Does South Africa hold the key to rugby’s future?

This is hard to imagine now but 23 years ago, when South Africa, New Zealand and Australia were negotiating to form SANZAR and drive rugby to professionalism, they couldn’t be bothered to talk to the northern hemisphere. They simply informed the IRB (now World Rugby) that SANZAR had been created and they were starting pro tournaments called the Tri-Nations and Super 12.

Considering the vast gap in playing performance between the three southern hemisphere powers and the struggling home unions in particular, SANZAR arrogantly dictated terms in the early years of professionalism.

At the centre of this brave new world was South Africa. Bullish union president Louis Luyt took no nonsense; he knew the value South Africa held then and, in many ways, the country’s strengths in 1995 – good players, good time zone and a large rugby audience – still hold true today. New Zealand and Australia wanted to go it alone but realised they needed South Africa to make it viable.

“The bottom line was that they needed South Africa to become part of a television rugby package that could be sold… for big bucks,” Luyt wrote in his 2003 autobiography Walking Proud.

“Even though Ken Cowley, the managing director of Rupert Murdoch’s News Corporation in Australia, had virtually shut the door on them after their initial meeting, they were confident there would be interest on his part once he found out South Africa had joined.”

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That was the beginning of SANZAR, which has always been an uneasy alliance because of resentment, especially from Australia, that South Africa was so central to its success.

In a matter of months Luyt and Sam Chisholm, who handled international sports contracts for News Corp, were the principal negotiators of the first broadcast deal that earned SANZAR US$555m over the next ten years.

It was a great deal for both at the time, but it ushered in professionalism at a pace that SANZAAR (with the addition of Argentina in 2012) has found difficult to keep up with. “Mindful of the sensitivities at the IRB and resentment of those in the northern hemisphere, we tried our best to deny that this actually meant a unilateral step on our part to end amateurism in rugby,” Luyt wrote.

“I am afraid, however, that we were somewhat disingenuous in this respect.”

SANZAR only had their best interests at heart in 1995. Yet here we are, nearly a quarter of a century later and those three countries are increasingly reliant on the northern hemisphere to sustain the professional game at its current scale. Revenue generated from tours, World Cups and broadcast deals tied into clashes between countries from North and South goes a long way to sustaining pro rugby in the South.

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But even so, the professional game in South Africa and Australia, in particular, is teetering. World Rugby vice-chairman Agustín Pichot recently acknowledged that rugby must undergo a revolution to stay alive. “If you ask me as a businessman, the business side is not working,” Pichot said.

“If you ask me as the playing side, it’s not working. Is the international game under threat? I think it is. Look at the balance sheets of some nations and you can see exactly where we stand. By the 2019 World Cup we need to have a blueprint for the next ten years. I think we’re four out of ten now (in terms of finding a solution) but before we were not even on the chart. We need to push that needle from four to at least six or seven. I’m not going to
be an accomplice to rugby’s ruin.”

SA Rugby has had two consecutive years of massive financial losses, driven by numerous factors such as bankrupt provincial unions that need bailing out and propping up, too many ‘pro players’, the loss of long-term sponsors, dwindling attendances, the player exodus to more lucrative leagues and poor performances from its flagship brand, the Springboks.

Rugby Australia has endured a similarly torrid time for similar reasons while New Zealand Rugby just about makes ends meet thanks to the All Blacks brand.

Collectively as SANZAAR, the four nations offer good rugby and excellent players but commercially they’re suffering now that the northern hemisphere has taken professionalism to a higher level.

CRUCIAL IN THE SOUTH

In some ways, South Africa is still at the centre of the SANZAAR alliance – literally – as it divides Argentina to the west and Australia and New Zealand to the east. If South Africa pulls out of SANZAAR or is asked to leave – two unlikely scenarios – the other partners would suffer, as they would not have the audience to entice broadcasters to invest heavily in its products.

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According to SA Rugby, even after 23 years South Africans make up 45% of SANZAAR’s TV audience. Chase that crowd away and there will be serious ramifications for the rest. It’s not about how much South Africa contributes to the alliance in pure commercial value but how much commercial appetite it brings. If South Africa aren’t in SANZAAR, the appetite will drop.

