as intense in the coming months.

top of page

Pulver's Super Rugby TV deal promise premature

Broadcasters and TV rights analysts question whether Australian Rugby Union chief executive Bill Pulver can deliver the pot of gold needed to save the professional game from oblivion.

They claim Pulver has negotiated in reverse, agreeing with SANZAR on an expanded 18-team competition from 2016, ahead of confirming with Australian broadcasters what they will pay for it.

Pulver has said the ARU can gain a significant uplift in TV rights for Super Rugby and Wallaby matches, equivalent to the payment Football Federation Australia receives for the A-League and Socceroos matches.

Analysts and broadcasters alike say this is overly ambitious, comparing it with the "stairway to heaven" valuation of $68 million a year V8 Supercars put on itself at a time when Channel Seven was paying $27 million. Seven subsequently renegotiated for $18 million and six months ago Channel Ten and Fox Sports combined for a deal of $35 million.

FFA currently receives $25 million from Fox Sports and $7 million from SBS, not the $40 million on which Pulver bases his claim that the ARU should receive more than the current payment of $25 million.

In the TV industry, content is king and in sport this translates to prime-time games, not 3am games beamed from South Africa.

Under the newly agreed SANZAR competition structure involving South Africa and New Zealand, the number of fixtures per Australian team is 15, compared with the A-League's 27, while the total number of home fixtures featuring Australian rugby teams is 37, compared with football's 122.

This produces the most significant statistic for a broadcaster: the total number of live home fixture hours is 74 for rugby union and 244 for football.

Both rugby union and football are shown mainly on pay TV, but Fox Sports is also willing to pay more for the A-League because it needs a summer growth profile, particularly with the Big Bash migrating to Ten.

It's no surprise, therefore, that 10 years after the Rugby World Cup in Australia, when the code vied with rugby league for second place in the pecking order behind Australian football, rugby union is now last behind football.

The new SANZAR competition structure reduces the number of local derbies between Australia's five Super Rugby teams, meaning every second year they will lose a home game.

A GMS report provided to the ARU and the New Zealand Rugby Union in 2013 clearly indicated that fans watching on TV in Australia and New Zealand preferred local derbies, followed by games involving trans-Tasman teams. Their least favourite teams were from South Africa, whether the game was played here or in South Africa. The data supplied contradicts Pulver's public comments that local derbies are important only with the Reds and the Waratahs.

A subsequent GMS report in 2014, commissioned by the Rugby Union Players Association, reinforced this and highlighted that the current Super Rugby competition would continue to make losses of approximately $14 million per year.

The new 18-team model is even worse, with a projected annual loss of $19 million.

While Pulver has promised his five Australian teams a rise in annual grants of more than the current annual payment of $4.5 million each, the GMS report claims they need an increase of 165 per cent in rights fees to ensure the Australian Super Rugby teams break even.

While income from SANZAR broadcasters is pooled, the money paid for coverage of domestic competitions – South Africa's Currie Cup and New Zealand's ITM Cup – is not.

It is extremely unlikely that Australia, which will launch its own domestic competition in August, would receive a third share of this.

South Africa will have to fund a new franchise from Port Elizabeth and there is a new partner in the sharing arrangement – Argentina, who join the South African conference.

Analysts claim that the only way the ARU can significantly increase TV revenue is to convince South Africa's broadcaster, SuperSport, to pay more for Australian and New Zealand games shown in South Africa.

Rugby union is the No. 1 sport in South Africa, with 8.8 million people annually watching the 60 regular-season games involving only Australian and New Zealand teams, excluding finals.

But, as one broadcaster said, why would SuperSport pay more for non-South African games in a 2016-2020 competition structure that has already been agreed?

The popularity of rugby union in South Africa is the main reason why Australia and New Zealand agreed to the retention of the tripartite relationship.

Threats that South Africa would move to play in a more time-zone-friendly competition in Europe are baseless.

Europe has recently finalised its club-based European Champions Cup, meaning South Africa has no alternative other than to play (and pay?) with Australia, New Zealand and Argentina over the five years.

Unless South Africa tips more money into the SANZAR pool, Pulver's promised pot of gold is more akin to the song Fool's Gold by Quote Unquote: "Everything we had is like a pot of gold, non-existent at the end of the rainbow; It all seemed so real, it all seemed so perfect, but it was just an illusion."

top of page

South African Rugby Union integrity questioned over TV revenue

The head of the joint venture governing Super Rugby and the Rugby Championship has defended its integrity heading into sensitive negotiations over the value of the new competition.

Figures compiled by a leading sports consultancy firm and obtained by Fairfax Media show South African broadcaster Super Sport pays roughly the same amount of money for Super Rugby as its domestic competition, the Currie Cup.

The Global Media & Sports report, commissioned by the Rugby Union Players' Association and distributed to all Australian Super Rugby franchises and the ARU, calculated that on a cost-per-viewer-hour basis, Super Sport paid $10 million for 33 Currie Cup games in 2013, compared with $10.9 million for 125 Super Rugby games. That is despite the Currie Cup attracting 18 million viewers, 23 million fewer – or less than half – per year than Super Rugby's 44 million in South Africa.

In contrast, New Zealand broadcaster Sky Sports paid the New Zealand Rugby Union roughly double the amount for the rights to Super Rugby ($11.9 million) as its domestic competition the ITM Cup ($6.3 million), which attracted half the television audience (six million compared with 12.5 million).

The figures back up long-held concerns the South African Rugby Union negotiated a richly sweetened deal from Super Sport for the Currie Cup knowing that under the terms of the joint venture, it would not have to share the revenue with its partners Australia and New Zealand. Greg Peters, chief executive of SANZAR, rejected suggestions South Africa had not negotiated in good faith.

"Under the terms of the joint venture all three unions are obliged to act in good faith. The Currie Cup is a very valuable property and Super Sport pay accordingly," Peters said.

"At the time of the last deal (2009), SANZAR had not determined what Super Rugby would look like at the time so South Africa took the domestic product to market, which it was entitled to do at the time.

"There is no doubt they got good value but the most important thing for us now is to be considering what Super Rugby and Rugby Championship are worth and putting those to broadcasters. If we get the right money from those it's almost irrelevant what those domestic products are worth."

But two weeks after South Africa, New Zealand and Australia agreed to go ahead with an expanded 18-team competition from 2016, it is understood SANZAR is considering beefing up its governance protocols.

It is understood that when a union is finalising its Super Rugby deal with a broadcaster, a member of one of the other two unions will need to be present. It is hoped the measure will guarantee better oversight of countries' individual negotiations and lead to increased trust among the joint venture partners.

Peters was in Dublin this week, where the International Rugby Board has its headquarters, with the three union chief executives, including ARU boss Bill Pulver.

It is this next phase of negotiations that will be the hardest fought, despite agreement being reached on the most public aspect of the new competition - its structure.

A key battle front is how the pooled broadcasting revenue will be divided among the three unions. Each country will still take its domestic competition to market first (Australia has already secured a reported $1.5 million for the National Rugby Championship) and be entitled to keep the proceeds to itself, before going a second time to broadcasters with Super Rugby and then the Rugby Championship.

The proceeds of those two deals made between unions and their respective broadcasters will be pooled and divided between the SANZAR co-signatories. But with no ongoing agreement on how that is done, the ARU is not guaranteed the one-third share it currently enjoys, which was secured by then-chief executive John O'Neill in 2009.

Australia must fight all over again for an equal or greater share with its partners and rivals. And it is here that the ARU is readying itself for war, since SARU can be expected to use its sixth mouth to feed (the Southern Kings) as a justification for demanding a greater share, while Australia will demand a larger piece of the pie, having broadly submitted to every one of South Africa's demands on the structure of the expanded Super Rugby competition.

"We all play together and need each other's teams to turn up and we need rugby to be funded in each of the three countries, but we also need a recognition of the value of each of the markets and that is not resolved yet," Peters said.

This is all assuming that a bigger pie is possible this time around. And there is worrying speculation the new two-division, four-conference model that leaves six South African teams in one division with Argentina and an Asian team, will in fact be less palatable to Super Sport, who already have a competition with a strong South African flavour (the Currie Cup).

Peters said SANZAR was confident it could secure "uplift", despite the format's implications for the most lucrative market.

"We're confident in the value of our product in the market place and we are hearing positive noises from the market that indicate we will extract the correct value," he said.

top of page

ARU finances leave players unclear on future

The Australian Rugby Union's contracting process has effectively stalled, with a dozen players offered Wallabies contracts making no move to sign them, despite the lure of playing in the World Cup next year.

The harsh realities of Australian rugby's dire financial position are starting to hit home, with players being made offers in some cases up to $100,000 lower than when they previously negotiated their existing contracts.

Although under the terms of the collective bargaining agreement, players are entitled to 26 per cent of player-generated revenue, the ARU at one point was overpaying on players' salaries to the tune of 32 per cent. Such largesse is out of the question now, with the ARU battling to stay afloat for another 18 months until the new and hopefully improved SANZAR broadcast deal kicks in.

"The players are at the point where they can't get their heads around what is being offered," one Super Rugby coach told The Australian. "Do I think they're all going to leave? No, because the lure of playing for the Wallabies, especially in a World Cup, is still a very strong (one)."

There is also the added uncertainty from the players' perspective of not knowing precisely what manner of competition they will be playing in from 2016 or whether their Australian franchises will actually be able to pay them if SANZAR goes ahead with its plans to expand to a 17- or 18-team competition.

Research conducted for the Rugby Union Players Association by external consultants Global Media and Sports paints a gloomy picture of the financial impact of such a competition, most especially on the damage that would be caused to Australian franchises if they lost one local derby match every two seasons. That would entail a financial hit of about $1 million, which one Super Rugby chief executive yesterday estimated would make the difference between survival and bankruptcy.

However, RUPA chief executive Greg Harris believes players are not looking so far down the track at this point.

"That might form a small part of their thinking but mostly they're saying to themselves, 'there's not enough money here … the money is better offshore'."

Opportunities overseas, however, might not be as plentiful as many players believe. British clubs have a limit of two foreign players and even then to qualify they must have played Test football within the preceding 18 months. And most clubs have filled their rosters for next season.

The fear is that once the World Cup is over, there will be a stampede for the door if Australian rugby still is not in a position to match the European contract offers. Harris claimed the ARU might have no alternative, if it wants to field a competitive Test side, to taking "a more flexible approach" by abandoning its long-held position that only players who have competed in Super Rugby are eligible for Wallabies selection.

"At the end of the day, if they (the ARU) haven't got the money, they can't pay it," said Harris.

"Maybe the solution is to set a quota of allowing, say, five overseas-based Australian players to be selected in the Wallabies at any one time.

"That way Australia gets to use these players at virtually no cost to itself. Instead of paying them hundreds of thousands of dollars, they only have to pay them the $10,000 Test match fee.

"The other battle Australian rugby has to brace itself for is if the NRL raises its salary cap to $7m, although at the moment we're losing players to league not at the Test level but at schoolboy level."

top of page

ARU has everything to lose in Super Rugby expansion

Professional rugby union in Australia is lurching inevitably towards a financial cliff, with rising costs and falling revenue expected to exhaust cash reserves midway through next year.

Five reports, commissioned by both the ARU and the players' association RUPA since 2008, have all pointed to this date with indebtedness, raising the question whether directors of the ARU are concerned about future claims on their own assets.

Chief executive Bill Pulver acknowledges the dire position, saying, "Australian Rugby Union has been upfront about the financial challenges facing rugby, and we are working with our members and the rugby community to build a sustainable financial model for our game."

The ARU annual general meeting, scheduled for April 1 has been put back to May 26, with Pulver saying it will enable the ARU, "To fully assess our financial position and take the steps necessary to ensure the continued financial viability of our game."

A new SANZAR competition structure, which will expand the number of teams competing from 15 to 18, exacerbates the ARU's financial peril because it reduces the number of income-earning local derbies from two a year to three over two years.

One independent report prepared for RUPA, presented in February, states, "The inescapable strategic issue is the absence, under the current and proposed Super Rugby structure, of sufficient locally attractive matches to generate the revenue needed to pay for Australian Super Rugby teams. Either the management of Australian rugby has the courage to face up to that reality and force change with its SANZAR partners, or it will continue over the precipice it has now reached."

