Rugby Australia is on a last caution – drastic measures will have to be taken to verify survival

Australian rugby is facing an existential threat – and it is not just the coronavirus crisis that is causing the code to suffer. The shocking, if somewhat unsurprising, revelations in News Corp publications about the cataclysmic financial position must be the final warning to a code that is in danger of sinking into oblivion.

According to the reports, Rugby Australia (RA) blew $500m over the last four years and faces liabilities in excess of $20m. Those figures are believed to be accurate, though a bit dated, which means the situation could actually be worse.

Related: Australia-only Super Rugby competition to include axed Western Force

How is RA to trade its way out of this financial black hole in the current economic crisis? All sports are struggling with the impact of the crisis, but rugby is suffering more than most, to the point where the very essence of the sport is under threat.

It is time for Australian rugby to imagine the unimaginable – that the professional game in the country, with the possible exception of the Wallabies, will virtually cease to exist if something drastic is not done to rescue the code financially. Australian rugby cannot afford to be so complacent as to think it could not happen. Just look at basketball as a case study.

In 1988 the National Basketball League predicted it would be the most popular sport in Australia by the year 2000 if it continued its pace of growth, but within a decade the game’s popularity deteriorated to the brink of collapse. In 2003 Australian rugby was so popular it threatened to challenge rugby league as the major sport in NSW and Queensland, but has now fallen way behind its major rivals, the NRL and AFL.

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The parallels between rugby and basketball are frightening. Both sports suffered a mass exodus of players to rich overseas clubs and experienced difficulties with their broadcast partners.

The fractured relationship between RA and its long-time broadcast partner, Fox Sports, is key to the survival of professional rugby below Test level – and that essentially means Super Rugby or some other provincial competition. Relations between RA and Fox Sports broke down when the former RA chief executive Raelene Castle rejected the broadcaster’s initial offer of $20m a year, down from the current $57m, as part of the renegotiation of the broadcast deal for 2021 to 2025.

If there is no other bidder for the rights, such as Optus, RA’s interim CEO Rob Clarke will have to repair relations with Fox Sports, assuming the News Corp-owned pay-TV operator is still interested.

It is difficult to see Fox Sports walking away from rugby completely because the demographics of the code’s followers help to drive subscriptions. But Fox Sports, of course, has its own financial troubles. There have been reports that it will only offer RA $10m-15m for the broadcast rights. This may be a bargaining tactic but if the figures are correct it will have dire consequences for Australian rugby.

It could result in a mass exodus of leading players to Europe and Japan once play in the northern hemisphere resumes post the lockdown. In this scenario, RA would be forced to abandon the so-called Giteau Law and consider all overseas-based Australian players for the Wallabies, which would have a hugely detrimental effect on Super Rugby.

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RA would also have to seriously consider reducing the number of Australian Super Rugby teams from four to three, or perhaps only two, to remain competitive with New Zealand and South African opposition. That is assuming Australian teams will be involved in an international provincial competition in the future.

While Australian rugby’s long-term future is uncertain, it is the here and now that urgently needs to be addressed. A prospective $17m loan from World Rugby would only see RA through to the end of the year, bringing up the possibility of insolvency.

RA desperately needs a resumption in play to generate revenue, but what will it be able to put on the field and what will it be worth to a broadcaster if indeed any broadcaster is interested? Without a Trans-Tasman bubble, RA is to organise a domestic Australian Super Rugby competition and invite the Western Force back into the fold to make up the numbers.

If Fox Sports was only willing to pay $10m-15m for the rights to the whole Super Rugby competition, what would it be prepared to fork out for an Australian version lasting only three months? Anything less and an Australian domestic competition would not be commercially viable.

RA, like the NRL appears set to do, needs to negotiate a long-term broadcast deal with Fox Sports which is front-loaded to survive the short-term but will also safeguard the long-term future of the game. Of course, that would require a fair amount of goodwill. The former Network Ten chief-executive Hamish McLennan is reportedly close to coming on to the RA board as chairman and his background in the News Corp culture would certainly help RA in its negotiations with Fox Sports.

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But what if Fox, as has been reported, has already walked away from rugby? What if there is no other bidder? RA would no doubt go into voluntary administration and Australian rugby would then be reduced to a community game with the Wallabies possibly the only remaining professional, or semi-professional, team in the country. That would be a serious threat to the code’s very existence.

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