NRL expansion: Doubts over Brisbane Jets financial stability after leaked documents
A confidential document obtained by News Corp shows the Brisbane Jets are under mounting pressure to prove their viability just a month from the expansion deadline.
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The Brisbane Jets are under mounting pressure to prove their viability following revelations the NRL’s 17th team hopefuls have requested $12 million in start-up funding from potential investors.
News Corp has obtained a confidential document from the Jets seeking urgent funding from potential investors and sponsors – just a month out from the NRL making a definitive call on whether to expand the competition for 2023.
D-Day will arrive on Monday when the three bid consortia – the Firehawks, Jets and Dolphins – deliver formal presentations in Brisbane to four ARL Commissioners, including chairman Peter V’landys.
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The NRL is expected to request a multimillion-dollar bank guarantee for the second Brisbane licence and that will not be a problem for the Firehawks and Dolphins, who have asset bases of $80 million and $100m respectively.
But alarm bells are ringing at the Jets as they prepare for a meeting with V’landys, an accountant by trade who is certain to grill the western-corridor bid on how they plan to finance a second Brisbane team.
In February, the rival Bombers and the western-corridor bids formed a joint venture to become the Brisbane Jets and the organisation has secured an estimated $20 million from local and state governments to help fund infrastructure.
But first the Jets must garner at least $10 million in start-up capital. The six-page document, issued by BlueMount Capital, offers an opportunity for investors to buy a stake in the Jets with a minimum outlay of $1 million.
Potential investors are advised the deadline for capital injection is July 31. The timing is intriguing. By then, the ARL Commission is expected to make a final decision on whether the Jets, Firehawks or Dolphins are officially unveiled as the NRL’s 17th team.
It is understood the Jets will inform the ARL Commission on Monday they have almost $10 million in start-up funding, pending further investment from potential backers.
Jets bid official Nick Livermore confirmed the consortium is exploring investment streams but insists the prospective second Brisbane team is not broke.
“The document has been issued to explore top-line initial interest in being involved,” Livermore said.
Asked if there are concerns over the Jets’ finances, he said: “Certainly not. It’s something we will reinforce when we deliver our presentation to the ARL Commission.
“Our financial model is not your traditional leagues-club model, but the three wealthiest clubs in the NRL right now don’t have leagues clubs.
“We will present our bid to the Commission, including our financial position, and it will be up to the Commission to decide whether what we put forward is sufficient.
“I will argue we would outrank the majority of NRL clubs in what we are proposing right now.
“From a whole-of-game approach, it will be very difficult to topple our bid, but financials are a big part of it, certainly.”
The Jets plan to announce marquee players and their coach in August, which suggests they are some way down the track with signing stars and potentially Wayne Bennett should they win favour from the NRL.
The document says the club will need more than $500,000 to get through to November this year and then nearly $10 million to set up the club for the 12 months that follow.
The Jets expect to be making a $5 million profit in their first year in the competition and then regular profits after that.
The three bid teams will be ranked by the ARL Commission in five key areas. One of those is finances, amplifying pressure on the Jets to prove they have the fiscal power to trump cashed-up rivals the Firehawks and Redcliffe.
THE $125 MILLION NRL EXPANSION BOMBSHELL
Brisbane’s three bid teams will deliver formal presentations to the ARL Commission on Monday amid revelations a 17th NRL club will be worth $125 million to rugby league’s broadcasters over a five-year cycle.
News Corp can reveal D-Day has arrived for the NRL’s expansion hopefuls with the Firehawks, Dolphins and Jets to front the ARL Commission for formal interviews in Brisbane following State of Origin II at Suncorp Stadium.
ARL Commission boss Peter V’landys made a desperate dash to Brisbane on Wednesday, beating the Covid-related Queensland border closure, to ensure he attends the most critical meeting yet in the NRL’s expansion push.
And V’landys’ plan to grow the code has received a massive boost with an independent report estimating a second Brisbane team would be worth $25 million to the NRL in 2023.
Applying that figure to a five-year term, the length of the NRL‘s last TV rights deal, a fourth Queensland team can be valued at a staggering $125 million — scuppering fears a 17th club would be a financial burden on the code.
The report, conducted by the Gemba Group, also found TV ratings would increase by 9.3 million viewers, while a second Brisbane team could boost NRL crowds by 160,000 in 2023.
V‘landys has always maintained the numbers must stack up for the NRL to expand and the independent data, funded by 12 of the 16 clubs, is the most compelling sign yet a second Brisbane team will be given the green light.
The expansion push will gather steam when the bid teams square off on Monday, with V‘landys confirming the high-powered meetings ahead of a definitive call on expansion next month.
“We will be doing formal interviews with the bid teams after Origin II, that‘s correct,” V’landys said.
“We’re on track with the time frames that have been set (for an expansion announcement).
“We should not be on the board if we are too scared to look at a second Brisbane team.
“I am determined to grow the game … but I can honestly say I don‘t know which way expansion will go because I haven’t seen all the facts and figures.
