NRL struggling to secure home loan

Negotiations between the NRL and banks to secure a loan to build new headquarters have stalled because of the code's 10-year history of near-zero cash balances.

The NRL has approached three banks seeking financing to supplement the A$11.4 million the federal government pledged late last year as part of its stimulus package but the code's banker, the Commonwealth Bank of Australia, expressed concern over the failure to accumulate cash reserves.

''The mighty NRL can't negotiate a loan at decent commercial rates,'' a club official said. ''We've got no future fund. We earn $150m and spend $149m.''

St George Bank, sponsors of the Dragons, offered a loan at a high interest rate, while further shopping around resulted in National Australia Bank prepared to discount St George's terms by 1.1 per cent. NRL chief executive David Gallop refused to be drawn into commentary on the outcome of approaches his director of finance, Ed Farish, has made to banks, saying the site for a new administrative headquarters, combining the NRL, based at Fox Studios, and the ARL, located in the NSW Leagues Club in Phillip Street, had yet to be decided.

The three potential sites are the Sydney Football Stadium, Homebush Bay precinct and Australian Technology Park at Redfern.

''We haven't made a decision on the site so therefore I don't know the extent of the loan we would require,'' Gallop said. ''It's right we have explored a number of options in terms of borrowing an amount above the $11.4m the Federal Government gave us. The different sites require different levels of loans.''

Gallop defended his administration's history of not accumulating a future fund, saying those who criticised him for zero cash reserves were the same club officials who demanded increases in the annual distribution to NRL clubs.

''Over the past 10 years, as we've generated additional revenue, our goal has been to increase our investment in junior development and close the gap between the players' salary cap and the annual club grant,'' he said.

''The salary cap is currently $4.2m and the annual distribution to each of the 16 clubs is $3.35m and we want them to be equal. We can't necessarily build surpluses when we give clubs and players more money every year.

''We could have stuck $5m in the bank every year for the past 10 years and been sitting on $50m, but we could well have lost a club to bankruptcy and fallen behind in funding to junior development.''

The NRL salary cap is pitched at the ability to pay of the lowest revenue-earning club - Cronulla - whose residual ability to pay their bills every year is a victory in itself for a team yet to win a premiership.

Total game revenue in 2010 is expected to be $348m, consisting of NRL income of $150m and total combined club revenue of $260m, less the $62m clubs receive in their annual distribution from the NRL. Total AFL revenue two years ago was $778m, more than double the NRL's.

The average salary of the top 45 players at each AFL club in 2008 was $233,000, with the distribution to the clubs equalling the salary cap. The average wage in 2008 of the top 32 players at each NRL club was $155,925 and is expected to be about $164,000 this year. AFL players earnt a 4 per cent rise last year, taking their salary to approximately $242,000.

Gallop's administration is accused of bloated costs. Some NRL directors and club officials say the appointment of a forensic cost cutter would strip $3m-$4m in expenses from the central administration. However, the AFL announced this week the 2009 salaries of its executive team, with chief executive Andrew Demetriou receiving $1.8m and a further 10 senior staffers receiving a total of $5.02m.

These figures dwarf the salaries of NRL top executives and the total number of staffers at the AFL's Etihad Stadium headquarters doubles the workforce at Fox Studios. Nevertheless, the AFL will own Etihad Stadium in 2022, while the NRL are renters.

Cost rationalisation will come with the merger of the NRL/ARL, concurrent with the establishment of a new independent commission to rule the code but rugby league's problem has always been income, not costs.

It is a working-class family, forever concerned with the weekly budget, looking to save money by cost cuts, with the breadwinner afraid to seek a new job and a higher income.

For 40 years, the code has attacked its financial problems from the cost side with ceiling payments to players, residential and import rules, a salary cap and poker machine takings paying the bills. It is the task of the corporate-minded new independent commission to raise incomes from broadcasting, licensing and sponsorship in order to build a new home for the code, without the embarrassment of bankers showing them the door.

- © Fairfax NZ News