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Home / Sport / Rugby / All Blacks

The fight for rugby's future: Part 1 - The international game and New Zealand Rugby's big All Blacks problem

Liam Napier
By Liam Napier
Senior Sports Journalist·NZ Herald·
14 May, 2020 06:00 PM9 mins to read

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Unveiling of the All Blacks jersey for the 2019 Rugby World Cup. Photo / Photosport

Unveiling of the All Blacks jersey for the 2019 Rugby World Cup. Photo / Photosport

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In the first of a three-part series looking at the future of rugby in a post-pandemic world, we look at the shape of the sport at international rugby.

Test rugby's landscape will never be the same.

From competition restructures to private investment and the re-tabling of the Nations Championship concept, the platforms for change are not only here but more importantly so is the appetite.

Evolution of international structures won't happen overnight, but a selection of rugby insiders canvassed by the Herald said that one way or another it will happen, even if that means New Zealand Rugby "going rogue".

With all international unions in survival mode, most issuing drastic cuts across their businesses, rugby's year of reckoning has arrived.

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As Covid-19 blocks borders for the foreseeable future an immediate localised focus takes hold, ceasing the prospect of the All Blacks facing opponents other than the Wallabies.

From a funding perspective, the rapid decline in All Blacks tests is the primary reason New Zealand Rugby is forecasting a 70 per cent drop in revenue this year and laying off half its staff.

Last year, a season in which the All Blacks played five tests outside the World Cup and therefore received $20 million in compensation from World Rugby, NZ Rugby lost $7.4m.

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This year that figure is expected to swell to tens of millions.

The All Blacks are the cash cow that drives revenue which then filters through all levels of the New Zealand game. They are NZR's global marketing tool, chief sponsorship driver and broadcast revenue generator.

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It is simple mathematics: without the All Blacks playing their customary 14 tests per year, the squeeze comes on.

All Blacks players celebrate. Photo / Photosport
All Blacks players celebrate. Photo / Photosport

For all New Zealand franchises, provinces and clubs that squeeze will feel more like a noose.

Scheduled tests against Wayne Pivac's Wales (twice) and Scotland in July will be postponed, probably to October in the first instance, but there no guarantees those assignments will be played this year.

Six scheduled Rugby Championship tests against South Africa, Argentina and Australia due to kick off from August 18 are, likewise, in serious doubt. Even a touted Rugby Championship bubble based out of Perth seems far-fetched, with the Springboks and Pumas needing exemptions to travel.

The logistical complexities of those destinations weigh heavily on the future of the Sanzaar alliance, too. For example, the massive disruption to the travel industry and the subsequent distress on the airline industry could simply make transporting teams from New Zealand to South America unfeasible in the medium term. South Africa and Argentina are, therefore, understood to be in discussions about forming their own rugby bubble.

Faint hope for test rugby's return extends to this year's traditional northern tour in which the All Blacks were expected to make a money-making venture to Tokyo en route to Twickenham, Murrayfield and Cardiff.

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The global pandemic will improve, and Boris Johnson has indicated the United Kingdom will start reopening for sport next month, but, realistically, the All Blacks are likely to only play the Wallabies in 2020.

Yet even a highly-marketable series against Dave Rennie's Wallabies inside a transtasman bubble will represent a drop in the financial ocean compared with that of a traditional schedule.

Perspective on the All Blacks' intrinsic influence on NZ Rugby's funding is evident in that one "add on" test each year – those that sit outside the three allocated November internationals – typically generates around $1.5m in profit.

As border restrictions remain, this year's Japanese venture will be the first match axed, stripping that valued one-off earner.

All Black Ardie Savea is tackled by South Africa's Makazole Mapimpi. Photo / Photosport
All Black Ardie Savea is tackled by South Africa's Makazole Mapimpi. Photo / Photosport

With NZ Rugby's six scheduled home tests this year, all of which usually sell out, likely to be reduced to two, the source of the projected $120m revenue hole becomes evident.

Outside gate takings, the lack of exposure for global sponsors and the decline in content for broadcasters, both here and abroad, also hits balance sheets hard.

All Tier One nations sit in the same leaky boat. England's RFU expects to lose £10m ($20m) in ticket sales alone from the expected non-hosting of the All Blacks in November. The Welsh and Scottish unions will also suffer.

Desperation to rapidly regain revenue offers the motivation to shake up test rugby's landscape.

In the immediate aftermath of his victory over Agustin Pichot, newly-elected World Rugby chairman Bill Beaumont outlined his blueprint for a long-coveted aligned global season.

This centres on shifting the Southern Hemisphere-hosted July test window to October, and pushing through the 12-team Nations Championship concept the Six Nations vetoed when it was first proposed last year.

The ideas are intertwined.

Moving the July window to October would allow test rugby to run back-to-back rather than being interrupted by the northern club competitions.