It predicts that unless there is a serious revenue restructure, professional rugby will be effectively dead in Australia by 2020.

"It is likely that by the time of the subsequent broadcast agreement renewal that Australia's second tier of professional competition [Super Rugby] will have been destroyed. Once that occurs, Australia will be reduced to the situation of Argentina, ie having its best players spending most of their year playing in northern hemisphere club competitions."

Only the Brisbane-based Reds of Australia's five teams makes a profit, with the total annual cost of running them ($84 million), about $15 million more than the revenue generated.

Included in these costs are $10 million in ARU payments to Wallabies players, whose revenue from Test matches reduces the overall annual debt to $10 million, according to a Saltbush Capital Markets report.

It is expected the $38 million net windfall the ARU received from hosting the 2003 World Cup will have disappeared by June next year.

Another report, prepared by Global Media and Sports and commissioned by RUPA, claims the expansion of the SANZAR competition in 2016, through the addition of a sixth team from South Africa, another from Argentina and perhaps one from Japan, will reduce revenue by $7 million a year and increase costs by $3 million.

Both South Africa and New Zealand refuse to expand the number of SANZAR matches because it would affect their lucrative domestic leagues – South Africa's Currie Cup and New Zealand's ITM Cup.

Their domestic competitions mean local SANZAR derbies are not as important as Australia's intra-conference matches, such as the Waratahs v Reds.

South Africa's SANZAR teams do nothing for the code in this country. Not only does an Australian team lose momentum with its audience when it spends three weeks playing in South Africa, the Republic brings little money to the table.

The average TV audience for a Super Rugby game in Australia is 62,000. If we exclude South Africa, where games are played at 3am our time, the number rises to 95,000.

These are soft figures, considering the Auckland Nines, a new rugby league competition, generated ratings of 227,000 on Fox Sports.

TV rights from the three nations for the SANZAR competition are pooled, with Australia contributing $US12.6 million a year from broadcaster Fox Sports, $US11.9 million from New Zealand's Sky Sports and $US10.9 million from South Africa's SuperSports.

However, South Africa separately receives $US10.3 million for its Currie Cup and New Zealand $US6.6 million for the ITM Cup.

The GMS report calculates that if the South African and New Zealand broadcasters were required to pay the same fee for their SANZAR games as they do for the domestic competitions, South Africa would be paying 50 per cent more and New Zealand 12 per cent.

The ARU has proposed its own third-tier domestic competition, beginning in August.

Greg Harris, chief executive of Australia's RUPA, prefers an Australasian conference, televised free-to-air, where Australian and New Zealand Super Rugby teams play each other, combining perhaps with Japan and Argentina, with end of season play-offs against the South African champions.

"The GMS report says that the only competition which washes its face financially is an Australasian conference," he says.

RUPA claims the ARU is in "violent agreement", with Pulver saying, "Our preferred Super Rugby structure is a two conference model, with Australia and New Zealand linked with Asia. However, this option wasn't supported by our SANZAR partners or the broadcasters."

South Africa has been threatening for years to play in its own time zone against northern hemisphere countries.

Its government is driving the SANZAR expansion because of its recent insistence on the inclusion of a sixth team from the predominantly black region around Port Elizabeth.

South Africa's broadcaster, which generates massive ratings at home, has a conflict in future negotiations because it has a part ownership of two teams.

ARU directors fear the possibility of Australia being excluded from SANZAR with South Africa and New Zealand flying over us to play each other.

But that is as fanciful a proposition as the ARU doubling its TV revenue at the next broadcasting deal and stopping the coming financial Armageddon.

top of page

To reach Golden Age, ARU must survive precarious here and now

We're all guilty of doing it, of imagining an idyllic future and then projecting ourselves into it, leaving behind whatever turbulence currently engulfs us, wishing our lives away.

It's entirely understandable Australian Rugby Union chief executive Bill Pulver would entertain such daydreams. The present he now inhabits in his job is, frankly, fairly miserable and in the short-term the situation is only going to worsen.

Worse still, from his perspective, he's got to put on a smiling face because the rugby community has told him in no uncertain terms it doesn't want to be constantly reminded of the game's financial woes. Of course, that doesn't make the crisis go away. It merely means that Pulver alone is left to deal with it. By almost universally rejecting his direct appeal to grassroots supporters to support the game they love via the $200 a team levy, Australian rugby has chosen the ostrich approach. If it can't see — or even hear about the problem — then perhaps it doesn't really exist.

By 2016, in the idyllic future Pulver envisages, Australian rugby won't exactly be awash with money but will, thanks to what he hopes will be a dramatically improved SANZAR broadcast deal, have more than enough to survive and flourish. Part of his rationale for thinking the broadcasters will pay handsomely for SANZAR's product is that French rugby only recently sealed a bonanza television rights deal.

Fair enough, except the French deal is as much disturbing as it is reassuring. The worry, not just for Australia but also for its two SANZAR "partners", South Africa and New Zealand, is that a cashed-up France will be in an even stronger position to cherrypick the best southern hemisphere players.

All of that — the good and bad — is in the future. But in order for Australian rugby to reach this Golden Age, it must first survive the precarious here and now. And if times are tough now, wait until the ARU's revenue drops off by $20 million next year because the World Cup puts a hold on inbound tours.

This is the environment in which the ARU will be conducting player contract negotiations, with limited resources at its disposal. Naturally, what resources it has it will deploy to retain players it deems vital to the success of the Wallabies. That means a whole host of fringe Wallabies, highly talented but not in the Folau or Cooper category, will have to accept modest contract top-ups or none at all, at which point Toulon and Montpellier become even more attractive destinations.

Rugby Union Players Association boss Greg Harris, who regularly does the rounds of his members in the five Super Rugby franchises, recalls asking a room full of players recently if any of their agents had not discussed with them the option of heading overseas. Only one player raised his hand. At which point all of his peers laughingly advised him to get himself a new agent.

Private equity has long been suggested as a panacea but what private investor is going to pour big money into the Rebels, Brumbies or Western Force when the game is stacked against them? Where those franchises get by on budgets of $5m a year, the Waratahs and Reds, who get first choice of their homegrown talent, effectively have $7m of ARU funds poured into them annually. Their players receive top-ups cumulatively running into seven figures. Force players, by contrast, received less than $100,000.

NSW and Queensland are the biggest markets and it's in the ARU's interest for them to succeed. That's not to suggest it's biased in their favour — it's simply a statement of historic reality. But is it any wonder private investors baulk at getting involved?

Now that South Africa finally has held its presidents' council meeting to discuss what Super Rugby should look like when the new broadcast deal comes into effect in 2016, expansion has become a certainty.

The only question is whether Super Rugby jumps from 15 franchises to 17 or a mathematically neater 18.

All that remains before SANZAR makes a public announcement is some domestic housekeeping across the three core countries. The detail isn't fixed but the policy is. Super Rugby is going to get bigger, which is not necessarily to say better.

Adding an Argentinian team makes sense. Indeed, it would have made a lot more sense for SANZAR to have introduced Argentina at Super Rugby level long before admitting it to The Rugby Championship rather than backfilling now.

But the admission of a seventh South African team, the Southern Kings, benefits no one but the South Africans. It's a neat fix for their political problem because it enables the SARU to bring the ANC-backed Kings into Super Rugby without jettisoning one of their established franchises, but all it does is foist upon the competition an uncompetitive team that won't draw crowds in Australia.

With margins already so skinny, how will that impact on the financial viability of these businesses? RUPA has research conducted by its consultants Global Media and Sport that points to some franchises not surviving.

Arguably this is research the ARU should itself have commissioned, if for no other reason than it could be suggested it's in RUPA's interests to be alarmist.

But in a climate of falling wages, increased imports and rising job insecurity, what trade union wouldn't be?

top of page

Pressure Grows for Live Odds Ban

ABC video

The Federal Government is under increasing political pressure to impose strict limits on gambling ads during sports broadcasts, with several Federal MPs and the South Australian Premier adding support for tighter restrictions than simply the banning of live odds.


LEIGH SALES, PRESENTER: The Australian public appears to have had a gutful of gambling ads during sports broadcasts and the Federal Government is under mounting pressure to do something about it. Next week the federal Labor caucus will debate a private members' bill from one of its own MPs calling for more restrictions than just a ban on the broadcast of live odds, currently under consideration by the Australian Communications and Media Authority. And that's not the only move afoot, as national affairs correspondent Heather Ewart reports.

HEATHER EWART, REPORTER: The public outcry over the promotion of betting during sports broadcasts is building and so too is the political momentum for the Government to do something about it.

NICK XENOPHON, INDEPENDENT MP: The overwhelming community sentiment is that they don't want their kids to be exposed to this sort of gambling advertising and they also don't want their games to be ruined by this pernicious, insidious advertising that seems to be non-stop during a game.

STEPHEN JONES, LABOR MP: Whenever I stop somebody in the street and they talk to me about this issue, they are seething, they expect somebody to do something about it.

NICK XENOPHON: It is a big political issue and it's an issue that will get to a tipping point in the Federal Parliament sooner rather than later. You've had the Opposition leader talking about this. You've had a Labor backbencher putting up a bill. The Greens have put up a bill. I had a bill two years ago. It is becoming a significant issue.

HEATHER EWART: It is an issue that's been simmering for two years, but it boiled over in March this year during the broadcast of the Broncos-St George NRL match. Embedded among Channel Nine's expert panel was bookie Tom Waterhouse, spruiking the live odds on upcoming games.

The move outraged fans. Channel Nine responded by taking Waterhouse off the panel and putting him out on the field.

STEPHEN JONES: I think Tom Waterhouse has acted as a bit of a lightning rod for community discontent on this. You've got a face and a name and it's now well recognised and when they hear the sports betting ads, they associate it with one person and that gets them very angry.

JULIE FLYNN, CEO, FREE TV: I don't think this is just down to one person. I think this is about the whole issue and we as broadcasters are very responsive to that.

HEATHER EWART: It all came to a head this week when the South Australian Premier Jay Weatherill decided he wasn't going to wait any longer for Canberra or the industry regulator to act.

JAY WEATHERILL, SA PREMIER (Yesterday): We're banning live advertising and we have a broad definition of advertising. It's going to cover signage around the ground. It will cover broadcast, radio and television and it will cover all forms of advertising including anything that identifies the availability of live odds betting.

NICK XENOPHON: Good on the South Australian Government for going much further than what's being proposed at a federal level. It will really force the hand of the networks and the Commonwealth Government to deal with this issue.

HEATHER EWART: What's on the table right now is this proposal from Free TV, representing all the commercial networks:

JULIE FLYNN: All live odds will be banned during play. The commentators and their guests will be banned not only during play and the scheduled breaks, but also for half an hour before and half an hour after a program. And licensed bookmakers will be allowed to advertise during scheduled breaks in discrete format and clearly distinguishable from the commentary team.

NICK XENOPHON: What Free TV's proposing is really quite minimalist. You can still be inundated with live odds and gambling advertising generally before the game, at quarter time, half-time, three-quarter time, after the game, you can still have ads for gambling advertising whenever there's a commercial break.

JAY WEATHERILL (Yesterday): Look, remember, you give industry the capacity to regulate in this way and they're going to regulate to protect their interests. They're not going to regulate to protect children. They're not going to regulate to protect the public interest.

HEATHER EWART: Public submissions to Free TV on the new industry code have just closed and now it's up to the Australian Communications and Media Authority, known as ACMA, to come up with new guidelines that recognise community concerns.

STEPHEN CONROY, COMMUNICATIONS MINISTER (Yesterday): I would expect that the consultation will be completed reasonably quickly and I would expect there to be a new code put forward in the very near future, certainly before the election.

JULIE FLYNN: We are determined to get an outcome that balances the community concerns and the interests of being able to broadcast live sport to all Australians for free.

HEATHER EWART: But it's not as clear-cut as that. Next week in federal caucus, Labor MP Stephen Jones will try to exert more pressure on the Government by putting on the agenda his private member's bill to impose tougher restrictions on gambling advertising.

STEPHEN JONES: I haven't found a colleague in my caucus who've said, "Jonesy, you're on the wrong tram on this." Everyone I've spoken to says it's absolutely right, we've gotta do this. That's why I say we don't have to wait till after the election, we should do it beforehand and we should ensure Parliament - both houses of Parliament deal with this issue before the election.

