Super Rugby clubs in financial strife ask Rugby Australia for $9m

Not long after securing an $80m loan, the financial strain is mounting on Rugby Australia.

Rugby Australia CEO Phil Waugh’s stance on funding has angered some of the state chiefs. Picture: Getty Images

Rugby Australia is facing deeper financial pain with a group of Super Rugby clubs set to double down on a $9 million demand in funding, adding to fears the head office is on ‘the financial brink’.

Just weeks after RA were approved an $80m loan, the Weekend Australian has learnt Super Rugby club CEOs are now preparing to invoice RA for $1.7m each to help run their franchises.

It follows a video conference on Monday last week where the state CEOs were told by Rugby Australia CEO Phil Waugh they would not be receiving $1.7m in funding .

That response from Waugh has angered some of the state chiefs, who are now preparing a letter and invoices. All Super Rugby franchises are understood to be making a loss and are forecasting a loss for next year.

“The money is important to all of us because none of us are in the black, $1.7m would be a huge boost for each franchise … because there are concerns that the Tahs are now being financially helped out while others are struggling,” said a Super Franchise source.

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

The Waratahs are the only franchise to have fully committed and agreed to RA’s centralised model meaning they are under the full control of the governing body.

“I can’t see it not turning into a massive shitfight,” said one club boss when contacted by The Weekend Australian.

Rugby Australia’s Phil Waugh did not return calls from The Weekend Australian.

Rugby Australia are enduring tough financial times, with Harvey Norman recently declining to renew their deal as the naming rights sponsor of the Super Rugby Pacific competition.

Recently ousted RA chair Hamish McLennan’s close relationship with the Harvey Norman CEO Katie Page was vital in the brokering of the sponsorship deal in 2021. They had invested around $5 million into the code as major sponsor.

Former ARU chairman Hamish McLennan. Picture: Tim Hunter

Last year The Australian reported that the Brumbies, a Canberra-based team, and the most successful Australian side in Super Rugby history, had started a process to sell up to 49 per cent of the club to local or international backers. Twelve months on, no one has bought the franchise.

Waugh recently gave assurance the ACT Brumbies will stay in the nation’s capital amid centralisation discussions.

But there are concerns about RA’s financial situation worsening as demands for more funding for many of the five Super Rugby franchises and cost blowouts put pressure on an already struggling balance sheet. RA recently secured a $80m credit facility with private equity group Pacific Equity Partners, funds which it said would be earmarked for the development of the game, with a particular focus on the women’s game, pathways and community.

The PEP money will be used to pay off RA’s existing $25m loan with global financial firm ARES, and it is understood that RA’s 2023 financial accounts will show both an operating loss of several million dollars for the year given cost blowouts from the Wallabies doomed World Cup campaign and also debts of between $30-40m.

A previous $10m loan from World Rugby will be extinguished from money that the global governing body would have paid RA for participating in the World Cup, meaning RA has little to show in terms of revenue from the national team playing in what is usually the most lucrative tournament in the sport.

There are also concerns debt owned by the NSW Waratahs and an emerging difficult financial situation at the Melbourne Rebels – who has well-documented financial strains – could put a further strain on RA’s financial situation should it have to step in to financially support rugby in both states.

The Waratahs are understood to have made further financial losses of several million dollars, and forecast a similar result in 2024, and the Western Force relies on funding from billionaire benefactor Andrew Forrest to keep it in a stable position.

One source said RA could easily burn through $30m or more of its loan in 2024, and potentially more, meaning it could have more well north of $50m debt on its balance sheet in 12 months time – as well as the additional burden of paying interest on the loan.

The code has endured a tough time with the recent disastrous World Cup campaign which saw Eddie Jones resign after just 10 months in the job. Despite repeated denials, he finally took up the Japan head coaching job this week.