The Rugby Championship (August-September) and the Six Nations (February-March) may also move closer together to forge clearly defined test and club windows.

Shifting the south's July test window would leave the respective domestic leagues in both hemispheres to run outside October and November.

Crucially this plan leaves July open for a potential world club championship recently tabled by French Rugby president Bernard Laporte, who as Beaumont's vice-chairman, is said to be the most influential man at rugby's top table – a not altogether welcome prospect in the south.

World Rugby chairman Sir Bill Beaumont and New Zealand Rugby chief executive Mark Robinson. Photo / Photosport
World Rugby chairman Sir Bill Beaumont and New Zealand Rugby chief executive Mark Robinson. Photo / Photosport

Such a concept could see the likes of Irish powerhouse Leinster, the English champions (potentially Exeter or Sale after giants Saracens were docked points for cheating the salary cap), and Jerome Kaino's French champions Toulouse facing the best southern clubs sides, possibly every two years.

If this window can be freed and player welfare concerns mitigated, the world club league is understood to have the support of leading clubs in both hemispheres.

The quest to crown a global club champion would generate widespread interest and enticing revenue, with visions of the final being staged at venues such as Barcelona's Camp Nou.

Beaumont and Laporte must first, however, sell the concept to the all-powerful European clubs.

The latter proposal to revive the 12-team Nations Championship is seen as fundamental in uplifting Tier One test revenues and creating a more equitable share of the pie for southern nations.

While the Rugby Championship and Six Nations would stand alone, each test within those tournaments and cross-hemisphere clash thereafter would award points to the winners on the path towards a proposed test rugby final.

Southern nations long fed up with the status quo, which allows the Six Nations to pocket significantly more gate takings from their home tests, cling to the Nations Championship revival.

New Zealand, Australia and South Africa rely on British and Irish Lions tours once every 12 years to bail them out.

NZ Rugby cleared $39m profit from the 2017 Lions tour, but the collective message from Sanzaar is this inequitable model is no longer sustainable.

"Our financial model at this stage is the All Blacks provide everything — 100 per cent of the profit and we then farm it out to keep the players that then flows throughout the rest of the game," a high-ranking NZ Rugby official told the Herald recently. "We're totally dependent on them remaining, as they have been, at the top of the world for 100 years…

"We need a completely brand-new model. NZ Rugby making multimillion-dollar losses [that are] covered every 12 years by the Lions ... it's gone; we have to change it completely."

Unveiling of the All Blacks jersey for the 2019 Rugby World Cup. Photo / Photosport
Unveiling of the All Blacks jersey for the 2019 Rugby World Cup. Photo / Photosport

This untenable reliance on Lions tours and the All Blacks to fund the game here is why NZ Rugby have engaged in talks with private investment firms, including US-based Silver Lake and CVC, about potential equity partnerships with a view to diversifying revenue streams.

Test rugby's model is particularly frustrating for the All Blacks who command such appeal that they could sell out Twickenham four times over during each west London visit. And yet while Twickenham tests gross in excess of $29m, NZ Rugby receives next to nothing from these matches.

As Covid-19 threatens to send unions under, it is hoped the $6.6 billion in private investment over the first 12 years of the proposed Nations Championship will remain on the table and, this time, be enough of a lure to get the Six Nations to agree to promotion-relegation.

If Beaumont ushers in the Nations Championship, Japan and Fiji will join the Rugby Championship.

Japan's kickback for helping to reinstate Beaumont is the promise of elevation to Tier One status, but plans were already in place for the Brave Blossoms to join the Rugby Championship from 2023, as the World Cup that year creates a truncated window which leaves room for a "guest" union.

Not everyone supports the Nations Championship proposal, however. Concerns persist about it devaluing the World Cup, the global showpiece that funds the global game once every four years.

Beaumont has detailed plans for second- and third-tier tournaments to sit below the top 12 teams, but Tier Two nations fear this model leaves them out in the cold and will only exacerbate a lack of exposure against the established elite. Samoa, for instance, are likely to face less Tier One opposition than they do now.

While a bright and shiny prospect, whether the Nations Championship benefits the global game is questionable.

From a New Zealand and indeed Sanzaar perspective, though, the concept would represent a major victory.

A new World Rugby-governed tournament, backed by significant private investment, would force the north to negotiate revenue-sharing models that, to this point, they have refused to engage on.

Equally shared profits, and the prospect of revenue incentives based on finishing positions, could lift the southern nations off life support.

If Beaumont can't deliver on his promise for change, NZ Rugby and the Sanzaar partners are considering taking matters into their own hands in what has been described as a Kerry Packer moment.

This path could involve major unions negotiating test tours without World Rugby.

As NZR chairman Brent Impey said this week, the All Blacks are not "beholden to the north".

No one is certain what next month will bring rugby's international arena, let alone the next decade, but the opportunity to seek long-term sustainability is one that cannot be squandered.

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