HEATHER EWART: The aim is to force the Government to bring in its own legislation instead of waiting for the industry regulator. That's unlikely to get the blessing of the Communications Minister. He does, though, have the option of overruling the new code if he doesn't think it's tough enough, and in this election year, that's a big call to make.

Gambling is a revenue spinner for supports clubs and the networks and they won't give it up without a fight.

COLIN SMITH, GLOBAL MEDIA SPORTS: We would anticipate that to be approximately 10 per cent of the given advertising revenues would be currently on sports betting. Now that excludes advertorials or odds being shown during a sporting event and other advertisements on the screen, etc. ... The issue is the loss of advertising during breaks. That will be significant for them, and so therefore, any loss of revenues for them flows directly to their bottom lines.

STEPHEN JONES: I think if we don't act quickly, the sports bet advertising, the gaming revenue, will become so entrenched with the economics of the sport that it'll be hard to unravel.

HEATHER EWART: It's a balancing act for the Government over whose interests it puts first and at what electoral cost.

LEIGH SALES: Heather Ewart reporting.

top of page

Aussie Cricket Whitewash in India

see video of Aussie Cricket Whitewash in India


LEIGH SALES, PRESENTER: The Australian cricket team's loss in the fourth and final Test overnight was a humiliating end to a terrible series in India. It's the first four-zero whitewash for Australia in 44 years. It doesn't auger well for the looming Ashes series and pressure's mounting not only on the players, but on Cricket Australia too. Greg Hoy reports.

GREG HOY, REPORTER: It's been painful to watch how the wickets of the once mighty have fallen on the Subcontinent.

MAX WALKER, FORMER TEST CRICKETER: Let's not mince our words: they totally outplayed us.

MIKE HUSSEY, FORMER TEST CRICKETER: It's been difficult to watch, for sure, but India is a very, very difficult place to play.

GREG HOY: In the leadup to the third Test the Australian cricket team was in disarray as four top players were suspended and berated for not completing an assignment on how to lift their game. The decision sparked strong debate amongst former greats.

MIKE HUSSEY: I think it acted as obviously a very big distraction in the leadup to the third Test, an unwanted distraction. You know, it's hard enough playing Test cricket and preparing as well as you can for a Test match without having all that sorta stuff going on in the background.

MAX WALKER: Your commitment to one another, despite your ego and your talent, I mean, it's gotta be balanced. If one guy gets it out of kilter, "I'm better than the rest. I need a different set of circumstances," then we start to get a problem, then we start to get a cancer and it eats away at the gut of the team.

GREG HOY: Despite its poor performance, the team remains the most highly paid group of Australian athletes.

PAUL MARSH, CEO, AUST. CRICKETERS ASSOC.: Our players are easily the best remunerated cricketers in the world in terms of from their board.

GREG HOY: Paul Marsh is the son of former Australian wicket-keeping great and current Australian selector Rod Marsh. As head of the powerful Cricketers Association he recently negotiated a bigger slice of the game's lucrative broadcasting rights for the players themselves.

PAUL MARSH: Under the new deal, the top Australian player will earn over $2 million just from Australian cricket. So on top of that will come whatever they can earn from their own endorsements or IPL. ... The average salary of our 17 contracted players would be somewhere around sort of $800,000.

GREG HOY: Some believe the affluence of the Australian cricket stars may well be part of the problem. Some, like cricket commentator known as The Voice of Summer, Jim Maxwell.

JIM MAXWELL, ABC CRICKET COMMENTATOR: They're very well paid. Some would say they're pampered. And maybe that's come out of what's been going on recently in India by way of the players being called to heel and being disciplined for misdemeanours.

MAX WALKER: If you had the privilege of a million or two or three or four or five million dollars out there in your bank account, then anything you want to do in life's possible.

MIKE HUSSEY: I definitely wouldn't think they're pampered. I think the guys work extremely hard and deserve a lot of credit for how they conduct themselves.

GREG HOY: The pressure is only about to increase. With Australia's cricket reputation in tatters, the conquest to try to recapture the Ashes from arch-rival England commences in just four months.

MIKE HUSSEY: Well, you know, I'm trying to stay positive. You know, I'm obviously an Aussie cricket fan and I want us to win and I want to us do well. The tour of India has been a real tough one for the boys. But I think it's gonna be a great education for those guys.

GREG HOY: The financial stakes are about to rise as well. Right now, Australia broadcasting rights, the biggest source of revenue for Cricket Australia and its stars, are being hotly contested behind closed doors. Unlike other major sports, Cricket Australia does not divulge the details.

COLIN SMITH, GLOBAL MEDIA SPORTS: We're hearing of numbers of $350 million or northwards.

GREG HOY: Broadcasting rights specialist Colin Smith has advised on some of the biggest sporting rights deals in the country.

COLIN SMITH: This is only part of their media rights revenue. They get very significant revenues from India, very significant revenues from England. They're probably going to be able to figure somewhere in the $800 to $900 million mark over a five-year period.

GREG HOY: When the new deal is done, the players' cut will be more than a quarter of that. But there is one big catch: the team will be penalised if it doesn't get to the top of the table.

PAUL MARSH: The Australian players get open bonuses for every time they win a match - Test match, one-dayer, Twenty20 game, for every time they win a series and for finishing in the top two of the ICC rankings at the end of each year.

GREG HOY: The current form doesn't bode well for bonuses. Australia's ranked fourth in Test team rankings, third in one-day cricket and seventh in Twenty20 cricket. And if things don't soon improve it's widely believed it won't just be the players who will pay.

JIM MAXWELL: Everyone's accountable. If Australia have two bad Ashes series this year, I would've thought there'll be a a lot of positions up for review. The coach, the high performance manager, the chairman of selectors, the CEO, the chairman of the board - they're all in positions which could be reviewed if Australia does not perform. And that's the nature of what we have to describe now not as a game, but a business.

LEIGH SALES: Greg Hoy reporting.

top of page

In the Driving Seat

Former Fox Sports executive David Malone has spent 12 months patrolling the pit-lanes of Australia, learning the intricacies of V8 Supercars. With the series on the cusp of a host of changes – to cars, format, and broadcast contracts – he is a chief executive with plenty on his plate as the 2013 season nears.

David Malone has good reason to be looking forward to a "massive 2013". The V8 Supercars chief executive's second year in the job coincides with the launch of a much anticipated new car, the arrival of two new international manufacturers in the series, format changes designed to spice up the show, and proper exploitation of the sport's media assets in a digital landscape.

Australia's dominant motorsport category – a bumper-to-bumper, high-octane championship which regularly attracts huge crowds, including 207,000 over a single weekend in 2012 at the renowned Bathurst 1000 meeting – stands on the cusp of a new era, with Malone in the driving seat.

"It's really broad fanbase and a growing fanbase and we're in very good shape," says the man himself, considering the overall health of V8 Supercars at the end of his first full season in December. "It's a big step-change in the series. We're expecting a very big year."

Many of the changes planned for 2013 were set in motion long before Malone's arrival. The most significant behind-the-scenes moment came in May 2011, when private equity firm Archer Capital acquired a 65 per cent stake in V8 Supercars through a company called Australian Motor Racing Partners Pty Limited (AMRP).

The competing teams, which had previously owned 75 per cent of the series, retained the remaining 35 per cent, while founder investors Sports Entertainment Limited relinquished its 25 per stake completely. The transaction valued the series at around AUS$300 million (US$318.6 million).

"I was obviously on the outside watching with interest that the sport had decided to move in that direction," Malone says. "They were looking to make some changes within their senior ranks and as it turned out I was approached while I was having my time off".

The call from V8 Supercars came as Malone wound down after 11 and a half years at the forefront of Australian sports media running Fox Sports, as chief executive of parent company Premier Media Group. The series was going through a period of interim leadership following Briton Martin Whitaker's appointment to a new position overseeing its international growth.

"I looked at the sport, obviously I was very familiar with it from my days at Fox Sports," Malone recalls, "and I was always very impressed with what they'd achieved and the growth trajectory of the sport. When I was approached and was considering coming on board, I obviously took a much closer look."

Malone was appointed in December 2011 and took up his new position in January 2012 in time to take in all 16 rounds of the 2012 championship. Intrigued by the possibilities offered by a leadership role at one of Australia's major sports properties, Malone, a man steeped in the world of sports media, was particularly attracted by V8 Supercars' in-house media production set-up.

"That was probably the tipping point for helping to decide to join the team," he explains. "We're the only major sport in Australia that produces its own television coverage, so the pictures played in Australia and across the world are actually produced by V8 Supercar Television. That interested me.

"I looked at the development of the sport and the plans they had in place for things like international expansion, the 'Car of the Future', potential new manufacturers, and I though it was really an interesting strategy with some very interesting opportunities and I could see myself adding some value."

While all of those project were in development by the time Malone arrive, he has spent 2012 overseeing their implementation. In several ways, therefore, 2013 is a crunch year.

"I wasn't around during the [Archer] transaction by having talked to a lot of the teams, a lot of the feedback was if they wanted to take the business to the next level they needed some of the aspects an organisation like Archer would bring to the table," Malone explains.

"That's very much been my experience this year. It's a terrific brand, the teams are highly professional, very committed, and now we're looking at how we can take that forward and exploit things like our digital rights, broadcast rights, develop a greater fan experience at the events, develop the 'Car of the Future' project – obviously the business has been talking about it for three and a half years but in March it becomes a reality. Executing initiatives like that is a big part of what my role is going forward."

Fundamental technical changes to a one-make motorsport category are always critical moments, given the potential harm they can cause to the competitiveness and attractiveness of the racing product. In V8 Supercars' case, the 'Car of the Future' is based around a control chassis, making it significantly less costly for new manufacturers to enter at a competitive level and challenge the duopoly enjoyed by Ford and Holden, a rivalry which has traditionally fuelled much of the series' popularity over many years.

"We've had a great rise with our two manufacturers," Malone says, "and the board and the business looked at where we needed to go over the next five to seven seasons. It became evident that taking the sport in a direction which opened it up to additional manufacturers made a lot of strategic sense. The new 'Car of the Future' racing platform has been able to reduce build costs for the teams and lowered the barrier to entry for new manufacturers."

It has even been suggested that build costs will shrink by as much as half with the new car and over the last 12 months V8 Supercars has announced two manufactures will join the series in 2013. Nissan announced in February 2012 its plan to run four cars in the series, through its central NISMO Nissan Motorsport division, while AMG Mercedes confirmed in October that it will run three cars next season.

"Having these new teams come in opens up new markets and demographics and brings more people into the sport," Malone suggest. "We've had a very good year in terms of closing off those discussions with people like Nissan and Mercedes."

While Malone has been on a crash-course in the intricacies of V8 Supercars over the past year – "everyone's been very welcoming of a non-traditional motorsport person coming in" – his specialism in media rights has also come in handy as the series prepares to reach a new broadcast settlement from 2013 onwards.

The expiring deal with Channel Seven, struck in late 2006, was believed to be worth some AUS$168 million and after enormous rises in both the AFL and NRL media rights fees over the past 18 months there was confidence midway through 2012 that a new rights package might top AUS$300 million. As November turned into December, no deal had been struck. Malone, at least on the outside, appears unfazed.

"We're still putting a lot of the pieces together," he says. "Under our current arrangement we've had a very strong traditional broadcast product – great free-to-air, a good subscription product and some use or exploitation of our content in the digital space. Going into 2013 we're in a different sort of space given the technologies that are available."

Malone believes there is a revenue opportunity in repackaging and properly exploiting the wealth of imagery, audio and data accumulated over any given race weekend by V8's dedicated television division.

"Things like tablets, smartphones and mobile devices are providing a whole new opportunity for sport generally, but I think for motorsport and V8s specifically," he points out. "Our sport is very data-heavy and there's also an enormous amount of content that is there to be used in linear broadcast feeds which doesn't get used a great deal, which we can repurpose into all sorts of interesting formats that our fans and viewers will love. My aim is to open that up so that fans can have a much richer experience.

"At the event we very much put the production together and we're in control of it. For a sport, that's unusual in this country and it does give you good flexibility and good control, to get the content just right."

