Franchise idea super silly or Tew brilliance?

MARC HINTON
Last updated 05:00 04/12/2011
Steve Tew
CHRIS SKELTON/Fairfax Media
REVENUE: NZRU boss Steve Tew said the New Zealand Rugby Benevolent Fund would pay outstanding February wages to Otago's contracted ITM Cup players.

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OPINION: Either A brilliant piece of revenue-generating creativity, or the con-job of the year.

It all depends which way you look at Steve Tew's scheme to inject some much-needed cash into New Zealand's ailing Super Rugby franchises.

Maybe when he finishes with this process, Tew might like to hawk off the Harbour Bridge. I'm sorry but it looks to my layman's eyes as though the NZRU's latest plan to license off its franchises has more than an element of the shyster about it.

Of course I could be wrong, and it could all go gangbusters as well-heeled moneymen queue up to part with their hard-earned millions, all just to be associated with a professional rugby team.

But somehow I don't think so.

Put it this way – the mechanics of the NZRU's much-trumpeted proposal would have me running very fast in the opposite direction. And I'm a gambler.

Unless I'm missing something, all Tew is offering is essentially the chance to rent a Super Rugby team for a few years (three in the initial deals being offered). Not to buy a stake. Just to buy the right to "run" a team.

In return you get – well, not a heck of a lot.

Taking a leaf out of the IRB's book, the NZRU will continue to bank all the major revenue streams associated with Super Rugby – broadcasting revenue and major sponsorship and commercial deals – and in turn give successful licensees the opportunity to gain a return on their investments via – wait for it – things such as team naming rights and non-rugby activities. Why would you bother?

It's not like Tew will be asking for inconsequential money either. He'll want a king's ransom, you can be sure of that. It's like having your cake and eating it too.

Professional sporting teams have never been sound financial investments at the best of times. The odd one does all right, but for the most part they're a terrible drain on the resources of owners who use them as tax writeoffs and playthings with which to impress their friends. And not in that order.

To think that cashed-up investors will part with their readies and not be given any sort of ownership in the product defies belief. It just doesn't seem to make any sense as an investment. Sure the outgoings might be minimal – the NZRU will continue to meet major costs such as the contracting of players and coaches as they do now – but with such minimal returns in prospect it's hard to see investors knocking down Tew's door.

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A couple of other concerns spring to mind. If, as seems likely, it ends up being provincial unions who buy these licences, doesn't that defeat the whole purpose? Isn't the NZRU then just sucking cash out of one pocket to line another?

Also, I note in the information sheet around expressions of interest that licensee responsibilities would include the management of teams including professional development.Is that an area that should be handed over to investors? Surely professional player development should remain the responsibility of the NZRU.

Who knows? This could be another Trade Me. It could be a Tew master-stroke, and save the New Zealand game. I hope it does. But it all looks too Clayton's to me. The franchise you buy, without actually buying a franchise.

On the surface it's a rugby revolution. The first step in the direction of private ownership of New Zealand's premier teams. But scratch beneath and it's a lot less exciting.

- © Fairfax NZ News

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