Independent Commission and News Limited's Exit

Fans get their game back
By Phil Rothfield
From: The Sunday Telegraph
November 28, 2009 5:50PM

THE game of rugby league is on the verge of being handed back to the people with the long-awaited independent commission just weeks away from becoming a reality.

In the most stunning administration shake-up since Super League, News Ltd and the Australian Rugby League are putting the finishing touches to an agreement that will see independence day arrive before the March kick-off of the 2010 season.

"It could be sorted by Christmas - if not before the start of next season," said a prominent official who has been involved in months of negotiations to deliver a watershed moment in the code's history.

The Sunday Telegraph has learned a series of high-powered meetings has resolved the major sticking points and lawyers for both parties are now nutting out the finer details.

As part of establishing the commission, those details are:

Melbourne Storm is likely to be sold to a consortium for just $1 in a paperwork transaction that allows News Ltd to leave the game;

David Gallop will remain as CEO for three to five years;

ARL supremo Colin Love will be the inaugural chairman for two years;

The 16 NRL clubs will have an equal share in all profits after grants are paid to the respective leagues to look after the grass roots, and;

Two new clubs will be added by 2013 to increase bargaining power when the commission negotiates the next television deal.

The key to any agreement has been the future of the Melbourne Storm and the reluctance of the Queensland Rugby League and the NSW Rugby League to come on board.

The Melbourne Storm sale

CEO Brian Waldron has been told by News Ltd to pull together a consortium to buy the club. He has approached several investors in recent weeks and it is believed he already has Gerry Ryan, the founder and managing director of Jayco Caravans, on board.

Former Super League boss and former Melbourne CEO John Ribot is also believed to be part of the consortium. However, the Storm have been told to keep his name away from the media because he is still regarded as damaged goods from the Super League war.

Waldron's problem is finding investors prepared to put around $25 million into a business that has been losing around $6 million a year. To make the sale viable, News Ltd will use an exit payment of up to $20 million which it will then drip-feed back into the club and the new owners.

Melbourne Storm's future must be secured because senior officials know the value the club provides in television negotiations in a national competition.

The NSWRL and QRL dilemma

The key negotiators are still waiting for final sign-off from the state bodies but are confident of getting their support, even if it means using fear tactics.The NSWRL and QRL will be told that the clubs are so determined to have the independent commission that they are prepared to go it alone if no agreement is reached.

"The clubs would quit the NSWRL," an insider told us. "It's as simple as that. They would form their own body and work under the new commission."

Who will own the game?

The 16 clubs will hold an equal share. Currently, all profits from the NRL are divided between the Australian Rugby League and News Ltd. News Ltd spends its share on bank-rolling the Storm - the Australian Rugby League uses its money to run the game and develop it at the grass-roots level.

The new independent commission will be set up as a non-profit trust with each of the 16 clubs getting an equal share after grants to the NSWRL, QRL and CRL.

Who will be on the commission and what role will they play in running the game?

Earlier plans to appoint former Prime Minister John Howard as inaugural chairman have been abandoned. Instead, Australian Rugby League supremo Colin Love will get the job for the first two years.Love's appointment does not have overwhelming support from News Ltd or from the clubs.

However, significant concessions are being made on both sides to get the deal over the line before the start of next year's premiership.

The Sunday Telegraph understands three of Australia's top business leaders - Katie Page, Gary Pemberton and Geoff Dixon - have agreed to sit on the commission.Others, including the likes of banking heavyweight Mark Bouris, will be approached to form an eight-man board.

What does this mean for David Gallop?

Senior officials have told Gallop he will remain as chief executive and will be offered a contract for between three and five years.Instead of reporting to two NRL boards, as he does under the current administration, he will report to the commissioners and be responsible for the day-to-day running of the game.

What are the key areas for the new commission?

A new television deal and the expansion of the game will be top priorities. The current deal with Channel Nine and Fox Sports expires at the end of 2012 and many believe the last contract was undersold. The AFL has already started negotiations with all free-to-air networks and rugby league will be left behind unless talks get underway soon for the next deal.

Channel Seven boss David Leckie has confirmed his network will be challenging Channel Nine for the rights but is waiting for News Ltd's exit before he enters into serious discussions. Two new clubs - possibly from the Central Coast and a second team in Brisbane - will be added to the premiership by 2013. This will provide an extra game and extra television programming.

The rights could be divided among two free-to-air networks and Fox Sports to maximise revenue, like Ten and Seven sharing AFL broadcasts. State of Origin and representative football will be sold separately. The new deal could be worth as much as $1 billion.

How the commission deal was done

Roosters supremo Nick Politis and Gold Coast managing director Michael Searle have been the key players - Searle in a very public way, Politis on the quiet, regularly meeting with News Ltd executives over the past 12 months.

Significant progress was made at a meeting last week between Politis, Searle and New Ltd's chief operating officer Peter Macourt about the major hurdle - the future of the Melbourne Storm. News Ltd wanted a guarantee that the Storm would continue to get funding from the game for three more years until they are established in their new stadium in Melbourne.

"The clubs wouldn't wear that," one insider told us. "Why should the commission be handing out $6 million a year to Melbourne when clubs like Cronulla are struggling to stay afloat? It gives them an unfair advantage over everyone else."

News Ltd wanted Melbourne's future assured because of the value they bring in television negotiations - for which the company will hold first and last rights - by ensuring it is a national competition. Instead of the Storm getting $6 million a year from the commission, News is likely to get a severance payment of around $18 million when it exits the game.

That money will be drip-fed into the Storm over the next three years to make the sale more attractive to prospective investors.

Is the future of all clubs assured or will there be mergers?

Financially struggling clubs like the Cronulla Sharks and the Newcastle Knights will have far greater hope of survival under the commission. At the moment, the NRL has no money in the bank to prop up a club that goes broke. Even if a club decides to relocate to the Central Coast, the original $10 million relocation offer is not available anymore because the cash just isn't there.

The commission will be looking to bank money each year to set up a war chest to fight the AFL in Sydney's west and on the Gold Coast.

"All clubs will be equal shareholders and it will be in all their interests to ensure no one folds," one senior official said. "One less team would mean one less game, which would seriously affect their income from TV rights. The struggling clubs will be far more secure under the new administration."

Will the commission be genuinely independent?

News Ltd will have no representatives on the board. The Australian Rugby league will have only one - Colin Love.

Nick Politis is one of the most powerful and influential figures in the history of the game and has been the key player, along with Searle, in all talks and private dealings to set up the commission.

But he has told those closest to him that once the commission is set up, he feels that, at 67, he is ready for a backseat role and will concentrate solely on his job at the Roosters.

What happens to the ARL, NSWRL, QRL and CRL?

The new independent body will be called the Australian Rugby League Commission, but the competition will still be called the Telstra NRL premiership. The NSWRL and Queensland Rugby League will come under the umbrella of the commission but will still oversee their state competitions and run the State of Origin series.

All revenue will go to the commission, which in turn will provide grants to the respective leagues. The CRL will continue to run bush football, while the independent commission will oversee all international football.

 

In short, the sooner News leave the game the better. It all sounds pretty good.

 

2 new clubs added? Wow.