The prospect of additional digital accoutrements to join the timing app V8 Supercars launched last year also opens up tantalizing global possibilities for the series. Although the championship is broadcast in well over 100 countries, Malone admits that, to this point, the focus has been on eyeballs rather than dollars.

"It's been very much about building our brand," he says. "I think the team's done a terrific job of that over the last few years – we do have very good reach. Going forward I think being able to deliver specific products through a digital offering will really be the next stage and I think that will open up some interesting revenue opportunities for us as well."

Malone is coy about breaking down the series' revenues, but a new domestic media rights deal, in whatever form that takes, will to a large extend at least determine the general health of the category over the coming years.

According to one Australian media rights expert, Colin Smith of Global Media & Sports, the "market is challenging" and the series "probably won't get the increase it thought it was going to get".

He adds: "It is an interesting sport in the sense it has lots of hours. Bathurst is a huge event and a massive boost for supercars. The challenge is to ensure all of the events are of a similar ilk. There's probably only two broadcasters who are interested and I don't see massive growth for them."

Malone won't be drawn on rights fee speculation but maintains that maximising V8 Supercars' digital assets is a priority over the coming year. "We're looking at best practice in different areas, the way certain categories handle onboards or data," he says matter-of-factly. "There is a variety of approaches out there and the approach we take is: what's the best experience for out fans and viewer? And let's work towards that."


David Malone is not alone in believing the exploitation of digital rights will be the next big revenue driver in the Australia sports market. Sports rights expert Colin Smith, the founder of advisory firm Global Media & Sports, says the Australia government's AUS$46 billion investment in a new National Broadband Network, designed to generate broadband speed of 100 megabytes per second for the home, will be a "game-changer in the digital environment".

Says Smith: "I'm really bullish about the future of sports media rights, however the market's going to be changing. "In essence 77 per cent of people around the world, especially young people, dual screen either on a tablet, a mobile or smartphone, or a PC.

"Probably a major proportion of those are dealing with their friends or getting stats on the games. Then there is the catch-up TV opportunity, so you can watch wherever, anywhere, any time. What I see as the big growth engine is a companion app on either your smartphone or table that supports the broadcast and is highly sophisticated in terms of the statistics it offers, giving highlights of goals and saves and also player history and statistical analysis.

"That is only just starting to emerge today," he adds, "and I'm extremely bullish about what this will do for sport because it will add further revenues to broadcasters in terms of both subscriptions and advertising, which means that the revenues for sports-related events is going to increase.

"What people will want – and frankly a lot of broadcasters don't get this yet and it's not only young consumers – is to start looking at heat maps of players, how many kilometers they've run, what their pulse rate is. That's going to be a second and potentially a third screen. I think that's the most exciting opportunity for sport I've ever seen."

top of page

Playing by the Rules—Analysis of the AFL Sports Market

In the aftermath of two billion-dollar media rights deals in two years the Australia sports market is peaking. Gill McLachlan, chief operation officer of the Australian Football League (AFL), and media rights advisor Colin Smith analyse a unique sports market where the new challenge is avoiding congestion.

That Gill McLachlan, the chief operating officer of the Australian Football League (AFL), cites saturation as the biggest challenge facing the Australian sports market is perhaps the most telling indication of the rapid growth of professional sport in the county in recent times.

"In 1999 the Brisbane Lions were one of four professional sports teams in Brisbane/Queensland," McLachlan points out, referring to one of the 18 clubs that make up the AFL, " and I think they're now one of 13 or something like that."

It is a sporting landscape crowded like few others and in McLachlan's experienced view such congestion points to challenging times ahead. "I believe there's a finite amount of corporate resources and I think the market is now saturated," he says. "That's a huge challenge for us – getting clean air is becoming an increasing challenge. I think ultimately we've done pretty well, but there's going to be winners and losers after this very strong period of growth in the last few years."

It is a matter-of-fact summary, delivered in McLachlan's low-key but businesslike style, and one that offers a clue as to the AFL's strategy in the coming years, particularly after the rash of key deals the league has struck in recent times.

Though McLachlan, a man last year publicly courted by the National Rugby League (NRL) as a replacement for outgoing chief executive David Gallop, reports to AFL chief executive Andrew Demetriou, he has over the last two years been at the forefront of a set of deals designed to shape the AFL's long-term future.

Chief amongst them is a new long-term broadcast contract – AUS$1.253 billion (US$1.36 billion) five-year deal with Channel 7, Foxtel and Telstra – but equally critical is the formation of two all-new expansion franchises, Greater Western Sydney Giants (GWS) and Gold Coast Suns.

"We've invested heavily in those two teams and it's an investment that has a 20-year timeframe," McLachlan says. With an expanded league, broadcast millions confirmed until 2016 and an eye-catching 12 per cent year-on-year rise in television ratings last season, plus McLachlan's renewed commitment to the cause – "with the NRL I was very flattered but ultimately I guess I felt there was still a good deal to be done here at the AFL" – the AFL appears set for a period of consolidation in the face of increasing competition from all sides.

If the AFL, Australia's biggest sporting code, is a target because of its stature, it is ready and willing to defend that position and, indeed, take on all-comers. Not that waging war is McLachlan's style. His focus is purely AFL.

"We think we have the structure broadly in place for the league for many years to come," he suggests, calmly. "We now play in every state and territory and I think we probably have the teams that we want, broadly in the right spots. I think we now have the structure that will see us go forward with a 20-year horizon."

The Suns debuted in April 2011 and Greater Western Sydney a year later. Although neither has enjoyed much on-filed success, McLachlan is buoyed by the Suns' having turned an AUS$1.7 million profit in their first year and the way GWS is establishing itself in a crowded Sydney market.

"They're taking a long-term approach with ultimately means in the long term they are much better positioned," he says.

Establishing the expansion franchises as "strong, independent, viable clubs" is one of McLachlan's key aims heading into the 2013 season, alongside further revisions to the AFL's NRL-like equalization policy to ensure all 18 clubs are on a par regardless of the different models of stadium deals and ownership structures across the league.

Although club-dependent, McLachlan says some 40 per cent of club revenues come from the league itself; with 50 per cent of the AFL's central revenues coming from broadcast contracts, it underlines the importance to the league of the billion-dollar rights increase McLachlan was integral in negotiating early in 2011.

"When the AFL sold its rights they went from AUS$780 million to AUS$1.2 billion," explains Australian media rights expert Colin Smith, adding a touch of context.

"What they actually sold was four games on free-to-air television – Channel 7 - and then they sold the other games to subscription television – Foxtel, which also has the simulcast rights to all the free-to-air games as well. They also sold digital rights on top of that, which included access to live coverage through smartphones and tablets."

For McLachlan's part, he says simply that "we did a good deal for our sport", despite complication during a negotiation process which ran parallel to discussions about the new makeup of Australia's anti-siphoning provision, which determine the rules by which sports rights can be sold.

"That brought some broader pressures to the deal, so it made for an interesting environment," McLachlan adds. "We just wanted to get the best deal for our game, for our clubs and for all of our stakeholders. We're really pleased with how the first year of the deal went.

"We've put a lot more of our games out live and I think the live broadcasts, combined with the simulcasts of five other games, have had a huge impact."


Few have a better grasp of the Australian sports media rights market than Colin Smith. His advisory firm Global Media & Sports works with a variety of properties across the industry, most recently advising the NRL on the structure of its new broadcast deal.

"We worked on their media rights and understand the place of the NRL [National Rugby League] in the Australian media marketplace," Smith says.

"It's far to say that the NRL probably didn't realize how big it was and probably also didn't realize what the drivers were and how they could actually have a key influence on that. By doing that and building this platform, it enable the new commission of the NRL to really make, with negotiation support from [Greenhill] Caliburn, a huge increase in rights value."

Sealed and signed in August 2012, the AUS$1.025 billion (US$1.08 billion) agreement with free-to-air Channel Nine and pay-television service of Fox Sports was a massive uplift on the previous AUS$500 million agreement. Digital rights were sold in December, reportedly for another US$100 million.

"The reason for the increase is that it has a bigger television audience than AFL," Smith claims. "In New South Wales and Queensland the NRL dominates; the AFL is very strong in the southern states of Victoria, Western Australia, South Australia and Tasmania. For a pay-TV broadcaster such as Foxtel you actually need both sports."

Aside from the big beasts of the AFL and NRL, the Football Federation of Australia (FFA) confirmed its own new long-term broadcast contract in November, a deal including both the A-League and national team games. The deal, with Fox Sports and SBS, is worth some AUS$160 million (US$166 million) over four years.

"It was a very significant increase," says Smith, "and very close to a doubling of their rights value. The reason is more to further strengthen the league - numbers have been smaller, but growing – but it's very important for subscription television because it's a summer sport; all our other codes are in the winter.

"This holds the audience for longer and what the owners of the clubs have done in the A-League is attract some really important talent, like Alessandro Del Piero in Sydney; a very significant investment that's had a real increase in television audiences. The TV audiences this season compared to last are probably up 30 to 40 per cent. You can only see that sport going further northwards."


Along with V8 Supercars, Cricket Australia is likely to be the next major Australian sports governing body to negotiate a new broadcast contract.

Colin Smith describes the sport as "truly first-tier" in the country and, buoyed by the success of international rights sales, says Cricket Australia can expect "significant increases" for its domestic Big Bash League Twenty20 tournament should this season's television audience match the previous year.

"The Big Bash League last year on subscription television had audiences similar to what the AFL and the NRL are delivering on subscription television," Smith explains. "That's very powerful indeed and potentially very valuable."

Elsewhere, Smith observes that free-to-air One HD's move away from sport is posing new challenges for sports such as basketball and netball.

"Basketball is still trying to prove itself as a national league. It doesn't have a team in Brisbane and contractually it's still getting games on Channel Ten but the rest of the games are being streamed online," Smith says, referring to last year's deal which saw digital media specialists Perform acquire rights to broadcast games via the internet.

"It was highly innovative and will provide coverage of most National Basketball League games," he adds, "but, candidly, there were not many choices. That's the danger if you go to a second-tier sport; the opportunity to be able to sell to free-to-air television or pay television is more challenged."

Smith believes domestic rugby union has potential. "They are poised to really exploit the opportunity," he says. "What is critical is to drive audience into Super Rugby, to grow the audience of firstly the Waratahs – probably one of the best-know franchises across the country in any sport but probably the most under-performing – and then the Melbourne Rebels, Brumbies and the Western Force.

"Currently they are not growing audiences or even attendances in their weekend games. That's a real challenge for rugby to drive that northwards and drive it fast because their rights come up in 2015."

top of page

A double vision for the main game

Fans are demanding more from their sport broadcasts and a second screen is what the leading codes are dangling in front of punters.

One large TV screen can no longer hold the full attention of youth, says the man who believes the leading professional sports, such as the NRL, can lead a revolution in Australia in how we watch our favourite teams and players.

Global Media's Colin Smith, a prominent expert on media rights who advises the NRL and other sports, recently returned from London and Monaco where he attended Sportel, the annual global meeting of sports and broadcasters.

This visit confirmed an observation we have all made while watching a horse race in a TAB, a football match in a pub, or a cricket Test in the company of our kids: the big high-definition TV screen is not enough for the younger generation. They need to dual-screen, watching the action on the big screen while using their hand-held devices to bet with corporate bookies, check football statistics or historical match data, or connect via social media with friends and fan clubs.

Smith says of this pursuit of 'appiness: "Nearly 70 per cent of young consumers watch TV while still using their smartphone or tablet or PC. Even for the older consumers, it is nearly 60 per cent who are using their smartphone or tablet or PC while watching TV."

He points to European football as sport's leaders in the digital revolution. "Soccer in France and Germany have embraced datatainment with a companion app that complements their TV broadcast," he says.

"Canal Plus who have part of the rights for the French football league have released their app that has been highly successful. Developed by Netco, it is the No.1 iPad app across all genre in France. The average time on the companion app is a very significant 50 minutes.

"Each user downloads on the app an equivalent of 15 videos, being highlights of the game or a history video of a key player. It's an opportunity that the Australian sport on TV, especially cricket, can maximise now."

