Northern hemisphere rugby league must consider the fact that clubs could be lost to the financial hardship of the coronavirus pandemic, says former Melbourne Storm chief Mark Evans.
Clubs have furloughed staff and players and have had little by way of revenue with the fixture programme suspended.
“This is a massive demand-side shock,” said Evans.
“We all rely on people buying something or volunteering something to keep us going. Sport is not exempt from that.”
Evans, who was this week’s guest on the BBC Radio 5 Live Rugby League Podcast, continued: “I think you might lose a couple [of clubs] along the way.
“It is not always that a white knight appears and someone else takes up the cudgels on a club’s behalf. Look at the experience of Bury FC recently. But it does often happen.
“The key thing is, do broadcast revenues hold up post 2021? Or will this virus and what a lot of observers seem to think will be a significant recession that follows it impact significantly on the largest revenue stream most clubs have got?
“If that is the case, you can see the numbers dropping and not being replaced – in a number of sports.”
Rugby league resilience to be tested
Rugby Football League chief executive Ralph Rimmer has previously spoken of his confidence that the sport is “resilient” and can sustain itself through the challenges of the pandemic.
Different circumstances across the league, such as assets owned or wealth of benefactors, means some clubs are naturally better placed to survive than others.
“There are still a number of clubs in Super League that rarely make a loss, can cover the current cost-base in a normal year and are underwritten by a well-financed shareholder base, either an individual or a group,” said Evans, a former CEO at rugby union side Harlequins. “I’m thinking Warrington, St Helens, Wigan, Leeds and those sorts of clubs.
“In any market, you then look at who is most at risk. You look at ‘them, them and them’. It is the same in the NRL where people always look at Cronulla, Manly and Gold Coast. I’m sure in Super League everyone always looks at Wakefield or Salford.
“There is an argument to say those clubs have got used to working on a very low turnover anyway, but it wouldn’t take much in terms of a once-and-for-all drop in revenue to make those clubs very hard to operate on a full-time basis.
“If you can get through this undoubted shock on the demand side – that people aren’t coming through the gate or buying memberships, the sponsors and broadcasters do not pay out – then you come back to the need to have cash reserves, you have to be able to borrow or you have to have some assets.
“If you have not got one of those three, you will quickly go insolvent. It is all a bit depressing but that is the world we are in.”
What will rugby league be worth to the broadcasters?
Rugby league is a staple of the Sky broadcast output, a committed audience which is loyal if not as great in number as for football, cricket and Formula One.
The broadcaster paid £200m for a five-year deal in 2014, and that money – predominantly spread across the Super League – pays for a great deal of the £2.1m salary cap for each top-flight club.
Those sums are minute compared to the Australian National Rugby League, where pressure from broadcast partners to gain a return on their investment has helped push moves to return to play on 28 May.
The NRL signed a five-year $2bn deal with its partners, but under that contract all games are televised, and the market for rugby league is much more like that of Premier League football for English audiences.
“In Australia it looks quite weak [for the broadcasters themselves],” Evans continued. “Fox Sports [are] losing a lot of money and are being supported by News Corporation. Channel 7 and Channel 9, the two big free-to-air giants are in challenging times.
“Advertising revenues are being hit as retail gets hit. This is a perfect storm. Rugby union doesn’t have a deal for next year and it looks like league are going to do an extension of their current deal at a lower level, so they have taken certainty over gambling it’ll all come back quickly.
“In England the two or three big broadcasters are bigger and with deeper pockets and are likely to be under less financial pressure themselves.
“The industry seems to feel rights values in this climate, in what will almost certainly be a significant recession post-virus, it is hard to see rights values increasing.”