Rugby gambles on the unknown

Fox Sports walked away from negotiations as it did not want to pay over-the-odds for a sport that has had declining rating.

Raelene Castle says rugby fans would have been angry if she accepted Fox Sports’ initial offer Picture: AAP

World Rugby has picked the least opportune moment to post the news that the Wallabies have dropped to their lowest-ever global ranking, seventh, as the relationship between Rugby Australia and its broadcast partner turns toxic.

Australia was pushed further down the world rankings by the rise of France, which scored a major coup by defeating Eddie Jones’ England in Paris on the weekend.

Not only could that ranking cause Australia problems when the pools for the 2023 Rugby World Cup are drawn following the November internationals — especially if the Wallabies sink to ninth or lower by then — but the news further bolsters the Fox Sport argument that it cannot afford to pay over the odds for a sport that is losing subscriptions and ratings.

Fox Sports has announced it has broken off negotiations with Rugby Australia for a new broadcast deal from 2021-25, even shutting down its attempt to secure the rights to the premier rugby club competitions in Australia, the Shute Shield in Sydney and the Hospitals Cup in Brisbane.

RA hopes to sell these competitions as a whole-of-game offering, effectively packaging Australian rugby from club level to the Wallabies, but had Fox Sports secured the rights to them it would have diluted the overall appeal to a broadcast rival such as Optus.

The decision had looked to hinge on the Shute Shield, jointly owned by the Sydney Rugby Union and the NSWRU, which jointly control the Sydney premiership and are in partnership with the Seven network and Club Rugby TV, owned by Nick Fordham and John Murray.

But it is understood that once the QRU had vetoed the idea of selling the Brisbane club rugby rights to Fox and the Sydney clubs had attempted to turn the sale of Shute Shield rugby into a “Dutch auction”, Fox Sports lost interest and withdrew.

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The situation has reached the stage where there is no communication between RA and Fox Sports, except perhaps for day-to-day organisational matters.

There is brinkmanship and posturing in just about every broadcast deal, although the deal brokered in 2015 between the then Australian Rugby Union chief executive Bill Pulver and Fox Sports boss Patrick Delany was completed harmoniously. But from the moment Fox Sports made RA chief executive Raelene Castle what it saw as a fair offer and she didn’t, things began to unravel quickly.

It is understood the offer was to duplicate the existing five-year deal negotiated by Pulver and Delany of $285 million or $57 million a year.

Given that the 2015 agreement was negotiated on the basis of five teams not four — the Western Force were not culled until 2017 — that the ratings are now down 25 per cent, the Australian dollar 30 per cent weaker and the Super Rugby competition planned for next year will see a 30 per cent reduction in the number of games, courtesy of the axing of the Sunwolves, Fox Sports believed it had acted more than fairly.

RA’s story is different. Castle won’t reveal what was offered but believes that rugby followers would have had every reason to storm her office had she agreed to those preliminary terms.

By walking away from the 25-year partnership with Fox Sports and introducing competitive tension to what had always been bilateral relationship by seeking out Optus, Amazon and Rugbypass, she has taken the biggest gamble of her professional career.

When she releases the tender documents in the coming days, she effectively will be betting that Fox Sports cannot afford to antagonise that well-heeled element of its customer base which essentially subscribes for the rugby. Yet it is a massive gamble. Rugby subscriptions have been declining over the last five years, so too the ratings, and though the loyal followers are hanging on stubbornly, at what point does Fox Sports decide to cut its losses?

There is no question that Fox Sports wants to keep the rugby but, equally, there is no way that Delany is going to pay what he believes are over-the-odds for the broadcast rights.

The Castle gamble also extends to her alternate choice, Optus. It may well be that the telecommunication corporation can offer enough money to keep Australian rugby afloat and operating for another five years but at what cost?

It does not have the reach of Fox, nor any real history with sport save for its bold adventure with the soccer, which initially looked a disaster with its coverage of the 2018 World Cup but now may be coming good with the English Premier League.

There is, as well, the fact that News Corp currently provides ­extensive newspaper coverage of rugby.

Still, under SANZAAR rules, the joint venturers, South Africa, New Zealand and Australia all ­independently negotiate the best possible broadcast deal within their own territory but then come together to pool that pot of money.

South Africa and New Zealand have already finished their negotiations and are believed to have been mildly excited by what broadcasters offered.

If so, any losses Australia might sustain in its own dealings with broadcasters could be offset by what their SANZAAR partners bring to the table.

SANZAAR is due to meet next month. No doubt there will be considerable interest when Australia reports on how it fared at the ­negotiating table.