Given the fact cricket fans are the most statistically obsessed of any in sport - bar perhaps baseball - and Cricket Australia will put its media rights deal up for negotiation in January, the nation's No.1 summer sport can significantly capitalise on the datatainment revolution.

But cricket administrators are usually about as immovable as Bill Lawry at the crease and have been reluctant to embrace change.

So are the traditional broadcasters, meaning sport and the free-to-air and pay TV networks have been slow to accept the notion that if they can capture the consumer on both screens, it immediately increases connectivity that grows the overall revenue pie.

No one doubts the popular sports guarantee free-to-air television audience, ratings and revenue. Other TV programming genre, such as Masterchef, can be incredibly successful but have a short shelf life.

Channel 10, without any leading sports and failed "reality genre" TV shows, rates well below Nine and Seven. Similarly, live sport on pay TV drives subscriptions which is their profit engine. The success of Foxtel is directly linked to NRL, especially in Sydney, and its coverage of other major sports.

However, the arrival of the smartphone and the tablet with high-speed internet through Wi-Fi and 3G/4G now allows consumers to watch their sport on these devices and their personal computer.

Yet the ramifications of this are not widely understood. Telstra paid $153 million over five years for exclusive online AFL rights. The telco has told other sports it paid too much, being stampeded into a deal with Foxtel at the 11th hour, with critics asking why would you pay for something everyone else is watching on high-definition on a big screen. But the dual screening revolutions means Telstra's AFL deal may work to the telco's favour.

Consider the following:

  • Consumers under 40 years old are now watching far less TV while those older are watching far more;
  • Devices are used at different peak times - radio in the mornings, smartphone mid-morning and lunchtime, TV at night, tablet late evenings and use of personal computers is stable over the day;
  • Mobile video streaming on smartphones or tablets has tripled in consumption.

While it would be in Telstra's interests to develop an AFL companion app, the AFL is headed in the direction of being its own online broadcaster, employing 150 staff ahead of the day it launches IPTV through, where it could sell games direct to subscribers via the national broadband network.

Typically, rugby league is a few years behind, having completed its free-to-air and pay TV deals for $1.025 billion but yet to finalise its online rights.

Confusion exists over what Fox Sports have acquired and what Telstra, the previous exclusive rights holders, can buy.

While the NRL does offer apps, Smith believes it can engage in some quick catch-up with the AFL if he can find the answer to this critical question: What will rugby league fans embrace on their smartphone/tablet/PC as a dual screen, while watching NRL matches on the main-screen TV?

What works in France with football is simply present historical stats data on teams and players with highlights, such as goals and misses, using highly sophisticated software and graphics. These apps also allow connectivity via social media with friends/fan clubs and interest groups.

The ARL Commission has given its executive a brief to review all contracts that yield revenue and Smith has been meeting with providers of statistics, the most suitable companion app and potentially the most lucrative one in the digital revolution.

"The dual-screen revolution means data, particularly statistics, both individual and team, has become far more important than any time in the past," Smith said.

top of page

Australian soccer rights fee set to double

According to multiple reports in the country, the Football Federation of Australia is poised to announce a record-breaking media rights deal for the A-League and national team games.

Fox Sports and SBS are understood to have acquired the rights for a four-year period, beginning next July, for some AUD$160 million (US$166 million).

One report said Fox Sports will pay AUD$32 million (US$33.2 million) annually to broadcast five A-League games per week and Australian home World Cup qualifying matches.

SBS is reportedly set to pay AUD$7 million (US$7.2 million) annually for one game from the A-League per week, which will be broadcast free-to-air. Under the new contract SBS, which hold the Australian rights to the Fifa World Cup until 2022, will broadcast national team games free-to-air with a one hour delay.

If confirmed by the FFA, it would mean the organisation has doubled its income from media rights. The FFA's current seven-year deal is worth AUD$19 million (US$19.7 million) annually.

The media rights deal was the last task for FFA chief executive Ben Buckley, who will shortly be replaced by former National Rugby League chief executive David Gallop.

Colin Smith, the noted Australian sports media rights specialist who runs Global Media & Sports, told SportsPro in September that the deal would mark a "very significant increase" for the FFA.

Smith, speaking at the Sportel Monaco sports television rights marketplace, said of the A-League: "It's very important for the subscription television where it's on because it's a summer sport - summer football and all of our other football codes are in the winter. This holds the audience for longer and what the owners of the clubs have done in the A-League is attracted some really important talent, like [Alessandro] Del Piero in Sydney; a very significant investment but that's had a real increase in television audiences."

Smith added: "The television audiences this season compared to last season are probably up 30 or 40 per cent. That's because all of a sudden there's renewed interest and you can only see that sport going further northwards."

The FFA is the latest Australian professional sports league to tie down a long-term media rights deal, following the billion-dollar contracts signed in the last year by the NRL and AFL.

top of page

Pressure on Ten to acquire high-performing sport

CHANNEL TEN is under pressure to get a major sporting code over the line in the next year or watch its share of the $2.9 billion television advertising market and TV audiences stay static.

Nine and Fox Sports' $1 billion bid for the rugby league TV rights has increased pressure on Ten to sign up one of four key sports for renegotiation in the next 18 months.

"Missing out on the NRL deal is negative for Ten, given our view that premium sport is crucial if Ten is to return to a 28 per cent-plus revenue share," a Commonwealth Bank media analyst, Alice Bennett, wrote in a note to clients.

The rights to cricket, soccer, V8 Supercars and possibly tennis broadcasts are all up for grabs. Stiff competition is likely to push up the price.

Ten's revenue share is about 25 per cent and its audiences have fallen by at least 10 per cent, with shows like Being Lara Bingle and The Shire underperforming and others, such as Everybody Dance Now, flopping entirely.

"We cannot see anything big on the horizon to turn Ten around," Fusion Strategy's managing director, Steve Allen, said in his latest ratings analysis.

One rights negotiator said that Ten needs the "guaranteed audience" that sports gives broadcasters. And a principal of Global Media & Sports, Colin Smith, said Ten could no longer afford to rely on its mix of reality shows and talent quests, which have only a 10 per cent chance of succeeding.

"The beauty of sport is that you are basically guaranteeing your audience, which means you have a greater chance of holding on to your ratings. You get a better lead-in to other programs, and you get a better lead-out. Basically viewers stay for longer," said Mr Smith, who participated in the NRL negotiations.

For example, a Saturday night AFL match attracts about 780,000 TV viewers in the capital cities; the NRL's Friday night live football match attracts about 795,000.

Ms Bennett predicts that Ten will bid for the rights for soccer and the V8 Supercars, which moves to twilight racing, giving networks a prime-time audience. Ten did bid for the NRL rights and is reportedly interested in the cricket, as is Seven.

However, one leading media buyer said that sport does not yield the biggest audiences on weekdays; that falls to locally produced shows, which hold up the ratings from Sunday to Tuesday.

The chief executive of Mediabrands Australia, Henry Tajer, said Ten needs to consider if it is worth pouring all its cash into sport. "They could just move on [from the NRL decision] and concentrate on coming up with some really engaging programs," he said.

"Not getting the NRL rights gives them the opportunity to take a look at the money they would have spent, and spending it on new programs that could really get audiences."

The potential rewards from locally made television programs could be greater than those from sports, Mr Tajer said.

top of page

Do NRL TV rights benefit the fans?


Colin Smith, managing director, Global Media & Sports, was involved in negotiations.
The media rights deal is a huge win for the game. Historically the NRL has been the poor cousin to the AFL and with this new TV deal the NRL can invest in grassroots rugby league, the players and the clubs. This will ensure the long-term leadership of the NRL in Australia.

The setting of a NRL fixed schedule for the first 20 rounds is a great outcome for fans. Rugby league's future is now secure, including the protection on Wednesday nights of Australia's premier sporting event, State of Origin.

Free-to-air television continues to have exclusively three games with 7.30 Friday night matches for Sydney and Brisbane. The near-live game on Sunday afternoon, together with some games on Thursday and now a game on Anzac Day, are great for the fans. With many choices to follow their team, the fans are big winners.


John Brady, NRL director of media.
The rights agreement represents a significant win for fans not least for the fact that it ensures their favourite teams will remain strong into the future, that those teams will be capable of attracting the best athletes and that the grassroots of the game will continue to flourish. Fans will have certainty through fixed scheduling, additional programming and key events such as the Anzac Day game, Test matches and State of Origin on free-to-air television.

Television rights are the biggest single factor in determining the financial security of the clubs and the game as well as being the key platform in giving people access to the sport. This package balances the need to attract revenue, to ensure the best games are on freeto- air television and to promote attendances. It unquestionably delivered the strongest financial outcome for the game across its broadcasting assets.

top of page

League silences critics with a wad of cash and a TV deal

IN hindsight, it is hard not to note the symmetry. On rugby league's version of Big Tuesday, one of the men most responsible for the billion-dollar deal that secured the game's future was overseas on a surfing holiday, enjoying the swell off the coast of Indonesia.

Former NRL chief executive David Gallop -- soon to become the chief executive of Football Federation Australia -- was the forgotten man as his interim successor, Shane Mattiske, and ARL Commission chairman John Grant announced a $1.025bn partnership with the Nine Network and Fox Sports that consolidated rugby league's standing as king of the east coast.

That the sport was even in a position to break the $1bn barrier was in no small part down to Gallop. During his 10-year tenure as the game's pre-eminent figure, Gallop kept rugby league alive, often in spite of itself.

He dealt with a litany of atrocities. He juggled the self-interest of clubs and the political minefield created by having two masters -- the game was formerly owned by the Australian Rugby League and News Limited, publisher of The Weekend Australian.

The code flourished in the face of its own fatalism. Rugby league types often speak about the code's capacity for cannibalism, but it didn't just survive during the Gallop era, it thrived. It saw off the threat of rugby union and, thanks to the broadcasting billions, is well placed to do the same with the AFL.

Ratings maintained record pace -- this year's State of Origin series was the biggest in the code's history. Crowds continued to grow. Now it has a broadcasting deal that reflects its popularity.

"This is a great working-class game," South Sydney chief executive Shane Richardson says.

"That's why it's strong in western Sydney, that's why it's strong in the country, that's why it's strong in north Queensland.

"People play it, they grow up with the toughness of the game. It has lived though Super League because every week there are these people out there who sell raffle tickets and do barbecues to keep it alive. It will never change. It's in our DNA."

Rugby league's rebirth from the wreckage of the Super League war is a story in itself. The mid-to-late 1990s almost destroyed the code, as the ARL and News Limited fought a bitter battle to gain control. Peace eventually arrived as the warring parties formed a joint venture, but the game remained fragmented.

Old wounds were intermittently reopened but, slowly, the sport regained the traction it lost. In 2005, rugby league took a giant step forward when Wests Tigers' exhilarating brand of rugby league captured the imagination. Superstars such as Benji Marshall, Greg Inglis, Billy Slater and the soon-to-return Sonny Bill Williams emerged.

In 2008, the league made a conscious decision to work on its public image during a two-day strategy session at the SCG. That meeting, which focused on the next broadcasting deal, was also the forerunner to the formation of the independent commission.

"There was a clear focus on getting the game the value it deserved in the next media rights deal," Mattiske says.

"We have always had a belief in the game's value and its strength. What we needed to do was put in place some strategies at that point in time with regard to the media rights which would ensure we maximised the outcome.

"One of the things we needed to focus on there was our positive player image."

The success of those measures were exemplified when the ARLC was named Governing Body of the Year at the international Beyond Sport Federation Awards in London last month for its effect on social change, particularly in the indigenous community.

All the while, people kept watching. For all the bitterness over the past 20 years, rugby league never lost its allure as a television sport. Ratings this year have been bigger than ever. Origin is a phenomenon. This year's three games -- it was won by Queensland for a seventh consecutive year -- dominated the broadcasting landscape.

The final piece of the puzzle was the ARL and News Limited handing over ownership of the game to an independent body. After years of negotiations, the NRL finally made way for the ARL Commission.

The commission, formalised in February and led by Grant, has attracted its share of criticism, but it had a major victory this week. As Grant said, they answered the billion-dollar question with a billion-dollar answer. The critics were silenced by a wad of cash.

"It's always been a hugely popular sport," says NSW Sports Minister Graham Annesley, who was Gallop's righthand man until entering politics last year.

