Struggling NRL clubs given two years to get into the black — or risk being stripped of their licences

STRUGGLING NRL clubs have been given two years to get into the black — or risk being stripped of their licences.

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STRUGGLING NRL clubs have been given two years to get into the black — or risk being stripped of their licences.

Only a day after all 16 NRL clubs were exposed for losing $42.7 million in 2015, the Australian Rugby League Commission also announced an $18.7 million deficit for the year — or an annual turnaround of almost $40 million.

Yet speaking with The Daily Telegraph on Wednesday, Chairman John Grant explained the “planned” loss was part of a wider, financial blueprint which will see all NRL teams profitable within two years.

Indeed, Grant explained that under his organisation’s new funding deal — which sees every club receive an extra 30 per cent above the salary cap from 2018 — no CEO should ever come cap in hand to League HQ again.

Apart from raising club funding by 11 per cent in 2015, to $162 million, the governing body will also gift $3 million to every club over the next two years.

But as for what happens if they still cannot clamber from the red?

Asked if clubs should be stripped of their licences if unable to turn a profit by 2018, Grant replied: “I don’t need to say that because that’s what the clubs are already telling me.

“The message has got through to them. And it had to.

“This isn’t about us versus them. But if we now provide a level of funding, then the clubs are to be sustainable ... that’s the deal.”

According to figures released on Wednesday, the NRL generated $334 million in revenue during 2015, or a $10 million increase over the previous 12 months.

However, apart from raising its spend across all areas, the game also paid $4 million to save the Gold Coast Titans and another $3.9 million for the business team which secured their hyped $1.8 billion broadcast deal.

Given the NRL was also locked in a broadcast bidding war last year, and there for trying to make its product as attractive as possible, an extra $21 million was outlaid on event, game and sponsorship costs — which includes everything from bumper State of Origin promotion to Cold Chisel’s grand final fee.

Elsewhere, the NRL increased administration costs by $1.4 million — for a sizeable $3.3 million raise over two years — while loan portfolio impairment charges were $4.4 million.

“So this loss, apart from being planned, is part of a much bigger picture,’’ Grant said.

“When you move through any broadcast revenue cycle, the first couple of years are spent accumulating your revenue so that, at a later point, you can distribute it.

“And that’s where we are now, which represents a big moment for the game. For so long rugby league has been the battler. Our finances viewed as ordinary. But with this money we’re spending now ... there’s going to be incredible change.”

Yet what of The Daily Telegraph’s revelations that clubs, in 2015, lost $42.7 million to fund a football club ‘Arms Race’?

“Clubs already realise this ‘Arms Race’, it needs to stop,’’ Grant said. “I’m not going to use the word ‘cap’ when it comes to addressing what clubs spend because I don’t think that’s the solution.

“But can they do it by themselves? We will have to wait and see.”