Everybody in rugby feeling the pinch

21 February 2016 - 02:00 By LIAM DEL CARME

Rugby had a fraught relationship with money even before the International Rugby Board ended amateurism in Paris, France, in August 1995. The then newly formed southern hemisphere alliance, Sanzar, had already taken the plunge on the eve of the World Cup final two months earlier when it signalled its intention to pay players, and handsomely.The professional game would be bankrolled by revenue generated from TV rights and it has remained the game's umbilical cord ever since. Sanzar signed with Rupert Murdoch's News Corporation for $550-million over 10 years and although that has increased as the competitions under its auspices have expanded, franchises are still stretched.story_article_left1As a result of the deal that comes into effect this year the South African Rugby Union (Saru) will almost double its broadcasting grant to its provinces but even the most established and well honed income generators among them will find the going tough.The Sunday Times understands provinces who don't anchor Super Rugby franchises will receive R14.5-million, and the Golden Lions, Western Province, the Blue Bulls, the Sharks, the Cheetahs and the Southern Kings will each receive R28-million and potentially R3-million more on condition they partner with a smaller union. They have to meet certain developmental criteria to receive the top-up.Still, everybody is feeling the pinch."We use sound business practices but it remains a challenge to balance the books," admitted Bulls chief executive Barend van Graan.Altmann Allers, the Lions' deputy president, also lamented the squeeze Super Rugby franchises are under."As things stand we cannot be competitive," he said.An industry insider who wished to remain anonymous said the Saru grant only partly covers franchises' expenses. "Some Super Rugby franchises' salary bill may be as much as R60-million so they will have to harness a lot from sponsorships and season ticket holders," he said.Van Graan admits the wage bill is burdensome."The players' salary bill is our biggest expense and it never stops rising," he said.What Saru can allocate its affiliates is dependent on a number of factors. For instance, they partly have to steel themselves against the vagaries of the exchange rate. "Around 80% of what they get paid is set at a predetermined rate. That way they insure themselves against losses," said the insider.story_article_right2With other sources of revenue becoming less accessible, the Saru grant may become increasingly important to Super Rugby franchises. Invariably, they try to woo from an ever-shrinking pool of sponsors."The Bulls are fortunate that we have long established and loyal sponsors," explained Van Graan. "That is a fixed source of revenue for which you can budget."Our suites are our second- biggest source of income. There is, however, a decline in this revenue and it is partly due to the fact that the Bulls and the Blue Bulls have failed to win a trophy since 2010. The state of the South African economy also has a direct impact on what businesses and the man in the street spend."We, of course, also rely on season-ticket holders and gate takings as well as advertising," said Van Graan.The industry insider contends that Saru may have to find more efficient ways of spending the money available to the sport."They can't afford 14 provincial unions. We have to ask if provinces like South Western Districts, the Griffons, Border and the like are making a meaningful contribution to South African rugby? For that number to be reduced we'll have to have a turkeys-voting-for-Christmas scenario."..

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