The axing of the Melbourne Rebels from the Super Rugby competition, though not unexpected, is another blow to rugby union in Australia.
Author
Tim Harcourt
Industry Professor and Chief Economist, University of Technology Sydney
The Rebels were axed because they were in serious debt to the tune of A$23 million (including $11.5 million owed to the tax office) and in administration since January.
Rugby Australia rejected a rescue package from a consortium led by former Qantas and Rio Tinto supremo Leigh Clifford, ultimately taking the view there wasn't enough rugby talent to spread across five teams in Australia.
The fact the Perth-based side Western Force was also axed in 2017 and then resurrected adds to the uncertainty surrounding the sport in Australia.
Rugby union's glory days are long gone
It wasn't always this way - Australian rugby was once rich in talent and finances.
Two decades ago, the Wallabies were riding high under captain John Eales, with two World Cups and a trophy cabinet full of silverware. The sport was well run and about to host the 2003 Rugby World Cup in Australia.
Rugby union was also considered to be strong financially, too. I knew this as chief economist at Austrade when we set up Rugby Business Club Australia to encourage trade and investments deals for business people coming to the World Cup.
The model was based on the Business Club Australia, which we hosted very successfully at the Sydney Olympics in 2000. We chose rugby union as the first sport after the Olympics as it was considered well-heeled and would allow the nation to benefit from the "power of schmooze".
Yes, rugby union in those days was rich, having just turned professional, while the Wallabies were winning and the code was very popular with the general sporting public.
But things are very different now.
Australian rugby's money issues
Financially, rugby is now far from rich. According to its 2023 annual report, Rugby Australia posted a $9 million loss, revealing an equity of negative $13 million.
By contrast, when we ran the Rugby Business Club Australia in 2003, Rugby Australia had $35 million in positive equity. That's a $48m loss at a time when rival football codes like AFL and NRL have boomed.
So where did the money go?
Like all sports, Rugby Australia revenues did grow, from $58 million in 2001 to $124 million in 2023. It gained a $50 million injection from the highly successful British and Irish Lions tour in 2013 but also copped a $45 million loss thanks to the COVID-19 pandemic.
But expenses grew too - astronomically. Rugby Australia expenses grew from $51 million in 2001 to $130 million in 2023, shrinking the $35 million World Cup windfall (made from hosting the tournament) over time.
The money was spent on expansion of Super Rugby teams, grants to state unions, a write-off for the (now defunct) Australian Rugby Championship and even a multi-million payout to high-profile player Israel Folau, who was sacked before suing Rugby Australia for religious discrimination and then receiving a financial settlement.
Rugby Australia's broadcast deal has been a big Achilles heel. Deakin University's Hunter Fujak has estimated rugby's revenues are 14% of the AFL's, with Rugby Australia's $30 million annual broadcast deal with Nine/Stan tiny compared to the AFL's $650 million rights deal for 2025.
The Super Rugby expansion doesn't appear to have been supported by the public, with crowds and viewers declining.
Rugby union, like soccer, desperately needs a new broadcast deal to generate fan interest in the game for those at home and in the stands.
What about things on the pitch?
Things are not much better on the field either.
The Wallabies are a shadow of their former selves, being bundled out at the last World Cup in the pool matches in the shadow of the Eddie Jones-Japan coaching saga - when he quit his post less than 10 months into a five-year deal before signing to coach Japan - and they are now rarely competitive in the Bledisloe Cup against the All Blacks.
There's also confusion about how to best structure a national provincial club competition to develop pathways at different tiers of the sport.
And then there's participation levels.
On an international basis, Australian rugby is growing compared to rugby elsewhere, but not in comparison to rival codes in sports-mad Australia.
In 2023, the Australian Sports Commission reported there were 145,000 adults and 95,000 kids playing rugby. But Australian rules football had four times that many, while 500% more kids played basketball.
Rugby union was Australia's ninth most popular participation sport, behind even badminton and rock climbing.
So, what can be done?
Critics believe rugby union has a governance issue, and some have suggested radical change is needed.
The sport is also governed very differently and makes it difficult for Rugby Australia to have the leadership authority of the NRL and AFL. In NRL and AFL, there is a governing commission that makes decisions but in rugby union, state unions have voting rights which means Rugby Australia can only act with the blessing of the states.
Rugby Australia also has a problem those rival codes don't have: the global nature of the sport. The northern hemisphere controls the rules but the southern hemisphere has more of the talent, making reform difficult.
For a start, rugby needs leadership that can deliver a better broadcast deal, so it's not a case of out of sight, out of mind as it has been for a long time now.
Are there reasons to be cheerful?
There are some bright spots.
Like with soccer, people still love the World Cup, and with men's and women's World Cups both coming up in Australia in 2027 and 2029 respectively, that will provide a windfall to Rugby Australia, along with the very popular British and Irish Lions tour in 2025.
International tournaments are still popular in the Rugby 7s, including at the Olympics where the Australian women's team in particular has captured the imagination of the Australian public.
Finally, in the tense geo-politics of the Pacific, having two Pacific teams, Moana Pasifika and Fijian Drua, in Super Rugby can potentially assist Australian foreign policy objectives in the same way that the Papua New Guinea team in rugby league may help in terms of soft diplomacy.
The Pacific teams also provide professional sports labour market opportunities for Pacific players at home as well as in Australia and New Zealand.
The bottom line is, rugby union in Australia needs change in terms of "the three Rs" - rules, revenue (especially broadcasting deals) and reform in governance and structure to get it back to a financial place where people can again enjoy "the game they play in heaven".
Tim Harcourt does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.
