“Material, urgent steps are required to address the precarious financial position of Australian Rugby, improve alignment, and clarify roles, ownership & accountability,” consultants Saltbush Capital Markets (SCM) warned in December 2013, even as the business banked a $19 million profit thanks to a successful British and Irish Lions tour.
“The Australian Super Rugby Conference is not viable in its current form, requiring new revenues and/or structural change. Australian rugby requires a unified approach to developing new properties and driving revenue growth. The majority of Australian rugby leading indicators are trending down, requiring alignment and investment.”
Then-ARU boss Bill Pulver had commissioned SCM to take a look at the business in early 2013 then re-engaged it for a six-week period in November.
Potential March 2014 ‘going concern’ issues for ARU and some SRCs (Super Rugby clubs) if action is not taken now.
Saltbush Capital Markets discussion paper, Dec 2013
The report out of that process makes for sobering reading. “Going concern” warnings pepper SCM’s predictions, as well as unfavourable comparisons with the New Zealand Rugby Union, the AFL and NRL with similar revenue and cost ratios but cash reserves in excess of $40 million to deal with downturns and curve balls. At the time, the ARU had posted a $12.4 million loss for 2012 and recorded cash reserves of just $3.4 million.
Chillingly, it recommended cutting back to four Super Rugby teams two-and-a-half years before a SANZAAR review canvassed that option in an Accenture review of the professional competition. “If there are insufficient incremental broadcasting revenues, consideration should be given to not progressing the NCC (the National Rugby Championship) and/or moving from 5 to 4 SRCs,” the authors noted.
By the end of 2015 it appeared Pulver had kept the wolf from the door thanks to raging competition in UK broadcast markets, delivering a record 148 per cent increase in rugby’s broadcast rights package for the next five years.
He and then-chairman chairman Cameron Clyne also managed to implement many of SCM’s recommendations, securing private ownership of the Melbourne Rebels for a time, setting up the Australian Rugby Foundation to bring new revenue streams into the game, and rebranding the business from ARU to Rugby Australia.
But structural reform of the game – SCM recommended wholesale centralisation of high performance and commercial operations under the RA banner, plus the separation of the professional and community arms of the state unions – remained elusive.
In 2017, with finances continuing to deteriorate despite the record broadcast deal, Pulver and Clyne axed the Western Force. Pulver had left the building by the end of the year.
Over the next two years, Raelene Castle and RA’s bean counters managed to balance the books, recording a profit in 2018 and a loss last year in keeping with the cyclical trends of World Cup years. They even built up the cash reserves to somewhere about the $10 million mark.
Then the coronavirus pandemic hit and the revenue tap turned off within weeks.
Wiggs has walked into this long-running financial storm. Along with another new director, former Virgin Australia boss Brett Godfrey, the Archer Capital supremo has put his hand up to take responsibility for the game’s finances after Castle’s resignation last week. According to several stakeholders, both have been scathing of what they’ve discovered.
Wiggs has experience with underperforming sports, having presided over Archer Capital’s purchase of Supercars from SEL in 2011. Archer paid $137 million for a controlling stake in the company, which boasted an enterprise value of $296 million at the time.
Very quickly, however, it emerged that Supercars was what industry types call “the dog” in the fund. By the end of last year, it was valued at $45 million. Since the coronavirus shutdown, it has dropped to $34.9 million, or 25 per cent of Archer’s initial investment, according to the fund’s March 2020 quarterly report to investors.
In recognition of this trend – the value had plummeted to $24 million by 2014 – Wiggs took control of the business, formally joining Supercars as chairman that year.
Since then he has managed to increase the value to $45 million, reduce the business’ debt from $30 million to $1.2 million and record audience growth of 2.5 per cent on Seven Mate and Fox Sports, as well as a 69 per cent year-on-year growth in online streams of events to 2.4 million.
On value alone, however, it is still unquestionably “the dog” in Archer’s suite of businesses and faces an uphill road to recovery amid the shutdown.
Only one of the 14 scheduled 2020 championship events has gone ahead to date and, with naming rights sponsor Virgin Australia in troubled waters, it appears Wiggs has his work cut out on two sporting fronts.
Wiggs did not respond to the Herald’s request for comment.
Georgina Robinson is the chief rugby reporter for The Sydney Morning Herald.