Brand new fears if RA’s debts deepen

The Wallabies brand has been used as collateral for a loan while Springboks and All Blacks conspire to isolate Rugby Australia.

All smiles as Rugby Australia chief executive Phil Waugh, right, and director of high performance Peter Horne unveil new Wallabies coach Joe Schmidt on Friday Picture: Getty Images

Just how far can rugby in Australia fall? That’s the question some influential figures, including ex-Wallabies, are asking after The Weekend Australian revealed that Super Rugby franchises are drowning in a sea of debt.

The answer is — a lot further.

There is a potential scenario that the Wallabies could be owned by private equity. The brand of what was once the most beloved national team has been used as guarantee to Pacific Equity Partners (PEP) for the $80 million loan to Rugby Australia in November.

PEP granted the loan for five years and RA has said it will be used in areas deemed “critical to the sport’s development”, such as high-performance integration, women’s rugby, community and pathways.

But with Super Rugby franchises ACT Brumbies and the Melbourne Rebels struggling to keep their heads above water — and every chance that their participation agreement could be handed back to head office — the financial state of play for RA is becoming a living nightmare.

RA is already absorbing the debt of the Waratahs — expected to blow out to $6-8m this year — leaving it in a financial jam.

If the worst of the worst situation unfolded and RA defaulted on its loan — the Wallabies brand could be all PEP’s.

RA opted to take the loan, with increased revenues expected to come from the British and Irish Lions tour in 2025, as well as hosting the men’s and women’s Rugby World Cups in 2027 and 2029 respectively. RA is hoping these events will bring in over $100m.

It’s not the first time the Wallabies brand has been used as a guarantee for a loan.

When Bill Pulver was chief executive, he used the iconic brand to secure a $7m currency hedge with former sponsor HSBC. Pulver and then-chair Michael Hawker set up the transaction in the belief that its value would increase, but that outcome was scuppered when Covid-19 hit.

RA had to borrow money to pay off that loan.

While Australian rugby is feeling the financial pain in the front office, there is also troubling news on the field.

Following Australia’s disastrous World Cup exit, its standing on the world stage has slipped to ninth, and in turn major rugby nations are turning their back on the once mighty Wallabies.

Current RA board member Matt Hanning, who is understood to be desperate to take over the chairmanship of SANZAAR following former RA chair Hamish McLennan’s departure, will have some challenges on his hands if he gets the role.

The Australian understands South Africa and NZ have all but done a deal to hold a bilateral three-test series every three years — and in turn cut out the Wallabies. It’s a deal that snubs both Argentina and Australia, and one that devalues the The Rugby Championship.

The Rugby Championship (TRC) is one of the pre-eminent competitions in world rugby. It is contested annually by Argentina, Australia, New Zealand, and South Africa. It is owned and managed by SANZAAR.

The shafting comes at a time when RA needs to get a significant uplift in the value of its media rights. Instead, the recent world champions in New Zealand and 2023 World Cup winners South Africa will get the rich spoils of their newly-proposed tours, while cutting out the Australian and Argentinian unions.

That move not only slashes the value of the media rights for Australia, but it also hurts the Wallabies’ and Pumas’ high-performance programs.

It would leave the Wallabies facing potential matches with Japan and Fiji, and with it, less revenue.

“NZ have taken advantage of the recent chaos and completely snookered their Anzac partner, Australia, they now control Super Rugby through the Super Rugby Commission,” a rugby source said. “Because Australia loses the high-performance interaction, it means New Zealand gets the best of both worlds.

“Also, Hanning is agitating for chairman, but has no experience in media rights, commercial sponsorships or competition management. Australia are screwed, because nobody is left to stand up to New Zealand. This whole thing breaks up the north/south balance.”

One of the shining lights on the horizon for Australia is the British and Irish Lions tour in 2025. The tour will see the Lions play nine matches in Australia, with three Tests against the Wallabies and six Tour games around the country – including a match against an invitational team of players from Australia and New Zealand in Adelaide.

But The Australian understands that sponsorships have been a hard sell and RA is currently not selling enough to meet its lofty expectations of a significant cash windfall.

It is a time when the middle-tier domestic sports are suffering.

Last week, the A-League brutally axed half of its workforce and questions mounted as to what happened to the $140m cash injection it received two years ago.

Poor governance, crazy spending habits, handouts to clubs and a last-ditch broadcast deal have been blamed for the Australian Professional Leagues’ troubles.

Rugby Australia is hopeful that under Joe Schmidt, the Wallabies fortunes will turn around and that more attention, will be on the game for the right reasons.