22 June 2015

Not a week goes by without reports of South African, Australian and New Zealand rugby players accepting huge offers in Yen, Euros, or Pounds Sterling to head up to the northern hemisphere to play rugby. Rugby is a professional sport and the players must be able to earn a worthwhile income while providing millions with entertainment. No one can begrudge those players the lucrative offers from clubs in foreign lands. This is the nature of professional sport.

Year after year more players leave their country of birth to go and play rugby overseas. Every World Cup year sees a contingent of senior players calling quits on their domestic career as they have a fial go at World Cup glory before heading off for a lucrative payday in France, Japan, the United Kingdom and, to a lesser extent Italy.

Think of the South Africans we know are leaving in 2015 – the two du Plessis brothers, Pierre Spies, Deon Stegmann, Duane Vermeulen, Schalk Burger, Steven Kitshoff, Demitri Catrekillis, Schalk van der Merwe, Jacques du Plessis, Willem Liebenberg, Willem Alberts, Flip van der Merwe, Jacques-Louis Potgieter, Heinrich Brüssow, Michael Rhodes are the names that come to mind immediately, although I am sure I have missed a few.

Some are heading off-shore for a three month stint of Japanese rugby before heading back to South Africa next year, names such as Marcell Coetzee, Francois Hougaard, JJ Engelbrecht, and Willie le Roux have all been linked to such a move. Pierre Spies is heading to Japan for three months to collect a couple of Yen before heading to Montpellier to join Jake and the Expatriates. (Sounds like the name of a pop band of some sort?)

Add the names of capped Springboks already playing elsewhere, such as Zane Kirchner, Frans Steyn, Fourie du Preez, JP Pietersen, Jaque Fourie, Frans Steyn, Bryan Habana, Morne Steyn, Ruan Pienaar, Francois Louw, Andries Bekker, Juandre Kruger, BJ Botha, CJ Stander, Brian Mujati, Gurthro Steenkamp, Ricky Januarie and Pedie Wannenberg.

Then there are the non-Boks:

Alistair Hargreaves, Brad Barrett, Quintin Geldenhuys, Petrus du Plessis, Neil de Kock, DTH van der Merwe, Louis Ludik, Rossouw de Klerk, Josh Strauss, Rob Herring, Robbie Diack, Antonie Claassen, Francois van der Merwe, Rory Kockott, Jannie Jornman, Deon Fourie, Frans Viljoen, Charl McLeod, Gio Aplon, Hendrik Roodt, Ross Skeate, Scott Spedding, Gert Muller, Peter Grant, Robert Ebersohn, Wynand Olivier, Pat Cilliers, Riaan Swanepoel, Peet Marais, Jono Ross, Morné Steyn, Meyer Bosman, Gerhard Mostert, Juan Smith, Ruaan du Preez, Riaan Smit, Jody Jenneker, Jandré Marais and Berend Botha, and scrumhalf Heini Adams all of whom are playing in the United Kingdom, Ireland, Italy, or France.

A quick count tells me that is 74 South Africans playing in Europe. Some, such as Barrett, Kockott, Geldenhuys, and Spedding have switched allegiances and “become” English, French and Italian, and some, such as Josh Strauss, Diack, Herring and Stander are about to become “foreigners” and join the other side.

That is at least five top class teams of South African rugby players who are playing in Europe!

This problem is not restricted to South Africa and South Africans! We know that there are currently 46 Kiwis in the French Top 14 league clubs, with a further 23 playing in the English Premiership and another 31 in the Pro 12, the combined Irish, Welsh, Scottish and Italian leading division. Steve Hansen recently said that New Zealand is looking at losing 16 of the current 1st choice players for a World Cup squad of 31 after October. Fully half his squad is leaving!

Australia faces the same issue!

Australians that are heading north include Will Genia, James Horwill, Nick White, Jesse Moggs, Quade Cooper, Sam Wykes, and a couple more whose names escape me at the moment.

New Zealand are losing at least 10 current All Blacks, including Colin Slade, Dan Carter, Ma’a Nonu, Conrad Smith, Charles Piutau, Francis Saiili, Tom Taylor, Frank Halai, Jeremy Thrush, and Ben Franks

Add in the uncertainty as to what Richie McCaw, Keven Mealamu, and Tony Woodcock are doing, they may retire completely or they may decide on a lucrative swansong up north somewhere.

