Rugby: Sanzar deal worth $560m

An increase in TV revenue means the NZRU should be better able to retain Super 14 stars such as Mils Muliaina. Photo / Getty Images

New Zealand rugby will have improved financial muscle to retain players as the finishing touches are put to what is thought to be one of the biggest rugby broadcast deals in the world.

The old Sanzar broadcasting agreement with Rupert Murdoch's News Ltd organisations was worth US$340 million ($480 million) over five years.

The new deal, which runs from 2011 for another five years, is thought to be worth a total of US$400 million ($560 million) - an increase of about 20 per cent.

The new deal, expected to be signed off shortly, flies in the face of dire predictions for the economic future of the game with a significant "pay rise" for the New Zealand Rugby Union.

A straight comparison is more difficult to make these days because of the more fractured nature of the broadcast property.

The South African component has been handled separately, as they have already sold broadcast rights to the Currie Cup.

The Herald on Sunday has learned that New Zealand and Australia will split around US$200 million between them when the Super 14 becomes Super 15 in 2011.

That will be split evenly between the Tasman partners with the value of the provincial championship and any inbound tours handed directly to the NZRU.

It is believed that the broadcasters have said the provincial championship is worth about US$20 million.

Add in the separately negotiated South African component and it is understood the total deal is about US$400 million, compared on an apples-with-apples basis to the US$323 million contract. There may even be more to come, as overseas broadcast rights to show Super rugby and Tri Nations fare have yet to be sold.

The NZRU is also believed to have taken insurance against currency fluctuations by fixing their exchange rate in a hedging arrangement.

The amount is one thing - but the most significant effect is what the NZRU will be able to do with the money in terms of retaining players.

Because of the value of the new deal in the pipeline, the NZRU are thought to be forecasting more promising financial results over the next three years.

That means the players are set to benefit with improved pay deals. Not only is there more money coming in, the new collective employment agreement has negotiated a greater slice of that money for the players.

Under the existing collective, the players take about 32 per cent of the total income generated by the national body. The new arrangement will see them take about 36 per cent.

Some of that will be offset by the increased squad sizes of the Super Rugby franchises - now 28, as of 2011 up to 32.

With more money available, the NZRU will have more hope of fighting the European clubs when they come on their relentless recruitment missions.