D-Day for Rugby Australia over broadcast deal

D-Day is fast approaching for the game of rugby, Rugby Australia and its embattled CEO, Raelene Castle. The future viability of the code in Australia hinges squarely on the outcome of negotiations by Castle to secure a new broadcast agreement when the current five-year deal with Foxtel ends this year. But as Reputation Edge's Patrick Southam explains, the product Rugby Australia is selling is nowhere near as appealing as it used to be.

It’s not an overstatement that the outcome of Rugby Australia’s broadcast negotiations will be make or break the organisation which relies on its broadcast partner to generate fan engagement and exposure for sponsors.

Rugby Australia introduced new branding in 2017

This week, RA will send out tender documents to Foxtel, Optus and Network Ten who have signed non-disclosure agreements. RA is keen to secure a five-year deal covering Wallabies tests, Super Rugby and club rugby for the first time.

There are unconfirmed reports the 2025 British and Irish Lions tour is included in the package which will be a popular drawcard, but that’s five years into the future.

Castle has already rejected Foxtel’s offer to renew its current broadcast deal based on $57 million a year, prompting Foxtel to declare it was walking away from rugby after 25 years.

Insiders close to the negotiations say Castle wanted $100m more than Foxtel was offering. Foxtel said “you’re dreaming”, so Castle decided to test the market. So far, Optus Sport and Network Ten have expressed interest.

But, here’s the thing. The product Rugby Australia is trying to sell for much more money is demonstrably less attractive to broadcasters and sponsors than it was in 2016.

Firstly, the lack of on-field success by the Wallabies and Australia’s four Super Rugby teams over the past few years has been a source of ongoing disappointment for fans and sponsors.

It culminated in the Wallabies being smashed by England in the quarter finals of the 2019 World Cup for the third time. It was the earliest exit at the tournament since 2007.

Secondly, no Australian franchise has won a Super Rugby title since the NSW Waratahs did it in 2014. After three rounds of the 2020 Super Rugby season, three of the Australian teams have yet to win a game, and so far, none have beaten teams from New Zealand or South Africa. It’s going to be another long season for Australian rugby fans.

Finally, Super Rugby continues to struggle to attract viewers and bums on seats. According to OzTAM, subscription TV audiences in 2019 plummeted to around 50,000 in capital cities, placing Super Rugby behind A-League soccer, and well behind the NRL’s 164,000 and AFL’s 167,000.

Super Rugby crowd attendances across the four Australian teams dropped to an average of 10,500 in 2019. Castle has admitted there is no “magic bullet” to arrest this decline.

When you add into this mix PR disasters like the Israel Folau controversy and the axing of the Western Force franchise in Perth, rugby is seriously on the nose with its supporters who are traditionally among the most loyal (and affluent) of the football codes.

Disgruntled rugby fans have voted with their feet by driving a resurgence in support for club rugby which is attracting solid crowds in Sydney and Brisbane driven by traditional tribal rivalries.

Against this backdrop it’s hard to fathom why Castle and Rugby Australia believe the ailing product is worth more than the current $57m it receives from Foxtel.

Castle’s job could very well depend on how these negotiations go

On-field results, viewership and attendances indicate rugby’s market value is actually worth a lot less to a broadcaster. With the axing of the struggling Japanese Sunwolves team from 2021 there will also be less Super Rugby broadcast product.

Rugby Australia is gambling Optus is willing to commit more money to attract subscribers to Optus Sport, or Foxtel will be forced to stump up more cash in a bidding war.

But this strategy has a big potential downside. Since securing the English Premier League from Foxtel, Optus has been dogged by regular technical issues on its streaming platform.

During the 2018 FIFA World Cup, Optus was so embarrassed by ongoing glitches it provided refunds to angry subscribers and simulcast the games on SBS.

Will rusted-on rugby fans who have subscribed to Foxtel for years be willing to switch subscription TV providers, especially given Optus’s poor technical track record with soccer?

Or will Foxtel be willing to pay up to $100m more for a sport which by all measures is going backwards? I doubt it.

The next month will tell. But one thing is certain. Castle’s future as CEO of Rugby Australia depends on the outcome.

Patrick Southam is a partner at PR firm Reputation Edge a Sydney-based PR firm specialising in reputation management


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