Already South Africa has moved towards the northern hemisphere, with the Cheetahs and Southern Kings playing in the Guinness Pro14. Two more South African sides are set to join in due course. This is all set against the backdrop of SANZAAR renegotiating a new broadcast deal to replace the one that ends in 2020. The organisation is also tabling blueprints for its future competition structures that might expand Super Rugby to 20 teams, including a side in North America, even though its expansion to 18 teams was a disaster.

A further layer to all this is World Rugby’s push to globalise the season as set out in San Francisco in 2017, though there’s some disharmony about the way forward after Pichot suggested that a World League – a tournament to replace the June and November Test windows – was imminent. There are many things still up in the air, despite World Rugby’s recent meetings in Sydney.

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“I don’t think anyone in world rugby would deny that the game is in a state of flux right now,” says SA Rugby chief executive Jurie Roux. “The vice-chairman stated the case quite clearly recently and collectively we have to rise to the challenge of reinventing the game to achieve a number of global objectives: managing the workload on players, ensuring that Test rugby remains compelling and relevant, and critically ensuring the financial stability of clubs, provinces and national unions.

“I think people forget that Francois Pienaar was an amateur player when he captained the Springboks to the World Cup in 1995 and the transition from amateurism to professionalism was achieved in the blink of an eye.

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“A professional principle was grafted on to an amateur structure and many of the major unions are still grappling with the transition to a fully professionalised system. Soccer, cricket and American sports have had more than a century to shape their business – we’re still balancing the equation of running a business and a national sports enabler.

“Changing that shape can only be done through collaboration and no single member holds all the cards to achieving it – certainly not South Africa.”

LOOKING TO THE NORTH

Roux has previously said South Africa would never abandon SANZAAR, which is accurate because it doesn’t have to.

It is perfectly positioned to leverage its strategic importance to SANZAAR while growing its footprint in Europe.

“SA is in a strong position because it’s the only country that can participate in two hemispheres and there is a demand for our product,” a well-placed source in South Africa tells Rugby World.

“Talk of choosing one over the other is nonsensical because we are capable of fulfilling two agendas. It makes sense for SA to help keep NZ and Australian rugby strong because it’s good for the overall global game and the standard of rugby works for our game as well.

“Australia aren’t that keen to stay in an alliance with SA, but NZ are adamant they won’t unhitch themselves from SA. They have told Australia they would choose SA over them. SA is still the major contributor to the alliance in terms of commercial value, which gives SA strong leverage.

“It’s a radical plan but we should rather dilute our offering in SANZAAR by taking, say, the Pumas and Griquas into Super Rugby and putting the Bulls and Lions in Pro14. SANZAAR can’t deny us that – SA has four places and licenses to issue as we see fit. The upside of that is SA can ask for more of the pie in Pro14 because it’ll bring three-time Super Rugby winners Bulls and three-time finalists Lions.”

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It would be a radical scenario that could eventually see the Boks join an expanded Six Nations. But that structure would be years away, if it happened at all. In the meantime, aligning the global calendar, preserving and growing the commercial value of Test rugby, and sustaining viable club tournaments both in the North and South is vital.

Pichot might have spoken out of turn on some of the ideas being put forward, but his sentiment that rugby can’t stand by and watch itself wither was important to air. And South Africa has a key role in the sport’s long-term health.

“There were exciting ideas discussed in Sydney relating to the Test calendar and we’ll await the outcomes of those discussions with anticipation,” Roux says.

“In the same way, we’re exploring with SANZAAR the future landscape for our southern hemisphere competitions. There are similar conversations going on at Pro14 level. But it’s too early to predict how those will unfold.

“Whether any of this can stem the flow of South Africans abroad is a moot point. Players will follow the money – and no one is blaming them for that – and creating greater value in the rugby content we provide will go some way to achieving that. But short of a miraculous reversal in exchange rates between the rand and the pound, euro and yen, we have to plan to lose the backbone of a Springbok team every four years or so.”

South Africa’s players may be heading overseas – but the country itself is crucial to the global game’s financial future.

This feature first appeared in Rugby world magazine in November.