NRL’s $150m TV deal haircut

The NRL will forgo at least $150m in broadcast revenue over the next three seasons, but are banking on a cost-cutting campaign to diminish the pain.

TV crews operate outside Suncorp Stadium before the NRL’s resumption

The NRL will forgo at least $150m in broadcast revenue over the next three seasons, but the game’s leaders are banking on a cost-cutting campaign at the league’s headquarters and government backing to diminish the financial pain as much as possible.

Broadcast revenue has accounted for at least 60 per cent of the NRL’s annual revenue in recent years and the billion-dollar restructuring and partial extension of the deal with Fox Sports and Nine Entertainment will put a dent in the league’s balance sheet.

Neither the NRL nor the broadcasters would release exact terms of the deal, struck about 50 minutes before Thursday night’s kick-off between Parramatta and the Broncos, though Nine did tell the ASX it would save about $119m over the next three financial years.

A portion of that deal is attributed to production costs to broadcast matches, pegged by sources at about $60,000 per game for Nine. But the bulk comes off the rights fee Nine will pay to maintain its free-to-air rights until the 2022 grand final.

Both Nine and Fox Sports were enthused about the response from viewers to Thursday night’s action, which attracted a 951,000 audience for Nine across metro and regional markets and an average 401,000 for Fox Sports — a record for a simulcast match.

“What I am excited about is what we can do with this season to make this a really gripping entertainment experience for our fans,” NRL chief executive Andrew Abdo told The Weekend Australian when asked about the new deal, which also has Fox Sports extending its contract until 2027.

“The broadcasters play a huge role in the way the game is presented, particularly when you don’t have crowds. As to the actual make-up of the deal, that is a commercially sensitive contract.

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“There are not many businesses that aren’t affected materially by (COVID-19). The way we have approached it is in a genuine partnership. That requires compromise. The alternative goes down a path where there is significant risk for both parties.”

The NRL last year received $324.6m in broadcast revenue, which will be reduced for the next three years but increase again under the new Fox Sports deal which is for pay-TV rights only. Nine is still considered to be in the box seat to further extend its free-to-air rights.

It is hoped NRL chairman Peter V’landys and Abdo can achieve savings of at least $50m at Rugby League Central and potentially more, though it may not need the $250m line of credit from the UK struck in April.

One source could be the NSW or Queensland governments, with the latter potentially offering the league a deal along a similar strategy of its $200m funding offer for airline Virgin.

The NSW government could also underwrite funding for the NRL should it delay or cancel its revamp of ANZ Stadium, for which it had struck a deal for 28 grand finals with the league after a $1bn-plus rebuild.

For the broadcasters, attention will now turn to the AFL. Fox Sports and Seven West Media need to strike a deal for AFL rights by its first match back by June 11.

The AFL is set to drive a harder bargain than the NRL with its rights holders, though both Fox Sports and Seven are keen to extend their agreement for another two years to 2024.