Check out today's article in the Australian regarding the NRL securing a $250m loan
NRL kicks $250m goal with British banks deal to help game through COVID-19 crisis
- EXCLUSIVE
The NRL has struck a deal for a $250m lifeline from a group of London banks and financial institutions, giving rugby league both financial breathing space and leverage in its negotiations with broadcaster the Nine Network.
A huge line of credit, which could also come with support from the federal government, will be drawn down by the sport’s governing body and dispersed to needy NRL clubs within weeks, staving off the need for funds from Nine before the competition resumes.
The money will be secured against future income the sport receives, including broadcast and sponsorship revenue under contract until at least 2022, rather than a particular asset.
The NRL had to go offshore to secure its life-saving funding package — unlike the AFL, which last month used its ownership of Marvel Stadium in Melbourne as security on a $600m loan facility from NAB and ANZ.
The $250m line of credit for rugby league, brokered by London firm Oakwell Sports Advisory, will mean the code is less reliant on funding from its broadcasters in the short term as it battles to keep the sport afloat financially during the coronavirus pandemic.
Australian Rugby League Commission chairman Peter V’landys emerged from a key meeting with Nine chief executive Hugh Marks on Tuesday in Sydney, saying he was “buoyed by Mr Marks’s support for rugby league and his commitment to the game”.
Nine last week took the unusual step of publicly criticising NRL management for what a network spokesman said was a mishandling of the game and the wasting of the millions the TV network had invested in the sport.
Mr V’Landys has set a target of May 28 for the NRL to return to action on the field, although the games will be played without crowds for the foreseeable future.
Nine and Fox Sports are contracted to pay the NRL about $300m a year, combined, through to the end of the 2022 season, although there has been speculation that Nine would be happy if rugby league did not return in 2020.
Oakwell and the NRL are set to sign off on the deal within days, and there is an expectation within rugby league circles that the sport will receive $100m to start with and then have a further $150m to draw down if needed.
An interest rate at general market rates for relatively short-term lending will be struck, but that rate will be halved, in effect, if the NRL is able to secure support from the federal government for the loan.
The NRL will disperse the money to clubs on a case-by-case basis, opening the way for some of the poorer clubs to potentially receive more funds than their richer counterparts under strict conditions set by the code’s head office.
It could be a similar move as that undertaken by the AFL, which is imposing strict conditions on most of the clubs in its league, including having each of them report to head office regularly about their balance sheets and their overall financial situation.
Some AFL clubs have said they would not need additional funding from the AFL, including the likes of Hawthorn and Collingwood, while the Adelaide Crows have expressed a preference for sourcing their own financing.
NRL clubs have different funding sources, with half the competition owned by private individuals or groups — or, in the case of the Brisbane Broncos, being listed on the Australian Stock Exchange.
Other clubs are reliant on funding from their licensed clubs, which have all been shut down during the pandemic.
Oakwell has previously brokered deals for investments in sport, such as private equity firm CVC Capital Partners buying 27 per cent of top-flight rugby union in England in a £200m deal in 2018. CVC has reportedly been linked to other rugby union deals around the world, including a potential play for a stake in southern hemisphere rugby.
A source told The Australian CVC was not among the financial institutions that agreed to lend money to the NRL.
Replies
Interesting, I think we are seeing the benefit of Peter V'Landys reputation and name at play here. At least the game has got some cash flow for the medium term.
The article said that it will incur the market interest rate, however that interst rate would be halved if the Federal Government provides support. I don't what the market rate is for that kind of financing at the moment, but yes there will be some pain.
There is no doubt that the Commission is going to have to wind back a lot of its investment, particularly in the area of events, matchday & promotion, which is where the bulk of its expenditure is going. That 500k a day figure that you like to quote is mostly made up from that investment, in fact it accounts for about 275k of that 500k. The question then is can the NRL actually recoup any of that. The $100m investment in NRL Digital apparently has blown out to $150m, which implies that money has already been spent. Hard to see them clawing any of that back.
The administration itself is fairly lean to be fair, it only accounts for about $20m annually, which for 400 staff is only 50k per employee. Whether or not they need 400 staff would be the question. But even if they slashed that by say $5m, its not a huge saving. The other item of significance is that they also spend $25m on the football department.
So ....
$20m on administration
$25m on football
$103m on events, matchday & promotion.
There seems to be some overlap there.
What is the administration spending $20m on outside of the football department ?
What is the football department spending $25m on outside of "Events, Matchday & Promotion" ?
What does "Events, Matchday & Promotion" mean outside of Administration & Football, and why does it cost $103m annually ?
Of course they do, they were paying a premium for the rights and wanted to the best return possible for those rights. That's the norm in most professional leagues around the world.
No that's not accurate, each club is given the same money from the NRL. Each club gets $13m per season. What does happen though is that FTA means greater visibility, more eyeballs, sponsorships become more valuable etc.
But this is normal for all sports.
I can tell you it doesn't really work like that in Afl. It is much fairer than nrl.
Only because the AFL has greater control of its scheduling because it can afford to, but even so, Collingwood still gets the lions share of Friday Night games for the same reason the Broncos do.
It's a line of credit so they are not necessarily going to use all the funds . What will probably be used for this year if they get the game up and running , it will cover shortfall on what they do t receive from broadcasters and sponsors.
also these funds basically give the option to nrl not to have to renegotiate the rest of the years current broadcast deals.
Cash is cheap, almost free with current interest rates.
NRL revenues are almost guaranteed once the game starts again.
As long as borrowed money is used wisely this is a very good outcome for the nrl. Well done V'Landys.
Yeah, but even so they couldn't get a much smaller LOC from any Australian bank. But you're right, this is clearly the work of Peter V'Landys.