"It obviously went through its well-documented dramas in the 1990s. What Gallop did through the first decade of this millennium was to put stability back in the game. He brought the game back together after its split . . . and set it up to the point where the game has done the richest television deal ever. That hasn't happened without David Gallop's contribution -- it's as simple as that.

"You only have to look at the TV ratings. They have always been unbelievable. I think its true value has been recognised."

Richardson says: "The reality is it is a great game -- you start from there. The players are great, it is a great game to watch, it's great for TV -- that's the first thing.

"The second thing is, I think we have all underestimated how great the game is. If you look at a scale from one to 10, we have probably been at a two for a long time. Now everyone can see the opportunity to be a 10. That has been shown up by the TV deal.

"We obviously undervalued ourselves for a long time on TV. We spent three or four years analysing what it was worth -- we never did any of that stuff before."

Again, Gallop can take some credit for the game finally realising its potential. Three years ago he appointed consultancy firm LEK to help prepare for the broadcasting negotiations.

One of the first things media expert Colin Smith discovered was the game's capacity for underselling itself. Despite rampant ratings on television, rugby league was content to live in the shadow of the AFL. Not any more.

"When I first started, rugby league didn't know how big and strong it was," says Smith. "It was very selfeffacing.

"It just didn't realise it is very significant in its own right. It didn't realise it had the mojo. It believed a whole lot of hype that came from down south. It had been the poor cousin of the (AFL). People were surprised when I showed them the numbers.

"I think one of the things that has come out of this process has been that at club level, at the NRL level and the ARL Commission level, it has discovered how big and strong it is.

"I think the work that David did in getting people like me and others on board . . . culminating in breaking away from the old model to a new commission, that was the final catalyst for what happened."

The challenge is to keep building. Rugby league now has the finances to confront its many challenges head-on. It has the muscle to protect its heartland in western Sydney and the Gold Coast, which is under siege from the AFL.

Clubs can expect greater financial support. Players can start earning as much as their counterparts in the AFL and rugby union. Thanks to the commission, decisions will be made for the greater good. Money will be distributed where it is needed most. Some should trickle back to grass roots. Good times lie ahead.

"We have been restricted in whatever we have done," Richardson says. "People want to bag the NRL, but the bottom line is they were restricted by finances. I wouldn't be overly critical of the NRL in what they have done, because they have done it in difficult circumstances.

"We had to put this game back together again. It was Humpty Dumpty, mate. It had fallen off the wall. There wasn't enough soldiers to put it together again. But we now have the soldiers. So beware . . . I am telling you, Humpty is not only back together again, he is looking to get a girlfriend."

top of page

CQ bid orders new report from NRL media rights consultant to counter Bombers claims

The Central Queensland NRL expansion bid has commissioned an updated report from the ARLC's media rights expert Colin Smith as the gloves come off in the increasingly testy battle for a place in the national competition.

CQ are seething over comments made last week by the chairman of the Brisbane Bombers bid, one of three, along with CQ and Ipswich, seeking to become a fourth Queensland team in an expanded 18 team competition. Bombers boss Craig Davison told AAP that the ARLC "needed" more games played in Brisbane city, a suggestion CQ says has no substance.

The Bombers have previously upset Ipswich's bid, with Davison dismissing it as: "Ipswich is a good little city, but I don't think it has the strength of numbers to make it (NRL admission) work."

The CQ bid released to SBI on Thursday a report prepared by Smith's Global Media & Sports company in August 2011, comparing the CQ bid to all others looking for a berth when the competition expands. They are Brisbane, Ipswich, Perth, Darwin, Central Coast and Papua New Guinea.

Smith is working as a consultant to the ARLC as it negotiates a new TV deal estimated to be in the region of $1.4 billion.

The 2011 Smith report concluded that CQ had the best local support and sponsorship potential of any bid and said the TV viewing figures and potential rights income was the same as it would be for the other Queensland bids.

"Given the propensity for Queenslanders to support their NRL teams, television audiences for a new expansion franchise in Brisbane or Ipswich or Central Queensland will not vary," the report said. "likewise Pay TV subscription growth is not expected to vary depending on location of the new franchise.

"The choice of location for an expansion team should be based on the success of the new team. The success of the new team will be determined by local support of fans and business. The survey shows fans' support will be highest for a Central Queensland expansion team."

The actual location of an expansion team in Queensland will have a minimal impact on overall TV audiences or Pay TV subscriptions," Smith concluded.

CQ business and community development manager Walson Carlos also revealed Thursday, "We have just re-engaged Colin Smith to undertake a further study that will update the current report and compile specific data relevant to the effects of expansion on other NRL clubs, the NRL and specific media outlets."

Smith's company Global Media & Sports was contracted to deliver his first report last year and surveyed 1,240 fans in spread through city and rural areas of Queensland (781) and New South Wales (451) and studied NRL TV broadcast ratings from 2008-11.

The key findings in the report, released to SBI today, were:

  • Queenslanders support Queensland teams as their first, second and third choice above outsiders and this is reflected in stated preference and ratings data.
  • While Queenslanders marginally prefer to watch their local team play on TV over other Queensland teams, audiences in Queensland fall significantly for games between outsiders.
  • Based on an analysis of audiences, an expansion franchise located anywhere in Queensland will draw similar TV ratings and the location of a Queensland-based franchise will have "minimal effect on overall TV audience size or additional Pay TV subscriptions".
  • While the survey found an overall majority support for the NSW Central Coast bid, based on a split of the vote in Queensland and a strong NSW vote, figures show audience levels drop in both states for Knights and Canberra Raiders games, indicating a regional team in New South Wales may not add to NRL audiences.
  • There is a strong appetite for expansion – 75 percent of respondents believe in expansion with most saying it should be two teams or four.
  • Central Queensland was the clear top choice of all Queensland respondents as the preferred location for expansion, and was second for Brisbane-based respondents.

Although a timeframe for expansion has yet to be confirmed, an NRL source said in February that bidders were expected to be told in July if they remained in contention.

top of page

Delay on panel may help NRL on TV rights

The lengthy delay in establishing the game's inaugural independent commission could prove to be a blessing in disguise when it comes time to formally negotiate the next broadcast deal, according to media consultant Colin Smith.

The eight commissioners will gather for the first time today for an induction at the NRL's headquarters at Moore Park where they will be given a state of the game address by league boss David Gallop covering some of the code's burning issues.

Smith has been advising the NRL over its next broadcast arrangement, which will start in 2013, and has a meeting scheduled with the commissioners within the next month to bring them up to speed on the situation. It has been reported the rights might not be finalised for another 12 months.

While the game has been frustrated at the prolonged negotiations between the ARL and News Limited (publishers of The Australian) over the formation of the commission, Smith said it could actually work in the game's favour for TV rights with the NRL enjoying a stellar season.

"Pay television numbers are fantastic and are up 17 per cent; we've got records in State of Origin with just under 17 million viewers; the live telecasts are really good, and they are all pluses in terms of saying people want to watch rugby league," Smith said. "The numbers now being provided are a real bonus to negotiating those media rights - no question about it.

"The process with an independent commission has been a real plus and there's some real good people on that commission, which will make the process even stronger."

It was reported last month after a NRL chief executives meeting the game could net as much as $1.4 billion for its next TV deal over five years, which would dwarf the $1.253 million deal the AFL received but broadcasters were quick to dismiss that figure.

Smith has told only two officials at the NRL what he believes the game is worth over five years - anywhere between $1bn and $1.2bn is the most likely figure - but he said he would pass on a recommendation to the commissioners on its value when he addresses them.

"It will be a very significant increase but that's all I've said," Smith said. "We're trying to do some things to make it attractive to the broadcasters. I'll tell the commission some evolving ranges depending on outcomes."

The eight commissioners - chairman John Grant, Catherine Harris, Ian Elliott, Peter Gregg, Gary Pemberton, Jeremy Sutcliffe, Wayne Pearce and Chris Sarra - are expected to formally take their place on the commission on November 1.

Television rights won't be the only topic of discussion for them today with Gallop to provide information on other areas of the game including the collective bargaining agreement, the salary cap, the season structure and expansion.

"It's an opportunity for us to present them with a snapshot of where the game is at," Gallop said. "There will be representations across all the areas of the business.

"While there are still around 20 issues to be resolved between the ARL and News, we can use the meeting to make sure that the commission hits the ground running once it is formally in place."

Rugby League Players' Association chief executive David Garnsey said he had also put a request to the NRL to meet with Grant at a convenient time to discuss a number of the players' concerns including an increase in the minimum wage.

"There are probably player specific issues, there are probably game specific issues and there are probably RLPA issues," Garnsey said.

top of page

NRL media deal to dwarf AFL rights

THE NRL's growing sense of optimism over the approaching media rights negotiations was dramatically highlighted yesterday when chairmen and chief executives from the 16 clubs were told the next broadcasting deal could reap the code $1.4 billion - dwarfing the amount netted by the AFL.

During a meeting lasting almost six hours with its clubs in Sydney, the NRL outlined a series of scenarios for the salary cap and club grant from 2013 based on what it expects from media rights.

The starting point was $1bn, the very minimum the game expects to generate from the rights for club, State of Origin and international football. At the top end was $1.4bn for the five years from 2013, an average of $280 million a year and a marked rise on the existing deal, which equates to about $90m a season.

Under the $1.4bn model - the AFL will receive $1.253bn over five years from next season - the salary cap would start at $6.6m and the club grant at $7.2m. Both would continue to rise over the life of the media deal. The NRL's ambitious view on the value of its product came only a day after Nine Network executive director David Gyngell acknowledged he would need to step up financially and South Sydney chief executive Shane Richardson warned the game would no longer be bullied by broadcasters.

NRL chief executive David Gallop declined to confirm the broadcasting figures when he spoke to the media yesterday, although he said the game was in an enviable position and was intent on capitalising on it.

"It's not my place to confirm the numbers we discussed because that was done on a confidential basis," Gallop said.

"We just did numbers we thought were relevant. We modelled a number of assumptions. They are assumptions only. We certainly modelled a scenario where I think everyone is going to be very happy with what the result is.

"I know you would love me to tell you a number, but I am not going to. We're certainly conscious of the number the AFL got and we're conscious of how well our game is going so you can draw your own inference from that."

Asked about the dramatic increase in the size of the grant based on the clubs receiving 37 per cent of the revenue, Gallop said: "We put forward a proposal based on a minimum percentage distribution of the game's revenue.

"We felt it would be irresponsible to model a lift in that percentage in circumstances where particularly the club chairmen have made it clear that they want the commission to make those kind of strategic decisions.

"It was a minimum level and shouldn't be taken as anything other than that."

It is understood some club chairmen felt more money should be directed towards the clubs, although the final decision will fall to the independent commission when it takes over running of the code from News Limited (publisher of The Australian) and the Australian Rugby League, the game's co-owners, within weeks.

On a momentous day for the code, Queensland's John Grant was confirmed as the inaugural chairman of the commission while the NRL also revealed sweeping changes to its schedule from next season designed to ease the load on the game's elite players. But the broadcasting talks were the most significant discussion point.

Consultant Colin Smith, who has been advising the NRL on the broadcasting landscape, claimed the NRL was the country's leading television sport.

"This is a fantastic television sport, it is the leader," Smith said.

"You've got three great products, the NRL home and away and finals, State of Origin and then internationals. That is what's so terrific about this game."

Gallop said several issues still needed to be ironed out between News Limited and the ARL, although it is understood that is merely a fait accompli.

top of page

NRL deal may trump AFL

The man charged with estimating the value of the NRL's new television rights deal believes rugby league could potentially match or outstrip the AFL's record-breaking contract.

Colin Smith, a senior adviser with LEK Consultancy, told a meeting of the NRL CEOs on Thursday that their game could earn just as much or more than the $1.2bn deal recently negotiated by the AFL over five years.

Smith says the NRL is in a stronger position than the AFL due to its broader appeal as a television sport.

Under the existing arrangement, which expires at the end of 2012, the NRL has reaped just $500m over six years.

Club bosses have been told there are three different proposals on the table for the next broadcasting deal - the first at $1bn, the second $1.2bn and the third $1.4bn.