A couple of other current All Blacks are still holding their cards close to their chests and we are not sure where the likes of Julian Savea, Sam Cane and Ryan Crotty are going.

Lest we forget: Most of the current Argentinean national rugby squad ply their trade in the north too!

If we consider the numbers of southern hemisphere players being sucked up north to play rugby in the professional leagues of Europe and Japan it is surprising that our sport survives at all. The moment we develop a young player to the point where he shows promise, his agent heads over to Europe to seek a contract for the youngster, foreign currency is so tempting and his commission is also paid in that currency, of course!

The more I think about the player drain to the north, the more I ask the question; How is this whole thing financially affordable?

Think of France! Just two Top 14 clubs, Toulon and Brive recorded a profit last season! Toulon €690,000, and Brive €202,000. The rest ran at a loss.

The two French professional rugby leagues, the Top 14 and the Pro D2, ran at a loss of €33,891,000 in 2014. That was an even bigger loss than the €32.5m of 2013. They are hoping a new TV broadcast deal worth €70 Million will help reduce their overall loss for 2015 to just €19 Million!

In South African Rand that 2014 loss equates to R467 Million, or more than half the annual budget of the entire SA Rugby Union, which actually runs at a small profit! If you are Australian, that is roughly $49,8 Million or $56,1 Million in New Zealand dollars.

Remember that the same kind of loss was reported in 2013, and a similarly large loss in 2012.

How is this sustainable?

A report released by the Direction nationale de contrôle de gestion (DNCG) – French rugby’s financial watchdog, outlined the massive amounts of money being spent across the country’s two professional leagues, the Top 14 and the Pro D2.

The report, which covers the spending of the top 30 clubs in France during the 2013/14 season, puts the average Top 14 club budget at €21.2m, with €7.4m of that supposedly going to player wages. The highest Top 14 club budget was close to €35m for the season.

The 2014 deficit is the highest since the creation of the Ligue Nationale de Rugby (LNR) in 1998, prompting the DNCG to comment that it “confirms the loss-making management of professional rugby as a whole.”

I ask again: How is this sustainable?

Any business that loses money simply cannot survive, and French rugby has consistently lost money for a long time! Yet they still continue to send out the agents and recruiters to gather as many southern hemisphere players as they can find. How?

Rugby finances in the UK is less easy to analyse as they do not have a central reporting authority such as the French DNCG, but we do know that the England RFU reported an overall loss of £9,5 Million for 2014. (R182 Million in South African terms.) This is the Rugby Union itself and not the clubs. From my research I can report that most of the professional clubs are teetering on the edge of bankruptcy year in and year out, some breaking even, but many running at a loss, some with enormous deficits, often helped out of the quagmire by sympathetic millionaire benefactors.

The reality is that Rugby in the UK is not a hugely profitable business. They have to compete with the massive marketing machine that is English Football and the big clubs like Manchester United, Arsenal, Liverpool, and the like.

So how is their recruitment of foreigners financially sustainable?

Perhaps it is important to note that rugby in the UK is subject to a salary cap and that this cap is rigidly enforced by the RFU.

The reality is that even English clubs are struggling to compete with the salaries being offered on the other side of the Channel!

France is supposed to have a salary cap too, but we are told that most clubs only have a nodding acquaintance with those rules. Toulon are known to work their way around the salary cap by signing players for lower monthly wages – but offering massive win and performance incentives.

The French salary cap now sits at €10.5 million per annum until 2016, but the French clubs are already lobbying to have this figure increased, and already have another loophole where two “marquee” players – non-Frenchmen – can be recruited who are excluded from the salary cap.

Dan Carter has become the most expensive rugby player in history, signing a three-year deal with Racing for €1.5 million a season. Ma’a Nonu has signed on for two years in Toulon on an undisclosed contract understood to amongst the biggest at the French glamour club.

Player wage packets are considerable, even for lower-league players in France. Average wages in the Top 14 sit around €9000 (R124 000) a month, and the D2 average monthly salary is around half that. R124 000 per month is a very comfortable kick under the backside for a young rugby player.

I have to ask again, how is this sustainable? Where is the extra money to fund these enormous wage packets coming from when almost every one of the French clubs are running at a loss and the French Rugby Union is running at a loss too? How long before the French rugby financial bubble bursts? What happens if Greece pulls out of the Eurozone and the Euro collapses?

Bill

June 2015