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Home / Business

Steve Tew: 'Are we a half a billion dollar brand? Who knows?'

Matt Nippert
By Matt Nippert
Business Investigations Reporter·NZ Herald·
6 Nov, 2015 10:00 PM6 mins to read

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Steve Tew with Dan Carter, as he announced his planned move to France. Photo / Jason Oxenham

Steve Tew with Dan Carter, as he announced his planned move to France. Photo / Jason Oxenham

Rugby boss seeks tips from other pro sports, reports Matt Nippert.

In Britain, watching his team conquer demons in Cardiff and Australians at Twickenham, New Zealand Rugby boss Steve Tew didn't just have eyes for ovals. As his All Blacks hogged the headlines, Tew was undertaking some lower-profile visits to see how round balls are managed.

"I've visited some colleagues at Arsenal and Chelsea on this trip," he says. "And we've had people looking up, not Manchester United, but Manchester City. We spend a lot of time talking to colleagues in North America because they are close to the leading edge."

READ MORE:
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• All Blacks: Steve Tew - We won't change selection policy

Tew had found himself on the leading edge in 1996, when he was in charge of the Canterbury Rugby Union. That was when rugby turned professional and his Crusaders quickly became a model for other teams to, in order, hate, envy and emulate. He moved to the national body, then up the ranks before becoming chief executive in 2008.

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From his start in the field, organising Easter Tourney for NZ Universities in 1982, he now finds himself contemplating the future of television. Part of his discussions with English football clubs concerned broadcasting rights, particularly how to safeguard and grow what is the lifeblood of professional sport -- whatever the code.

Tew acknowledges that TV rights provide about 40 per cent of NZ Rugby's revenue, and disruption in the sector is seen as both a concern and an opportunity. While pay television networks aren't suffering quite as much as their free-to-air counterparts, cracks are beginning to show. internet streaming tends to disrespect geographical boundaries and deals based on carving up territories.

Nimble online-only operators, not saddled with expensive satellites or transmission towers, are making plays for content. Some of Europe's large football clubs have become broadcasters themselves, packaging game footage and interviews and streaming boutique channels online for a fan base that is connected more by jersey colour than nationality.

Given we're a rights holder, and providing we're nimble and don't back the wrong horse for too long, we should remain in pretty good shape.

Tew says he's trying to keep up with the play: "Yes, we're monitoring that carefully, but frankly, no one's an expert because it's moving so quickly." Aware the ground is moving under his feet, Tew says options are being kept open and -- while he is happy with the deal with Sky TV that runs until 2020 -- he won't rule out the future establishment of All Blacks TV, given that NZ Rugby appears to hold a trump card. "Given we're a rights holder, and providing we're nimble and don't back the wrong horse for too long, we should remain in pretty good shape," he says.

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What wasn't in good shape when Tew took over was the organisation's constituent unions. Only semi-professional -- both in terms of players in the level below Super Rugby and in administration -- the global financial crisis knocked sponsors and commercial revenue at all levels of the game and left unions facing existential crises.

Deloitte has put out annual reports on the financial state of the unions, showing that for five straight years from 2007, the provincial unions, overall, ran losses. Some (particularly at the bottom of the South Island) even found themselves technically insolvent, with negative equity and running sausage sizzles to stay afloat.

Tew says his response to the global financial crisis was a policy that can only be described as Keynesian. "What we decided to do as a business was to spend some of the balance sheet to keep things kicking over. So, yes, some of the unions were doing it tough, but we were able to keep them afloat one way or another. We certainly ran a very mean ship for 18 months, two years or so. A lot of the nice-to-dos got taken out, but we kept doing the absolute fundamentals."

The strategy was possible thanks to the unusually large cash reserves at NZ Rugby -- still standing at $62 million, according to accounts for 2014 -- which Tew says reflect conscious conservativism rather than balance sheet laziness.

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The crisis has since stabilised. In 2010 four unions were technically insolvent, having negative equity, but only Waikato remained in that position by this year. That said, half the constituent unions were only just out of the red, with equity of less than $1 million apiece.

Tew says a review of funding for provincial unions will soon see more of the parent's riches trickle down to the grass roots, while the national team will continue its push to expand globally.

Profile

• Job: Chief executive, New Zealand Rugby

• Age: 57

• Born: Lower Hutt

• Education: Masters degree in recreation and administration

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• First rugby job: In 1982, as general secretary of the NZ University Sports Union

• Twickenham companions: Daughter Ruby and Prince William

Tew wants to return the All Blacks to Tokyo and Chicago and says talks are under way with major sponsors AIG and Adidas, on extending their association, even though the deals have many years to run. He concedes that revenue from offshore is likely to be the only avenue of growth.

The maturation of the New Zealand market for rugby is probably best illustrated by Calum Henderson at The Spinoff website, who chronicled his efforts to subsist entirely on food and drink emblazoned with NZ Rugby logos.

These days the All Blacks seem to have their own aisle at the supermarket, and Tew agrees that saturation point may have been reached. "That's a very good question our commercial guys are asking themselves all the time. There's certainly a body of thought that less would be more too."

After the success of Richie McCaw's team -- marked by victory parades this week -- commentators have turned to asking what victory means to the value of the All Blacks. British consultancy Brand Finance published some sketchy research saying victory in last week's final was worth $54 million and the team's brand value could more than double to $750 million in the coming decade.

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Tew seems more amused than impressed with the figures. "There's a whole industry, isn't there? Valuing and revaluing brands every 12 months in order to put them on balance sheets. I'm sure the accountants enjoy that."

And a full war chest means there is no need to employ accountants to play such esoteric games, Tew says, so it's unlikely this question will get a definitive answer: "Are we a half a billion dollar brand? Who knows? We haven't gone through that exercise, mainly because we're not looking to borrow money which is the main reason we go through that process."

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