'Foxtel's pay television for NRL is up 20 percent. And then you look at State of Origin, (where there were) just under 11 million viewers,' Smith said.

'It just demonstrates the NRL fan loves rugby league and loves it on television, which is very promising going forward for the media rights negotiations.'

'We actually haven't come up with a dollar figure at this stage because we are waiting for the new independent commission to be formed.'

'When that happens we will have a discussion with the commission and give them some views of value.'

Asked if the NRL was ahead of the AFL, Smith replied: 'In television audience, it is.'

'You've got three great products - the NRL home and away and finals, State of Origin and then internationals.'

'That is what's so terrific about this game.'

'This is a fantastic television sport. It is the leader.'

NRL boss David Gallop would not be drawn on a target figure when asked what the new rights deal should be worth, but clearly expects it to challenge the AFL model.

'I know you'd love to me to tell you a number but I'm not going to,' he said.

'We're certainly conscious of the result the AFL got and we're conscious of how our game's going so you can draw your own inferences from that.'

Gold Coast CEO Michael Searle believes the NRL deserves to cash in on its next deal.

'Every week our numbers are phenomenal,' Searle said.

'It's a difficult environment but one thing that not too many people would disagree with is that rugby league's in a really strong position, back to probably the growth curve that we had back in 1995.'

Under the new deal, it is expected host broadcasters will be permitted to run short advertisements during breaks in play to maximise revenue return.

top of page

NRL aiming for record $1.4 billion TV deal

It will be the richest sports deal in Australian television history - a $1.4 billion bonanza that will see the NRL obliterate the AFL to secure the most lucrative TV rights payment seen in this country.

That is the scenario sold to NRL club chairmen and CEOs yesterday when they were briefed on the possible outcomes for rugby league in the upcoming broadcast rights negotiations.

A startling figure of $1.4 billion - which would surpass the NRL's current deal by $900 million - was put forward as a possibility when negotiations are finalised for 2013 and beyond.

Colin Smith, from Melbourne-based electronic strategic consultants LEK, addressed the meeting of the code's officials at Coogee. Mr Smith, who is employed by the NRL, told his audience rugby league had more TV viewers and should obtain more cash than AFL, which has attracted a $1.25 billion deal.

He said the NRL could look at three scenarios - a $1 billion deal, a $1.2 billion deal and, finally, a bullish $1.4 billion deal - giving all clubs the chance to share in the NRL's bulging bank balance.

At present, 37 per cent of revenue is directed through grants to clubs, which is equal to the AFL. But with a huge TV deal, clubs want the independent commission to determine whether that share should increase.

NRL CEO David Gallop would not comment on exact TV figures discussed at yesterday's meeting, but said: "We worked through some scenarios. Obviously we have looked at the media landscape and what our expectations are and given the game is going so well on television.

"We modelled a number of assumptions. They are assumptions only. We modelled a scenario where everyone will be happy."

Mr Gallop said while negotiations were yet to commence, a good deal of preparation had been undertaken.

"The clubs went away comfortable that, when the negotiations can start, we are in good shape," he said.

Asked if the deal could surmount AFL's broadcast contract, Mr Gallop said: "I know you want me to tell you a number but I'm not going to. We are certainly conscious of the result the AFL got and conscious of how well our game is going. You can draw your own inferences from that."

NRL provided 77 of the top 100 shows on pay TV last year, while 3.765 million nationally watched the State of Origin decider this month.

Asked was NRL now ahead of AFL, Mr Smith said: "In TV audience, it is. Foxtel's pay TV for NRL is up 20 percent. And then you look at State of Origin, just under 11 million viewers. This is a fantastic television sport. It is the leader."

top of page

NRL will significantly increase cash grants to its clubs

Struggling NRL clubs are set to receive the kiss of life tomorrow when chief executive David Gallop outlines plans to use money from the the game's next television deal to dramatically increase the size of the grant from 2013.

Gallop and broadcasting consultant Colin Smith are scheduled to make presentations as part of a summit on the game's future, which will be attended by chief executives and chairmen from all 16 clubs.

The most significant issues are the season schedule from 2013 and negotiations over the next broadcasting deal.

The Australian understands the NRL will outline a series of scenarios for the TV rights, which some optimistic officials hope could generate as much as $1 billion over five years, from 2013.

The NRL is expected to propose significant increases in the amount of money it dispenses to the clubs each year. That should appease the concerns of club chairmen, who will hold their own meeting before the summit to discuss where they think the game should head under an independent commission.

Central to their concerns is the financial future of their clubs. With the clubs appeased, the focus will switch to the players, who are hoping for a significant increase in their own pay when the broadcasting deal comes to fruition.

However, the NRL's desire to improve the lot of its clubs could come at the expense of the players. Rugby League Professionals Association chief executive David Garnsey met the NRL yesterday and was taken through the proposed structure of the competition from 2013.

It is understood that proposal, which one official described as revolutionary yesterday, includes the scrapping of City-Country, shifting State of Origin games to Monday nights and the remainder of the representative calendar moved to the end of the year.

It is also understood there will be greater protection of clubs with a high number of representatives, a move designed to ease the load on the game's elite players.

Yet the NRL did not disclose its plans for the salary cap at the meeting, perhaps wary of alienating the players before the TV deal is completed.

"The purpose of the meeting is to drill down into a couple of key issues rather than trying to look at everything in the game at this stage of the season," Gallop said.

"Those issues are the future structure of the broadcasting rights and the impact of the broadcasting rights on the level of the salary cap and the grant.

"We have had a long-held view that we wanted the grant to equal, if not exceed, the cap to provide financial stability to the clubs and certainly the scenarios we are looking at are going to to do that."

South Sydney chairman Nick Pappas will also address the meeting and announce the game's inaugural eight independent commissioners, who were confirmed at a meeting of stakeholders on Monday.

Meanwhile, officials are optimistic the NRL's legal stoush with Queensland coach Mal Meninga could be resolved by the end of the week as talks continue.

top of page

Clubs' ploy to abandon Foxtel to get rights value

NRL club bosses meet tomorrow in Sydney, unanimous they must be rewarded at the next broadcasting contract for the high ratings and subscriptions their games generate, even if it means abandoning Foxtel.

While clubs are optimistic competition among the free-to-air networks will deliver the dollars consistent with the code's popularity in NSW and Queensland, there is a growing fear pay TV monopolist Foxtel will not offer the same for NRL rights as it recently did for AFL games.

It is possible clubs will support NRL chief executive David Gallop in a strategy of offering all eight games per week to the free-to-air networks on a short-term basis, shutting out Foxtel until the News Ltd-controlled service realises the disastrous loss of subscriptions such a move would cause.

Foxtel paid AFL a record $650 million over five years for four exclusive live games a week, yet pays the NRL only $42 million a year for five live games a week. Foxtel boss Kim Williams has acknowledged the high price paid - which allows coverage of all AFL games - was designed to increase subscriptions in the AFL states (currently 24 per cent in Adelaide to 27 per cent in Melbourne), well below subscriptions in Sydney (38 per cent) and Brisbane (32 per cent).

While Williams sees less capacity for growth in NRL subscriptions, club bosses believe Fox Sports was built on the popularity of rugby league and they should be rewarded for what they have delivered.

If this involves selling Foxtel's Super Saturday three games and the high-rating Monday night game to the free-to-air networks, with the consequent cancellation of Foxtel subscriptions in NSW and Queensland, this may be the only course to bring Foxtel to the table with an offer that reflects just value.

Asked to comment on a future broadcasting package, Gallop said: "We envisage a mix of FTA and pay at this stage but one thing is clear - we drive subscriptions, we provide 73 of the top 100 shows [on pay-TV]. You can talk about length of games and number of ads being different with AFL but at the end of the day it's about what people sign up for and that's clearly our game. We must get value for that.

"And if we do not, then we need to consider alternatives. If this involves a short-term FTA deal without Foxtel, so be it."

Gallop said there had been unprecedented lobbying by networks Seven, Nine and Ten: "The FTAs are currently knocking our door down to show their interest."

Tomorrow's rare dual meetings of club chairmen and chief executives in Coogee is the first since an independent commission was named.

The broadcasting contract and its flow on effects to club grants and the salary cap is high on the agenda. Gallop and L.E.K. Consulting's Colin Smith have not been given permission to begin formal negotiations with networks until the commission is in place to ratify the broadcasting contract, but the first meeting of the eight directors of the new ruling body is imminent.

Complicated first-and-last rights provisions with each of the four entities that hold options over NRL rights - Channel Nine, Fox Sports, SKY New Zealand and News Ltd - mean it could take 15 months to negotiate the final broadcasting contract.

Informal discussions to date with network chiefs have delighted the NRL over the interest from free-to-air TV but executives are alarmed Williams prefers AFL because of its superior "family image."

Gallop countered with: "The AFL have had their fair share of off-field image issues."

Williams also points out AFL games last three hours, compared to the NRL's two, allowing greater opportunity for commercials. However, Foxtel will not show advertisements after goals, in a deliberate strategy of wooing viewers from Channel Seven for the four AFL games they simulcast.

Foxtel also believe AFL's pre- and post-game shows are superior to the NRL.

Smith said: "The NRL media results for 2011 reinforce the game's leadership position with State of Origin, the three most watched games ever with 3.8 million viewers; critically, pay TV numbers are up 20 per cent; NRL dominates the top 100 shows on pay TV."

Asked the effect of Foxtel losing rugby league, considering its existing packages force subscribers to buy programs they don't wish to see, Smith said: "It would be very significant indeed and lead to a major loss in subscribers from pay TV.

"If FTA TV bought NRL for say three years, it could be catastrophic for Foxtel."

top of page

NRL warned against revised schedule

One of the nation's leading experts on sports media rights has warned the NRL to tread carefully as it contemplates tampering with the season schedule to ease the load on the game's elite players.

Media consultant Colin Smith, who has an intimate knowledge of the sports broadcasting landscape, believes the NRL risks damaging its product if it listens to those calling for wholesale changes to the season structure.

Leading coaches Wayne Bennett, Craig Bellamy and Phil Gould have tackled the issue of burn-out over the past week, advocating a range of measures including changes around State of Origin and the possibility of a shortened season.

"You don't want to lose the very vibrancy and fabric of this competition," Smith said.

"The television numbers are fantastic. Fans are loving it. We get lost in that thinking it's good for broadcasters, but it's only good for broadcasters because fans love it.

"You start playing with the structure of the competition very, very carefully because you have a fantastic game that people love.

"What I mean is people like the idea that they're following their club, then they go into this really exciting State of Origin.

"I recognise the issue with players backing up. But gee, you have to be really careful with what is working well."

Smith's comments came on the same day the NRL held talks with the Nine Network over a re-shape of next season, which would mean the introduction of a stand-alone weekend of representative football.

Those plans, however, have been put in jeopardy by Nine's commitment to cricket, although NRL football operations manager Nathan McGuirk is still hopeful the league can strike a deal with the broadcaster.

NRL chief executive David Gallop also held personal talks with Nine boss David Gyngell over the perils of stand-alone Origin games, and the potential introduction of Monday night interstate matches in 2013.

"We had a great discussion about how well placed the game is in terms of the television results," Gallop said.

"We obviously need to talk more about the season structure but he was very clear about the negative impact Saturday night State of Origin would have."

top of page

Back-to-back Ashes could dilute interest

One of Australia's leading experts on broadcasting rights, Colin Smith, has warned that back-to-back Ashes series could dilute interest in cricket's oldest rivalry.

Smith, who helped broker Cricket Australia's telecast agreement with Channel Nine, which expires in 2013, said there was a risk of there being too much of a good thing.

"You've got to be really careful of swamping the game, because that can be a real issue," Smith said yesterday.

"The concept could be you give it a fillip to television audience in Australia and in the UK, that's the upside of it. The downside of it is that it's basically two series in a row - it becomes less attractive and there's less public interest.

"I just think in terms of how you promote, you've got to be really careful of it - [that] you don't get the market causing you a problem."

His comments follow yesterday's report in The Age that Australia would host a five-Test Ashes series in the 2013-14 season just months after trying to regain the urn in England. There could also be another contest in England in 2015, which would mean 15 Ashes Tests in just two years. The last time there were consecutive Ashes series occurred in 1974-75.

