Rugby Australia hopeful Peter Wiggs still has Supercars work to do

Potential Rugby Australia chairman Peter Wiggs is already battling to shore up another struggling sport: Supercars.

Private equity specialist Peter Wiggs, who is pushing to take over as chairman of beleaguered Rugby Australia, is already ­battling to shore up the future of another struggling sport: Supercars.

As chairman of Australia’s V8 racing ruling body, Mr Wiggs, who founded private equity firm Archer Capital, is under pressure to strike a new broadcasting deal, as media companies slash spending in the wake of the corona­virus crisis.

“Supercars has been a poor investment for Archer Capital, and we make no secret of that,” Mr Wiggs told The Australian.

“We probably purchased it at the top of the market. And we’ve faced difficult structural issues since the day we acquired it,” he added, referring to a drop in broadcast rights, corporate sponsorship and a difficult market for ticket sales.

It is understood that talks about a new deal have yet to start, despite the five-year deal with Fox Sports and Network Ten, worth just over $40m a year including production costs, ending at the end of the year.

Supercars, which has halted all races during the health crisis, is expected to struggle to secure a new lucrative broadcast deal, as broadcasters tighten their belts in a bid to offset lower advertising revenue.

Sources inside Kerry Stokes’s Seven Network are adamant the television operator will not be a player in Supercars negotiations, saying its sports slate is full with cricket, AFL and Olympic rights to manage.

Even before COVID-19, broadcasters were struggling with declining ad revenue as ­audiences turned to streaming services for a mountain of TV shows and movies.

“There will be a huge readjustment of all sorts of things after COVID-19,’’ an executive familiar with sports broadcast rights negotiations said.

“Players across the board will get paid less, there’ll be half the number of executives in these governing bodies of the sport, so the NRL, AFL and rugby, they’ll have far less employees because they don’t need them all.”

In recent weeks, Mr Wiggs’s associates have been pushing his credentials as part of a campaign to install him as the new Rugby Australia chairman. Mr Wiggs has longstanding connections with Mosman rugby club and is close to World Cup-winning Wallaby Phil Kearns.

“At the club (Mosman), it’s Wiggsy this and Wiggsy that; if he and Kearnsy take over Australian rugby, we’d be delighted,’’ an associate said.

Through Archer Capital, Mr Wiggs bought a 65 per cent equity stake in Supercars for about $137m in 2011, with the remaining 35 per cent owned by the ­racing teams. At the time, Supercars was making an operating profit of about $27m annually.

Over the next three years, ­Supercars profit dropped to $9m under Archer’s control. The sharp drop was caused by the loss of two popular events in the Middle East and a substantial drop in the broadcast rights.

Instead of taking a Seven deal worth about $27.5m, plus 5 per cent for another five years, ­Supercars turned it down following a report that its broadcast rights were worth $60m, a source said.

But a higher bid never materialised, with Supercars accepting a revised $18.5m offer from Seven. Supercars is understood to now make a profit of about $23m annually.

“They did that deal because the teams were going out backwards because they weren’t getting enough money. So in order to prop up the teams, they did that deal,” a media executive said.

Archer tried to sell its 65 per cent stake in Supercars in 2017 for more than $100m but failed to get a bid. By the end of last year, its stake was valued at $45m. Since the shutdown, the value has dropped by another 25 per cent to $34.9m.

Mr Wiggs took over as Supercars chairman in 2014.

“Obviously the first three years were particularly difficult, where we saw a decline of earnings of 66 per cent,” he said.

“But since I got involved as chairman, and have had the benefit of two extremely good CEOs in James Warburton and Sean Seamer and a very good management team backing those guys, and a very good partnership with the teams, we’ve managed to turn that around.”

Mr Wiggs is also likely to have to find a new major sponsor, as the future of its current sponsor, Virgin Australia, remains under a dark cloud after it was placed in voluntary administration.

“Peter … is extremely sharp,” said one company executive who has had dealings with Mr Wiggs over several years. “He is the sort of guy who will look at things from all different angles when you’re in a meeting with him, drill down at what is important and you’ll walk out of there with two or three fresh and really good ideas to attack.”