NRL news: ARL Commission is facing another expansion headache over a club loyalty payment

The ARL Commission is facing another expansion headache after it emerged that existing clubs could be owed a loyalty bonus worth up to $24 million.

Peter V'landys is convinced a second Brisbane team will work.

The ARL Commission is facing another expansion flashpoint after it emerged that existing clubs could be owed a loyalty bonus worth up to $24 million.

News Corp has seen the deed of agreement that was struck between club powerbrokers and head office five years ago outlining the future funding arrangements for the 16 teams.

The deed includes a clause referring to club funding after October 31 next year when the existing broadcast deal comes to an end.

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It refers to a participation top-up payment of $1.5m for each club, meaning the commission may be forced to outlay $24m to honour its side of the deal on November 1 next year.

The agreement was struck before ARL Commission chair Peter V’landys had joined the commission and well before chief executive Andrew Abdo had taken the reins of the NRL.

ARLC chairman Peter V’landys. Picture: Jonathan Ng

Abdo on Friday said he was aware of the clause and insisted that club funding had increased significantly above the initial agreement between the NRL and clubs. He also said the clause had been superseded in later talks which covered funding until the end of the 2022 season.

However, the clubs believe the $1.5 million falls outside that time frame given it is due to be paid on November 1 – the start of the new rugby league financial year. It is understood the clubs have discussed the agreement among themselves and will broach the issue with head office, giving the game a serious financial headache as a decision on expansion looms.

As revealed by News Corp, V’landys held top-level discussions with broadcast partner Foxtel on Thursday as the NRL unveiled its plans for an expanded competition from as early as 2023.

The NRL financial year runs from November 1, meaning the new side would be expected to be included as part of the funding ­arrangement from that date next year – the same day the existing clubs expected a bonus $1.5m to lob in their bank accounts.

Money is at the heart of the debate over expansion. Not only do the existing clubs have no desire to prop up a new team, but many believe they should be given an incentive for allowing an extra team to become a member of the commission.

The 2016 agreement with the clubs also has implications for expansion in terms of the potential for unequal funding and the impact on existing club finances.

The deed stipulates that clubs will all receive the same funding, meaning any new side will be forced to fend for itself without any preferential treatment.

There is also a clause related to an expanded club competition. The clause is clear that funding of existing clubs must not be affected by the addition of a new side.

“It is intended that the club funding model set out in this MOU, which is based on a 16-team competition, will be preserv­ed even if there is an expan­sion in the number of clubs in the NRL competition,” the document says.

Peter V’landys and NRL CEO Andrew Abdo.

“In consideration of this undertaking, where the addition of a club(s) would result in an improvement to the level of the participation payment (as compared to the previous year), such improvement shall be retained for reinvestment in the game as determined by the ARLC.”

The commission is expected to hold further talks over the issue of expansion next week before making a final decision at some point this month.

The Dolphins are the raging favourites to become the 17th team, although the Brisbane Firehawks and Jets are fighting to convince the commission of the merits of their respective bids.

Brisbane head of football Ben Ikin is among those who can see the Dolphins working should they enter the NRL.

“They have a very rich history, great financial strength, so beyond that with the infrastructure they have been able to pull together, some of what is already available inside the current set-up at Redcliffe, a lot of NRL clubs would be envious of,” Ikin said.

“They tick multiple boxes. But I haven’t seen their bid. I’m only looking on from a distance because to be fair the Firehawks are in a similar boat. Very financial, great cashflow, good infrastructure at Easts Brisbane, so it feels like it will be a fairly tight-fought race.”

NRL REVEALS BOLD VISION FOR EXPANSION FUTURE

After years of speculation over a second Brisbane team in the NRL, the league has finally formally pitched a 17-team competition to broadcast partner Foxtel.

ARL Commission boss Peter V’landys confirmed he took to Foxtel executives on Thursday a competition with a second Brisbane team from 2023 or 2024 – the NRL’s first moves to expand since the Gold Coast Titans entered the competition in 2007.

The negotiations for a 17th team have so far been the most delicate V’landys has confronted since taking the reins at the ARLC two years ago, with strong concerns about the expansion plan among some of the code’s existing 16 clubs.

Peter V'landys is convinced a second Brisbane team will work.

V’landys, however, is understood to be convinced a second Brisbane team would grow the game in southeast Queensland – and that was a key part of his pitch to Foxtel.

The three bidders for the new licence – the Firehawks, Jets and Dolphins – delivered their formal presentations to the NRL’s Expansion Assessment Committee last Monday week.

The ARLC is understood to be meeting next week to discuss the merits of each bid, with V’landys keen to make a final decision on expansion within a fortnight ahead of a final Commission decision by the end of the month.

But V’landys last Sunday said expansion couldn’t go ahead without the support of broadcasters Foxtel and free-to-air partner Nine, regardless of the quality of the bid.

“The broadcasters are supportive,” V’landys said at the time.

“We are finally making traction with the broadcasters and getting a final figure from them is important.

“That’s why Fox is critical in this because where the broadcasters will win out is by us bringing in a new audience.”

He said the key would be to attract a new audience that would subscribe to Foxtel or its sports streaming platform Kayo to watch the games.

“That’s where the broadcasters will make their money,” he said.

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“A team that has tribalism will get you extra subscribers. Can you imagine a Brisbane derby ... the tribalism and rivalry will bring additional subscribers and that’s where the broadcaster can win.

“That’s what we have stressed to the bidders. You can’t migrate an audience that usually supports the Broncos or the Titans, they have to bring in a new tribe.”

Firehawks bid chief Shane Richardson said V’landys’ ability to strike the right broadcasting deal with Fox would be a critical factor in whether Brisbane will have a second team.

“Fox have to be shown why it is valuable to them, and I would feel the same way if I was running a business,’’ he said.