NRL staring at a $250m blackhole

NRL chief executive Andrew Abdo has told clubs the game is budgeting for losses of up to $250 million this season.

Magic Round at Suncorp Stadium was a huge money spinner for the NRL last year

The NRL has finally put a figure on the financial damage caused by COVID-19. In talks with the club bosses this week, it is understood NRL chief executive Andrew Abdo told them the game was budgeting for losses of up to $250 million this season.

Last year, the game generated more than $552m in revenue, although that figure included $24m in contra from the broadcasters.

That target has been downgraded this season to as little as $280m, although the hope is that with the help of the broadcasters they can push the figure north of $300m. Regardless, the losses are devastating as the strain on the game is exacerbated by the $13m in additional costs that have been dedicated towards bringing rugby league back on schedule. Those costs include the fees incurred in the hiring of biosecurity experts, charter flights and housing of the Warriors.

While players have been guaranteed 80 per cent of their contract figures for this year, clubs have been told they will receive their $1.1m grant for the remaining five months of this season.

They have agitated for more, although it is understood that at their meeting on Tuesday night they were told that the NRL would absorb some of the costs that would normally go their way.

The NRL has budgeted for devastating losses over the course of this year due to the absence of gate receipts and corporate support while fans are locked out of venues.

The NRL’s financial reports for last season indicated that non-broadcast revenue increased by 25 per cent to $203.9m in 2019. “The largest contributor to the uplift being major events ($16.6m), as a result of the new Magic Round and an improved (State of) Origin series and premiership grand final,” the report said. “Corporate partnership revenues also ­increased.”

Magic Round has been put on ice due to the outbreak of COVID-19. At the same time, the NRL is expected to miss out on the money that would have come from playing an Origin game in Adelaide.

Although the Adelaide game has not been cancelled, it seems only a matter of time before the match is moved given Origin has been shifted to the end of the season and there is no benefit in South Australia hosting a game with no crowds. Cricket’s T20 World Cup is also due to be played over that time, meaning Adelaide Oval would be out of commission for rugby league.

The NRL will also lose significant money if the grand final is played without crowds, although it would have been far worse had the game been scheduled for ANZ Stadium. Instead, with ANZ Stadium being rebuilt, it had been earmarked for the smaller SCG. However, like Adelaide Oval, the SCG may be out of action due to cricket commitments, which is likely to mean it is played at Bankwest Stadium.

Broadcast revenue, or at least the size of it, also remains in doubt due to ongoing talks with the Nine Network and Foxtel. It is understood club officials were given little clarity over the progress of broadcast negotiations on Tuesday night, although there is a growing sentiment that discussions are edging towards finality.

Foxtel seems likely to sign a five-year extension to their existing deal which would take them through until the end of 2027. The Nine Network has been a tougher negotiation, although there remains a degree of confidence at the NRL that they will strike a deal with their commercial partner as well.

Both Nine and Foxtel are likely to receive healthy reductions for this season — according to last year’s financial report, the NRL had budgeted on a 2 per cent increase each year over the life of the broadcasting deal, that runs until the end of 2022.

That expectation has now dramatically changed. The NRL received $324.6m in cash from the broadcasters last year — as well as the Nine Network and Foxtel, that amount included Telstra streaming rights and New Zealand television — but that figure is expected to diminish in 2020 by as much as 30 per cent.