Brumbies locked in battle for survival

The ACT team pin their hopes on private equity to secure their future as Super Rugby franchises drown in debt.

The Brumbies celebrate the 2001 Super Rugby title; they remain the only Australian franchise to win two. Picture: John Feder

ACT Brumbies chair Matthew Nobbs has revealed the Super Rugby franchise is “fighting” to stay afloat, but is determined to “avoid insolvency” and he is confident private equity can help secure the future of the iconic club.

The Brumbies, Australia’s most successful Super Rugby club, have a debt of more than $1m to Rugby Australia, of which they’ve been required to make payments which Nobbs said the organisation had met every time.

All Super Rugby clubs are facing an uphill financial battle, with the Rebels carrying $9m in debt and facing insolvency.

There is talk the Rebels may be cut by RA and are understood to be pondering an alliance with the Auckland-based Pasifika Moana.

The Brumbies are struggling to avoid insolvency as rugby union’s financial crisis hits a new low.

Rebels chief executive Baden Stephenson last year denied that the club would go broke and was adamant it had a future.

The Weekend Australian can also reveal the Waratahs are in a “big hole” and dealing with a debt that is conservatively estimated at $5m but could well be a lot more.

The Waratahs are the only franchise who agreed to RA’s centralisation model and RA insiders were said to be recently floored by the amount of debt the NSW club has after they signed on.

Nobbs, who has been chairman for six years, says it is “business as usual” for the 2024 season – he believes the team can win the Super Rugby title – but the chairman did not shy away from the financial reality his iconic franchise is facing as RA refuses to provide more funding to the Super Rugby clubs.

The addition of Super W teams has added to the financial pressures of the franchises.

Nobbs said private investors were circling his club and he was hopeful that private equity could come to fruition and a group may buy the 49 per cent on offer.

“It is not in the Brumbies’ DNA to roll over,” Nobbs said. “We will fight. We’ve got good support from the local government, sponsors and our members.

“We’ve got investors that are ready, genuine investors that can take the Brumbies to another level. We’ve got strong ties overseas, including links to America, and have been offered opportunities to play games in Japan.

“I believe if we can get over this hump, I am 100 per cent confident that our brand and the organisation will kick to a level that we’ve never seen before.

“I would love us to be the Manchester United of rugby union.”

After RA were successful in acquiring an $80m loan in November, the line of credit moved state CEOs to request funding for their cash-strapped clubs to help cover their day-to-day running costs.

However in a Zoom meeting, RA boss Phil Waugh told the CEOs they would not be receiving $1.7m in funding – a decision that angered the franchises.

Nobbs noted that Rugby Australia’s funding distribution of its franchises starkly contrasted to how AFL and the NRL helped out with players’ wages.

“The Brumbies are an organisation that has always operated very leanly,” Nobbs said.

“The impact of a 30 per cent reduction in funding from our national body for now the fifth straight year has impacted us greatly. Add $1.7m every year for five years back on to our balance sheet and we aren’t having this conversation,” Nobbs said.

“Add in additional costs associated with running our Super W team that weren’t there five years ago. The NRL provide 130 per cent of their teams’ salary cap and the AFL would be similar. RA’s funding for the SR clubs is 70 per cent.”

Nobbs added: “If any Super Rugby club is trading insolvent, RA can take back your licence, it’s part of the participation agreement.”

Super Rugby attendances have been falling steadily over the past decade as interest in the domestic competition wanes.

A Super Rugby insider says that according to their ‘participation deed,’ RA and the club has a mutual obligation to fund the club and fulfil its obligations with its media rights deal with Nine and Stan. Revenues and debts are jointly shared.

The Weekend Australian understands all Super Rugby franchises are in debt and are forecasting losses for next year.

In November 2022 the Canberra-based team, which won Super Rugby titles in 2001 and 2004, started a process to sell up to 49 per cent of the club to backers.

Nobbs said they had attracted strong interest from investors.

“We have genuine investors wanting to invest and see the value in our brand,” he said.

“They believe in us and the potential that the organisation brings and acknowledge our success. We are seeking the support of RA to ensure that we can realise the value of such a deal.

“We have great support from the ACT government and our other stakeholders. Our members are fantastic.

“But the best form of support we could get is from the ACT community – and that would be to buy a membership, merchandise and get out to GIO Stadium.”