Super clubs facing $1.7m wage gap, says Melbourne Rebels chief

After reports the Rebels could be axed, Melbourne chief Baden Stephenson reveals the brutal financial situation ‘all’ Super Rugby clubs are in.

Baden Stephenson, chief executive of the Melbourne Rebels, at the MCG. PIcture: Getty Images

Melbourne Rebels chief Baden Stephenson says Rugby Australia funding cuts have placed massive financial pressure on all five Super clubs to pay their players, with millions stripped from their budgets.

Stephenson, who feels there has been a targeted approach to throw a “grenade” at his club, said all clubs were facing a “$1.7m wage gap” to pay their players after Rugby Australia cuts since 2020.

The Rebels are estimated to be $9m in the red and have privately been touted as a franchise to be axed as Rugby Australia faces growing financial pressure. Stephenson said the Rebels’ financial problems were solvable, but they, like all clubs, needed more support from Rugby Australia.

“The salary cap is $5.5m and our funding has been reduced to $3.8m for the last four years, so there is a $1.7m gap per annum just to pay the players – a total $6.8m per Super Club over four years,” Stephenson said.

“We were told that $1.7m would come back in 2022. It didn’t come … RA also indicated that private equity or a capital funding event would come in ’23, so the five Super clubs budgeted for that $1.7m to come in ’23. We were then told by RA two weeks ago that $1.7m for ’23 isn’t coming, and we are not getting it in ’24. 

“So when I talk to other CEOs in other sports, they just say to me; ‘You have to be kidding me that your player salaries are not even covered in your annual grant funding by the national union’.”

The Australian rugby player contract is a tripartite agreement between Rugby Australia, the Super Rugby club and the player.

Stephenson added: “Given Rugby Australia are employers of the players, there is strong agreement from all of the Super Rugby clubs that the contracting and funding models need to reflect the legal obligations of the national union.”

Rugby Australia CEO Phil Waugh, who has been in contact with all Super clubs including the Rebels this week, said the current financial reality for all clubs is “tight”. He told The Weekend Australian that the $9m the clubs requested won’t be delivered.

“We have got broad financial challenges right across the game,” Waugh said. “When we did the new broadcast deal it was significantly less than historic broadcast revenue. And the allocation of that broadcast revenue into Super Rugby is significantly lower as a result.

“It’s important to recognise that the pass through from Rugby Australia to the Super Rugby clubs as a percentage of the broadcast revenue is significantly higher than it was historically. The reality is that the revenue coming into the game and the attribution of that revenue to Super Rugby has diminished considerably.

“Unfortunately, the broader revenue challenges of the game at a national level impacts all stakeholders across the game, including Super Rugby clubs, but also communities. We must be conscious that we need to fund many different functions of rugby.

“The growth of the women’s game and the enormous focus on pathways are two key pillars we need to fund appropriately. Funding these two critical pillars in addition to appropriately funding Super Rugby clubs is important, and we are also working closely with our Super Rugby clubs in driving the product in their own jurisdiction which will drive local revenue.”

Waugh said a private equity deal not coming to fruition had also contributed to the $1.7m not being distributed.

“Clearly that the path that we’ve gone down with a debt facility rather than a private equity transaction changes the economics of what funds are available,” he said. “Right across the game now, we need to be disciplined and as efficient as we possibly can to drive a better product into the market, which will ultimately drive greater revenue over time.”

Waugh also said despite reports that the Rebels were on the chopping block, RA has no intent of cutting the franchise or any club.

He said reports that the Rebels would be cut were incorrect. “We have absolutely no intention in reducing the number of teams in the Australian market.”

“We’re clearly at a fairly low point in the game. So we need to keep winning the hearts and minds of those that support rugby and hopefully we’re doing that through the right level of integrity and transparency, and ultimately delivering on what we say we will deliver on.”

Stephenson, whose Rebels recently re-signed major sponsor La Trobe University for a five-year deal as well as a number of sponsors for multiple years, says their financial situation is not dire as reported.

He also says “importantly” the Melbourne Rebels and Rugby Victoria enjoy the strong support of the Victorian government, which is in the running to secure the 2027 rugby World Cup final for Melbourne.

Stephenson said he believes RA’s bid to centralise high performance and commercial elements – driven by former RA chair Hamish McLennan – was all but dead in the water.

 The Waratahs was the only Super Rugby team who wholly agreed to the proposed centralised commercial model – it was vehemently opposed by Queensland and the Brumbies, who then were part of a coup to overthrow McLennan – and the talks have stalled since the former chairman’s axing.

“From a Melbourne Rebels perspective, we actually were very open to an aligned or centralised model for the commercial operations – because if people could do it more efficiently, better, cheaper, we’re all for it – but those conversations have all stopped in their tracks,” Stephenson said.

“Rugby Australia are now trying to work out a funding model to run Super Rugby – and they don’t have the money. The Waratahs have the certainty that their gap in salary funding and financial losses is covered by Rugby Australia, while the other Super Rugby clubs are being told to keep doing your best with the same money.”

Waugh said “aligning” the high-performance system across the game was of utmost importance rather than the former drive to wholly centralise the game.

“We are certainly moving away from the word centralisation into integration and performance alignment,” Waugh said. “Our ambition and that strategic reset is still our No.1 priority.

“We’re absolutely committed to driving the same agenda that we announced in August, which is around that strategic reset and high performance alignment across the entire Australian system.”

Just weeks after RA was approved an $80m loan there are fears because all Super Rugby clubs are under pressure.

Following the coup that saw McLennan ousted, there is also discontent at the top, with pressure gaining to see four to five Rugby Australia’s board members removed before April’s AGM.

Meanwhile, the ACT Brumbies, the NSW Waratahs – who are rumoured to be projecting a $5m loss next year – as well as the Rebels are all operating under immense financial strain.

The Australian Financial Review recently reported that the Rebels owe millions of dollars to the ATO and around $1m in fees for use of the AAMI Park stadium, but Rebels bosses maintain this is being addressed and is “solvable and we have a clear plan”.

The Rebels maintain their future will be bright – in time.

 The Victorian government is eager to host the final of the World Cup in 2027. The MCG has a capacity of more than 100,000. “The Victorian government put more money into the game than anyone else,” Stephenson said. “These key relationships sit very much here in Victoria and our government understand that for rugby union to have a big presence in this state, the Melbourne Rebels play a critical role.”

A crowd of 83,944 filled the MCG for the Bledisloe Cup earlier this year – the largest Australian rugby crowd in 20 years – while the Super Round will return to Victoria in March next year. 

A Victorian government spokesman said that the Melbourne Rebels were an “important” part of the state’s sporting landscape.

“The Melbourne Rebels are an important part of Victoria’s sporting fixture, which draws people to our state and provides lasting benefits to our economy,” the spokesman said.

“The Allan Labor government continues to support the tenants of our state sporting venues so that Victorians can experience world-class sport in their own backyard.”

 One of the Rebels’ key focuses has been growing and connecting with its Pasifikabase. A number of Pasifika focused programs are supported by the Rebels, including in the state school system. “Everyone goes on about the game only being played in private schools, however we are leading the country here in Melbourne as we’ve got eight state schools in Melbourne signed up to the Rugby Academy Movement program, which is now a formal part of the school curriculum,” Stephenson said.