SA Rugby runs into static as Icasa tinkers with free-to-air
Nearly 60% of income is earned from broadcast revenue – take that away and the game is sunk
If SA Rugby were a person rather than a large sporting organisation, it would have been on the equivalent of a Banting diet over the past two years. It’s so lean now, it borders on malnourished.
The 2018 annual report, released this week, confirmed that rugby’s mother body had turned a small profit of R2.3m after running in the red to the tune of R77m over the previous two financial years. It has cut a lot of fat.
It hasn’t happened by accident, or without sacrifice and pain. Through a series of aggressive cost-cutting measures the books look better, although profit of R2.3m out of income of nearly R1.3bn seems paltry.
Essentially, though, SA Rugby will never have massive reserves because it serves the game. The more money SA Rugby makes, the more is ploughed back via the 14 provincial unions who want and need it. It’s rugby’s cycle of life.
But after two years of massive losses that were the result of over R24m paid for their doomed Rugby World Cup 2023 bid, and an increase of over R50m to players for their image rights, things have turned around.
Travel is one of the biggest costs on SA Rugby’s books because it runs myriad competitions nationally that all require players and officials to traverse the country and globe.
Most provincial competitions have been cut to a single round, halving the travel budget in a stroke. The Springboks have started flying economy class while airlines such as Ethiopian Airlines, with its competitive pricing, have been used internationally.
While there have been no retrenchments, vacancies at SA Rugby have not been filled, adding to the existing staff’s workloads. Marketing budgets have been slashed and the budgeted distributions of income to the unions have also been cut.
Despite the turnaround, though, the future of professional rugby is still under threat from the Independent Communications Authority of SA (Icasa).
Nearly 60% of SA Rugby’s income (R714m) is earned from broadcast revenue. The money comes from pay channel SuperSport and, as the only viable commercial TV channel, they hold the rights to rugby and other sports such as football. Icasa wants to break SuperSport’s monopoly of broadcast rights in SA despite the fact that there is no viable competition that could pay market-related value.
The utopia Icasa dreams of is that all matches of national importance (and somehow the Currie Cup has been included in this) will be broadcast free-to-air. That means: broadcast on the bankrupt SABC.
Considering the national broadcaster cut 90% of its sports programming on radio recently due to lack of budget, and couldn’t come anywhere close to a market-related value to buy the rights to rugby or football, this is a worrying development.
SA Rugby and the SA Football Association (Safa) have both presented to Icasa at its public hearings and explained that broadcasting their products free-to-air would kill off professional sport. Premier Soccer League chairperson Irvin Khoza didn’t mince his words, saying the league, the professional arm of soccer, “would shut down” if Icasa’s proposals passed.
Similarly, professional rugby would be unsustainable without the hundreds of millions earned through broadcast rights. It’s not a South African scenario either but a global reality. Every major sport, league and organisation is sustained through broadcast earnings. Icasa’s proposal is political and unrealistic. But it’s on the table.
Any major sport, and in this case rugby, would enjoy nothing more than to have two or three viable broadcasters bidding for the rights to its product. That would drive prices up and benefit the sport.
But in SA, SuperSport is the only player in the market, spending about R2bn annually on rights to sport. Until the SABC (or any other broadcaster, such as the newly-licensed Kwese) can compete in the same ballpark, SuperSport will remain the sole participant in the sports broadcast rights market – unless Icasa has its way.
So SA Rugby can enjoy a moment of rare good news this week, but at the end of the month Icasa’s hearings resume and everyone will be watching and hoping that sense prevails.