Smith, the head of LEK's regional sports, gaming, media and entertainment division, played a role in orchestrating the AFL's lucrative five-year $780 million TV deal and is also working with CA on its next TV rights deal.

That the 2013-14 Ashes would occur in the first season of CA's next telecast agreement was a bonus for the game's powerbrokers but not without risk, Smith said.

"What it means is you'll start the new period with the highest television because England, I'm talking about domestic rights, attracts the highest rights," he said.

"Having that as the first impetus in the new round of rights will be very important indeed. It will help them. India is in some ways more important because what they get paid from India as well.

"But a threat of that is if it has an issue affecting interest because it's back to back. I can't recall the last time that it happened.

"That could actually be a negative for them. Really, cricket is totally dependent on England and India for its economics."

The England and Wales Cricket Board yesterday denied the Ashes were at risk of overkill despite the glut of matches between 2013-15.

"We want to break the cycle of the World Cup and Ashes arriving at once, get enough distance between the events, make sure the players have enough catch-up time and we want to protect the Ashes brand," ECB marketing boss Steve Elworthy told the BBC.

"It's important to maintain momentum. There's a huge resurgence for Test cricket right now, a massive wave of interest.

"With the home-and-away nature of the Ashes, fans will really have something to look forward to. Everyone wants to see the arch-rivals meet."

England batsman Kevin Pietersen said: "As a player you love playing Ashes series, [but] two-back-to-back will be tough for both teams."

top of page

Sky Channel wins QLD rights deal

Sky Channel has won its battle with TVN for exclusive broadcasting of thoroughbred racing in Queensland. Queensland Racing confirmed on Friday it would begin exclusive rights negotiations with Sky Racing to finalise a 10-year deal.

Chairman Bob Bentley said Queensland Racing had been engaged to collectively negotiate the TAB clubs' media rights renewals with both Sky Racing and TVN.

"The process undertaken was a vast improvement on previous arrangements whereby the broadcaster would come to Queensland and do a deal with the metropolitan clubs first and then give the provincial clubs what they thought was fair," Bentley said.

Queensland Racing had appointed an independent adviser, Colin Smith of LEK Consulting, to undertake the negotiating collectively on behalf of the clubs to secure the best outcome for the industry.

Two significant broadcast rights deals were presented to the clubs for their consideration and after detailed analysis the clubs decided unanimously that they instruct Queensland Racing to continue further negotiations with Sky Racing on an exclusive basis.

Bentley said Queensland Racing would ensure that the final deal struck with Sky was capable of growing the industry that currently contributes $1.44 billion to Gross State Product and employs around 30,000 people.

"Queensland TAB clubs and Queensland Racing have the common goal of creating a strong, accountable industry that protects the interests of the people who rely on it for their livelihood," he said.

The multi-million dollar 10-year Sky Racing deal chosen by the TAB clubs is already well in excess of previous broadcast agreements reached.

top of page

PNG NRL Bid makes Quantum leap

THE PNG NRL Bid is moving ahead in leaps and bounds thanks to a strategically co-ordinated roll out program. This week saw the bid move to the next level with media rights expert Colin Smith arriving in PNG from Australia to gauge the economic environment and the media market.

At a media conference at the Ela Beach Hotel yesterday in Port Moresby, he said he liked what he saw. "It has been an eye opener for me. I have come at a very exciting time. My role is to develop a media model so that people can watch NRL." Smith said however that there were two main aspects, firstly was to make sure there was quality coverage and secondly how to make it commercial and sustainable to go forward and how it translated to a revenue model. Smith, who has been in Port Moresby for a week, said PNG was "one of the best kept secrets."

"PNG will be the next boom country of the globe in the next 20 years," the media rights expert said. He said he would be working on a costings for a media rights program, a draft of which would be presented to the PNG NRL Bid when he next visits here in for weeks time.

Colin Smith, the boss of LEK's regiona sports, gaming, media and entertainment division, is regarded as Australia's best sports broadcast advisor and has worked on the biggest TV deals in Australia's sporting history. He has engineered contracts and deals that now see more than $350 million generated though professional sports. While in PNG Smith has met key banks, sponsors of the bid such as Ela Motors and met with the major media companies represented in PNG. Bid general manager Bev Broughton said Smith's visit was a quantum leap forward for the bid.

top of page

The Hybrid Plan to Fill the Coffers

A clash between the codes is back on the agenda

Multimillion-dollar contracts have been prepared which could make an historic hybrid conTest between the Kangaroos and the Wallabies a reality this October.

The Sun-Herald can reveal a consortium will present the NRL and ARU with contracts of up to $40million for a clash of the codes at ANZ Stadium.

The media consultant negotiating the NRL's next broadcast rights deal has been engaged to prepare a report into an event. Melbourne-based media expert Colin Smith believes the concept could draw more viewers than State of Origin and a one-off match could generate up to $4.8million in advertising revenue alone.

The development comes at a time when both codes face significant financial challenges, with the NRL under huge pressure to lift the salary cap and rugby officials struggling to revive flagging interest.

The concept is led by former rugby league first-grader and entrepreneur Phil Franks and has the backing of high-profile sporting identities Bob Fulton and Bob Dwyer. The pair are expected to oversee the development of the hybrid rules, which would be roadtested at school level by renowned rugby league and union schools.

Franks said a one-off game could generate at least $20 million - but possibly double that figure - part of which could be redistributed back to players by increasing the NRL salary cap. The former Penrith, Norths and Western Suburbs player is convinced at least $5 million could be funnelled back to the players of each code.

"It's worth a minimum of $20million; it could be worth $40 [million]," Franks said. "The majority of it would go to the clubs to assist with the salary cap. If it's done properly, it will definitely bear fruit."

The proposed venue is ANZ Stadium and the match has been pencilled in for October, which fits into the calendar of both codes. An alternative date is early February next year.

Franks, a long-time proponent of the cross-code clash, believes the time is right to revisit the proposal with the NRL chief executive David Gallop and his ARU counterpart John O'Neill.

At a time when Gallop has charged NRL clubs with coming up with solutions to the salary cap crisis, the hybrid money-spinner has the potential to increase the salaries to disgruntled players.

Franks said the money could also be used to fast-track an independent commission by paying all monies owing to News Ltd following the settlement from the Super League war.

"This is something that could either fix up the salary cap or put the [independent] commission into a position to buy the game back for the people, which had been stolen by News Ltd," Franks said. "We're saying 'This is what's in it'; they would be derelict in their duties to turn their back on it."

The opportunity to witness Johnathan Thurston take on Matt Giteau, Greg Inglis mark Quade Cooper and Anthony Watmough tangle with Rocky Elsom is sure to capture the imagination of fans.

One of the many talking points is how to tinker with the rules to make it fair for players of both codes. Under the Hybrid 12 proposal, there would be:

  • 12 players a side;
  • Play-the-balls with a six-tackle limit while teams are in their defensive half of the field;
  • "Ruck and maul" with unlimited recycling of the ball for the attacking team while they are in the attacking half of the field;
  • To ensure the game is a genuine 12-man contest, the traditional rugby union front row would be scrapped, leaving a five-man scrum. The rules would ensure the most predictable parts from either code—the defensive kick in rugby union and the attacking one in league—would be eradicated.

Franks has held talks with Warriors coach Ivan Cleary and John Hart, the Warriors' executive director of football. The former All Blacks coach mooted the possibility of a clash between the Warriors and the Classic All Blacks - former New Zealand rugby union internationals - at Auckland's redeveloped Eden Park.

It's understood Queensland Reds captain and Wallaby James Horwill has also been canvassed for his thoughts on the proposal and provided positive feedback.

"I will never, ever give up on this," Franks said. "I want Gallop to know that."

top of page

The Man Who Holds the Key to TV Sport


Broadcasting rights fees are the lifeblood of professional sport in Australia and, along with its close relation, sponsorship, contributes 60 to 80 per cent of total revenue.

More than $350 million in TV income pumps through Australian sport annually, with one player involved in all the big contracts, either the current deals, or negotiations for the next rights fee package.

He is Colin Smith, a 50-year-old Melburnian, who, despite his surname being the most common in the English-speaking world, is the only Smith common to the caller ID's of the phones of Australia's top sporting officials.

He logs more air miles than most pilots, crossing the country as the boss of LEK's regional Sports, Gaming, Media and Entertainment division, as well as recently linking up with the former Cricket Australia and ICC boss, Mal Speed, to form Global Media and Sports, a firm specialising in negotiating broadcasting deals for sports.

Smith worked on the biggest TV deal in sporting history—the AFL's five-year, $780 million contract—in tandem with Ben Buckley, who is now the chief executive of the FFA.

Buckley and Smith lodged the AFL's initial claim for rights fees to the Channel Seven-Ten consortium at only 4 per cent of the sum the then Channel Nine boss, Kerry Packer lodged, forcing Seven-Ten to meet it under their first and last rights clause.

Smith is advising the NRL chief executive, David Gallop, on rugby league's next broadcasting contract, which hopes to deliver parity with the AFL.

Smith helped ARU chief John O'Neill with the soon-to-be-announced SANZAR rights, and helped Cricket Australia boss James Sutherland with the last TV deal and is involved in the next round of rights. Thoroughbred racing, including the AJC, VRC and Queensland Racing, consult with Smith and AOC chairman, John Coates, has engaged him on digital rights.

Even exotic deals—advising PNG on the broadcasting value it can bring to the NRL as a possible new franchise and preparing a brief for ANZ Stadium on the likely TV income of a possible hybrid rules match between the Kangaroos and Wallabies—are on his desk.

The big professional sports are lining up like formula one cars at the grid, as anticipated changes to the federal government's anti-siphoning rules are expected to favour the cash-strapped free-to-air broadcasters.

Rugby union media rights are first out, with the Wallabies and Super 15 deals soon to be announced. The AFL is next, with its contract concluding in 2011, followed by the NRL a year later. Cricket is the last of the big sports to finish existing deals.

Smith rejects claims his multiplicity of deal-making exposes him to accusations of conflict of interest, saying, "I am acting for the sport, and not the sport and the broadcaster at the same time. If I was doing the AFL and the NRL at the same time, it would be a problem."

Smith is convinced all sports will receive more from their next broadcasting deals. "I am very confident that the leading professional sports will continue to grow. Popular sports guarantee TV audiences. The fragmentation of audiences across more channels on free-to-air and pay TV, and now through broadband, will ensure an increase in overall audiences watching the game and holding it for longer."

Nor does he see an increase in one sport's rights income necessarily being at the expense of another, although it seems certain Channel Nine—desperate to hold NRL rights—will not pitch seriously for AFL, leaving the Seven-Ten consortium as the only bidder.

He cites NRL as an "excellent TV product" and notes Gallop is considering unbundling the existing rights of the Telstra premiership, State of Origin and Four Nations tournament, although Channel Nine believes its first-and-last rights deal prevents the NRL from doing this.

Of rugby union, he says: "The new SANZAR Melbourne team in Australia's second-largest market, together with a guaranteed finalist from the five Australian teams, will give the competition a real boost. Last year, the Waratahs effectively disappeared off our TV screens for three weeks because they were playing in South Africa after midnight in Australia. This will happen less under the new contract."

Of cricket: "The international runaway success of the Twenty20, especially IPL, is a clear indicator the market has adopted another form of cricket. Similarly, the success of the KFC Big Bash this season, with the inclusion of international players, has been a big success."

However, the Australian sports market is highly competitive, with more national leagues per million of population than any other nation.

"There are clubs that are financially challenged," Smith said, pointing to Super 14's Queensland Reds, recently taken over by the ARU; the A-League's North Queensland Fury being bailed out by FFA; the AFL's Port Adelaide, which sought a merger with a more cashed-up second-tier club; and NRL team Cronulla's ongoing problems with the bottom line.

"The picture for the football codes is rosy only while all teams are competitive and guaranteeing an audience to TV."

Smith is a gold medal-winning rower, winning Australia's first ever World Championship in the lightweight fours at Lucerne in 1974. He subsequently won medals at the following three World Championships and, as chairman of Rowing Australia, he will lead the sport to the London Olympics.

While he may have multiple oars in the water at once, he is confident he can negotiate the murky waters of Australian TV, with its history of conspiring to depress rights fees to sport.

top of page