“Whatever outcomes the Gemba report found, we will take that into account as a Commission and we will test them to see if it‘s accurate or inaccurate.
“We are also finalising our own report.
“I can’t say if there will be only one meeting (with the bid teams), we might have a second or third meeting, but I have to read the Gemba report, our own report and speak to the three bidders, which we will do next week.”
The Gemba report also found sponsorship and wagering will increase by $8.7 million with a 17th team.
That means an expanded competition could be worth a collective $168 million over five years to the NRL and their broadcast partners.
Some clubs opposed to expansion will question whether a second Brisbane team can deliver such value and have challenged the NRL to prove growing the code can generate more money.
Broadcasters Channel 9 and Fox Sports will have a crucial say in whether the code expands and the Gemba figures are evidence a second Brisbane team can deliver bang for their TV billions.
Firehawks bid chief Shane Richardson is adamant a second Brisbane team will generate millions for the code, a sentiment backed by rival Jets official Nick Livermore.
“David Gyngell (former Channel 9 boss) once said another Brisbane team is worth around $100 million over a five-year cycle, so his assessment appears accurate,” Livermore said.
“It‘s very hard to find an accurate measurement in this environment with Covid, but I have no doubt expanding the game can deliver financial benefit.
“The Brisbane market is effectively doubling from a broadcasting point of view, so if the report is saying a second team is worth $25 million to the NRL, then that‘s great news.
“If the game wants participation and growth, then I believe we are the bid to grow the game of rugby league in Queensland.”
CLAIMS: QUEENSLAND TEAMS COULD BE UNDER THREAT IF SECOND BRISBANE TEAM IS LAUNCHED
An independent report into NRL expansion has warned a 17th team in 2023 could cannibalise Queensland’s three clubs – and decimate NRL premiers Melbourne Storm.
A $100,000 probe conducted by the Gemba Group into NRL expansion, funded by 12 of the 16 clubs, has raised major concerns over a proposed second Brisbane team stealing fans, sponsors and players from the Broncos, Titans and Cowboys.
The findings will pique the interest of the ARL Commission, who are undertaking their own analysis of expansion after last month issuing expressions of interest to Brisbane’s prospective franchises the Dolphins, Jets and Firehawks.
ARL Commission chairman Peter V’landys is keen to grow the code in Queensland to combat the threat of AFL’s Brisbane Lions, but he has always cautioned he will not rubberstamp expansion if it is a threat to Broncos, Titans and Cowboys.
Now there is some opposition to expansion, with the Gemba report raising serious ramifications for Queensland’s three teams if a second Brisbane side is launched to rival the Broncos.
The ARL Commission has also been warned another expansion outpost in Melbourne – the NRL’s premier performing club of the past two decades – risked being eroded because of the heavy supply of Queensland-born players to the Storm.
According to a section of the Gemba report, leaked to News Corp, the probe raised fears about damage to the NRL’s on-field product because the existing 16 teams would lose a combined 34 players, eroding playing depth.
There is also a risk launching a fourth Queensland team would lead to inflationary pressures for cash-strapped clubs, not only on player salaries, but coaching, high-performance and administration staff.
The Firehawks, Jets and Dolphins submitted their bid documents a fortnight ago and are set for formal meetings with the ARL Commission in the coming weeks with a view to a definitive call on expansion in mid-to-late July.
The report added that there was some upside in expansion – more teams would mean more games and potentially generate more revenue. However, the existing clubs point out that you don’t need to add another team to create more games.
Last month, Firehawks bid chief Shane Richardson, the NRL’s former strategy boss, declared the code can bankroll a second Brisbane team.
“Brisbane is ready for another team. The game is ready for expansion, absolutely,” Richardson said.
“I was part of the NRL in 2015 and we did a comprehensive analysis of the demographics and where the best locations were (for expansion), myself and Andrew Fraser did a fair bit of work on it.
“Southeast Queensland is a hotbed for rugby league talent, but the key is you have to value-add.
“It’s important the new team doesn’t steal IP (Intellectual Property) from the Broncos or Titans.
“The performance of the Queensland teams at the moment is not a concern.
“If anything, another team means more opportunities for Queensland kids to stay home. The expansion team will develop and keep others on their toes.
“A second Brisbane team helps Queensland in the State of Origin arena. It’s important we consider the benefits of expansion if we want Origin to remain healthy.”
Queensland Rugby League chairman Bruce Hatcher says he is open-minded about expansion, or possible relocation from a Sydney team – on the proviso it does not impact on the Titans.
“We need an NRL game at Suncorp every week,” he said.
“I believe the Titans have to be supported and we can’t continue to ignore the growth in that western corridor of Brisbane.
“I am not anti-expansion, but I do believe a Sydney team should consider straddling two markets by relocating and taking advantage of a new base in Queensland.
“All three bids are very credible, but the western corridor is the growth area of Queensland and with AFL there, we have to combat that.”
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