BY DAN

This is a really shitty time.

When the NRL pulled the plug last week (seriously, it was only a week ago), it wasn’t the end of the world, but rather another example of the heinous impact of the horror of the Coronavirus that has befallen us. For some it meant jobs went, but for most of us the NRL’s pause was about losing a potential outlet, a source of hope; a little ray of light in the dark.

Because the NRL’s self-serving media can’t help themselves, immediately the conversation shifted to which clubs wouldn’t make it. NRL CEO Todd Greenberg expressed concern for clubs that required the backing of leagues clubs to survive, given the impact that shutdowns were having on those organisations. Parramatta, Penrith and Canterbury were quickly identified as potential casualties of an extended shut-down. The ‘Riff shuttered their doors within hours of the decision. The Dogs and the Eels stood down their coaching staff. The Sharks have even lost payments from their major sponsors until they start playing again.

Then the conversation shifted to the Raiders. They’ve been forced to send the administrative staff away, and the football staff will be sent on leave at the end of April. The club has been forced to close the doors on its new headquarters and its seven licenced clubs.

As Don Furner told AAP

I’ve never hidden the fact our business is underpinned by the licenced clubs of which we have seven….they are all closed down and they are expected to be closed down for six months.

Don Furner to AAP

It’s a terrible thought. The administrative staff at Raiders HQ do an incredible job, and in this environment the thought that they are without work is genuinely saddening.

It’s a jolt for the rest of us who are just waiting on the Raiders. There is no hiding now that the Green Machine are at risk, as is much of the league. Furner noted the importance of broadcasting revenue, gate, sponsorship, merchandise sales and leagues club support to the financial position, and ongoing survival, of the club.

The Raiders are doing everything they can. In addition to job cuts, they’ve cut back maintenance at the newly establish Raiders HQ. The players salaries remain a moving feast being negotiated by the NRL and the Players Association, but it seems clear that that will also represent a substantial reduction in expected cost for the Raiders.

These cost reductions pale in comparison to the revenue challenge faced by the fact broadcasts won’t be going ahead. It’s about $350 million across the league for the season, and if we divide that by 16 ($21.8 million) we get an idea of the gap the Raiders are needing to bridge.

However, all is not dire for the Raiders, or the league. While things are obviously not good, the Green Machine have the short term cash and medium term support to weather the coming financial storm. In the longer term their existence is a function of the ongoing existence of the NRL, which seems likely given the code’s access to credit.

Short term cash: The membership base

The Raiders have a relatively large membership base. According to Leagueunlimited.com, the Green Machine have the fifth biggest base in the league at 19,039 wonderful humans. That’s money that people paid in before the season begun. While not a huge amount (if every member is taken as a bronze member it’s about $3.5 million) every dollar counts right now.

That amount of money is a guess, and regardless it will reduce over the next few weeks as people seek refunds, but it’s critical cash that may be available to tide the club over in the immediate term.

Medium term support: The licensed clubs

The Raiders aren’t making money off the licenced clubs anymore, but those clubs are in a better financial position than the NRL side. As Caden Helmers reported in the Canberra Times:

The Queanbeyan Leagues Club’s financial reports showed $8,155,195 in cash and cash equivalent assets at the end of October 2019, with QLC chairman John McIntyre committed to doing whatever it takes to keep the Raiders afloat.

Caden Helmers in The Canberra Times

Similarly, a quick look at the Canberra Raiders Sports Club Pty Ltd’s (which by my reading accounts for the Raiders’ clubs in Canberra) balance sheet shows they’ve got $15 million in net-equity, including $4 million in cash.

As McIntyre noted to Helmers, the support will be shaped by how long a shut-down goes for, and how much support the team needs. Liquidating the clubs to keep the NRL team afloat would be irresponsible (and wouldn’t net the same value that is represented here), but there’s money here to reduce the impact of a dead season for the Green Machine.

Long term: the National Rugby League

It is likely that support will come from the National Rugby League to keep clubs alive, both from the central administration and from the league more widely. The NRL administration has identified a $150 million war chest, of which only $12 million has been identified for player payments. While that player payment number was an ambit claim in the negotiation with the Players’ Association, it suggests that there’s a substantial amount of money available to keep clubs afloat.

In addition to this the NRL has established an additional $100 million line of credit through a British private equity group to support clubs during this time. That’s basically 6 months of revenue already; theoretically enough to keep clubs afloat until September even if they don’t drastically cut costs over this second quarter. It’s likely that the NRL can access further credit if needed – they do have annual revenue of around $500 million a year after all – but that will only be necessary if the season is called off together. There was talk early on about a government bailout, but the chances of that seem to have dissipated.

It has been made clear that the NRL is making every effort to keep clubs alive. Of course this is in their interest. Whenever the competition starts again, they need to be able to put on 8 games a weekend in order to get the broadcast revenue. They can’t do that if they’re scrambling to get 16 teams together. A cynic might think they may let a Sydney club or two go bust in order to facilitate a more national competition (i.e. move a team to Brisbane, Perth or Adelaide), but the pressing issue when the competition will be 8 games. Nothing else matters. There will be no time to establish new clubs, new coaches, new grounds, new fan bases. 8 games and 16 clubs will need to be ready to go, and quick.

This also means that the big clubs that have cash reserves will have an incentive to help out the smaller clubs. I suspect Brisbane, the Roosters and Souths are all sitting on much greater cash reserves than the rest of the league. While they’d be loathe to use those to support other clubs, they’ll lose more money from an unmet broadcast deal.

However this certainty about the interests of the clubs should be tempered by their potential for greed. Steve Mascord’s interesting article from the weekend put clubs trying to assert more power at the heart of Fox and Channel 9’s demands to tear up the broadcasting contract. Such a frustratingly short-sighted attempt by the clubs to wrest power away from the Commission and the centralised governing authority shows that they have every capacity to be idiotic in the face of the obvious long term interest of the game.

This certainty should also be moderated by the fact that no one knows what the next 6-12 months hold. The ongoing existence of the NRL presumes so many things we have taken for granted continuing to exist in their current form. There is a world of upheaval where the Raiders cease to exist because professional rugby league does. It’s not one I consider likely at this point, but given the pace of change of the world at the moment, it would be foolish to rule it out.

However, given the information we have now it seems likely then that the Canberra Raiders (and the NRL) will survive, though the certainty of this decreases the longer the competition is out of action. The Raiders have the short term cash from memberships, clubs that can provide support in the medium term. Their existence, like all 16 clubs, is necessary to the ability of the NRL to drag itself out of this crisis.

For the time being at least, the Canberra Raiders will survive Covid-19.

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