Brumbies’ financial woes should ring alarm bells at RA

If some estimates are to be believed, the cumulative debt of Super Rugby clubs is not far short of the yearly value of the code’s TV deal.

Rugby Australia chief executive Phil Waugh at the announcement of new Wallabies coach Joe Schmidt on Friday Picture: Getty Images

The revelations the Brumbies are staring at insolvency is a warning sign for Rugby Australia.

If private equity does not come through, a potential outcome is that the Brumbies ‘hand the keys back’ and that would lead to RA absorbing the debt of not only the Waratahs but also the Brumbies and perhaps even the Rebels who are also in financial dire straits.

And whatever RA gives those franchises – it will most likely lead to the Western Force and Queensland to ask for similar financial compensation – so as to not be disadvantaged.

It’s a scenario no one wants. It would be a financial nightmare. But if that worst case scenario were to happen the three franchises’ debt would be close to the value of one year of RA’s TV deal with Nine.

It’s no surprise there is strong talk in rugby circles that either the Rebels or the Brumbies will be cut by RA.

Some fear the $80m loan Rugby Australia secured late last year could soon be spent. Rugby insiders say times are tough in not only Rugby Australia’s head office but in Super Rugby land.

For over a month now the Super Rugby franchises have been asking RA for $1.7m each to help cover the running costs of their franchises. It has not happened.

Some Super Rugby officials believe that RA is too distracted by the national teams and has neglected the major domestic competition in the process.

“RA have got their head in the sand; all they’re interested in is a winning Wallaby team … it’s farcical, they’ve got to invest in Super Rugby,” they said, adding; “there’s a Super Rugby comp starting in a month and you wouldn’t know it.”

Next month Super Rugby Pacific kicks off without a major sponsor after Harvey Norman severed ties following a leadership coup that overthrew chairman Hamish McLennan. The deal was estimated to be worth $5m.

McLennan had pushed hard for centralisation – which some say triggered the coup – to avoid this current dire situation.

Rugby has never been more up against it. People who adore and love the game are worried.

The Australian sporting landscape has never been tougher for rugby union. Kids in the schoolyard still struggle to name a Wallaby but can easily tell you who Sam Kerr is. The NRL juggernaut led by Peter V’landys and Andrew Abdo goes from strength to strength and is set to launch its opening round in Las Vegas. The AFL dominates junior sports with its Auskick program, not to mention attendance and the national TV ratings; the sport is slicker and sharper than ever.

And rugby battles on after its worst showing at the World Cup. Privately many people in rugby union circles with an understanding of the finances believe that RA itself could become insolvent if more cash doesn’t start flowing into the organisation.

“RA directors should be aware of fiduciary duty that there is potential that RA is not a going concern,” said one source.

The worst case scenario is that Rugby Australia could go under – the best case scenario is the loan tide it over, until it gets the money from the Lions Tour and then the Rugby World Cup. Then there is a possibility that money will only be used to pay off the loan and not be invested into developing the game into the future.