Is The World League Worth It?

Details of the latest iteration of the World League or what was being called the World Rugby Nations Championship have been leaked via the press. As Tyler Arnold has written, there are big, ugly problems with the proposed format. Those are around cheapening the Rugby World Cup, impacting British & Irish Lions tours, killing the game outside the 12 lucky nations, and scant regard for player welfare. What no one seems to be talking about is the money side of things.

Why Do We Need A World League?

For all the talk of moving rugby away from “friendlies” to meaningful games, the only reason the World League is on the table is money.

New Zealand Rugby has said that post-Rugby World Cup, they are projecting that they will be running an “unsustainable deficit.” We already know that Australia and South Africa have been struggling financially for years.

Things are not all rosy for the Six Nations countries either. England Rugby Football Union (RFU) made 60 roles redundant last year due to a shortfall in income. Also the Six Nations are in the first of a six-year sponsorship deal with Guinness. Reportedly it starts at £6 million a year, rising to double that by the end. Even the final ~£12 million a year will be down on the £100 million six-year deal (~£16.6 million a year) RBS was paying previously.

It’s no surprise that the two additional countries that are being added in this version of the proposal aren’t the next two teams in World Rugby’s Rankings, i.e. Fiji and Japan. Instead, it’s the largest and third largest world economies in the USA and Japan.

For all the money that is in the Japanese domestic Top League, via the corporations that own the teams, the Japan Rugby Union is essentially amateur. Last year, World Rugby “provided USA Rugby with a substantial loan” so it’s clear to see why both these nations could use a few extra dollars too.

Is The World League a Cash Cow?

The leaked report suggested that the World League would provide an extra NZ$10-14 million a year or US$6.8-$9.5 million. On the face of it, that’s a chunk of cash but is it that much in rugby terms?

If Tier 2 Rugby have got their numbers right, then NZR annual revenue is about US$175 million, Rugby Australia US$106, South African Rugby Union US$86, and USA Rugby US$14.

Reminder those "cash strapped" SANZAR Unions make revenues several times that of the richest Tier 2 Union. In 2017 NZRU revenue was £132.6m, ARU £80.4m, SARU £65.3m, by comparison USAR £10.6m. ARU spend more just paying their executives salaries than Fiji's entire annual revenue.

— Tier 2 Rugby (@T2Rugby) March 1, 2019

Clearly, an up to 68% increase in funding for USA Rugby would be transformational. However, a 5% increase for New Zealand would have a much smaller impact. You might say that US$9.5 million is a big number whatever percentage change we are talking about and it is a lot of rugby balls for grassroots rugby. At the professional level, though, it’s not quite so flashy.

The thing that is putting pressure on the union’s budgets are player salaries. Salaries are being driven up by European clubs with the Premiership salary cap at £7 million (US$9.25 million). The Top 14 salary cap in France is even higher at €11.3 million (US$12.86). In other words, we are talking about an increase to national union coffers of about the same as the salary cap of one team in Europe. The problem is that there are 12 teams in the Premiership and 14 in the Top 14 with these budgets.

New Zealand will have to spread that money around five Super Rugby franchises, Australia four, and South Africa four plus the two PRO14 teams. I just can’t see that this is enough dollars to make a real difference in how countries can hold onto their players purely on a salary front.

What About Other Extra Income?

Tyler Arnold is right that there is extra income from “the game day sales as well as merchandising and the general fundraising and sponsorship deals each union will collect.”

Again this is something that will make a big difference to the USA and Japan but a much lesser impact on the other 12 nations. Most Tier 1 countries already sell out every test match meaning there is little scope for upside on game day sales and merchandising.

The sponsorship one is interesting. As shown with the Six Nations sponsorship, we are in a weak sponsorship market in Europe. That has also been shown with the European Rugby Champions Cup only getting one headline sponsor (Heineken). They were looking for three-five in the same way that football’s UEFA Champions League has.

Will opening up the USA and Japan markets bring in big sponsors? If it does, will that be consumed bringing the USA and Japan up to parity in income or will there be enough to share around?

As we can see above, the USA aisUS$72 million behind South Africa in terms of annual revenue. If Japan is in a similar boat, then that’s a lot of dollars just to create an even playing field.

This Is Not The Silver Bullet

Looking at the numbers, the World League just doesn’t look like the silver bullet to sort out the revenue imbalances in rugby. Don’t get me wrong, no one is going to turn down an extra UD$9 million or so and it is a chunk of cash. It just doesn’t look like a big enough chunk of cash to me.

Are there other motives behind this then? It was only two years ago that a World Rugby calendar for 2020-32 was agreed. The World League would not fit within the international windows that have been agreed and would take players away from their European clubs for up to an extra two weeks.

The clubs have already suggested they would look at legally challenging any extra release of players. Is this all part of a strategy to have a showdown with the clubs about the control of rugby’s future?

There are a lot of people in the game who are concerned that the power is shifting from the unions to the French and English clubs. It’s something that happened in football with the advent of the English Premier League and the European Champions League.

Are we at one of those decision points in history with rugby? There’s a certain feeling that it has to happen now as the next opportunity is in 12 years time. By then the horse will probably have bolted in one direction or the other.