Rugby: Player transfer fees could help NZRU recoup costs

In part three of our series Prof Steve Jackson, of the University of Otago, suggests rugby needs a transfer fee system.

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What sort of business exports its product around the world without receiving a cent in payment?

According to Prof Steve Jackson, of the University of Otago, that business is rugby. And if the New Zealand Rugby Union (NZRU) wants to turn its finances around, then a transfer fee system should be at the top of its agenda.

Of course, the NZRU will need to negotiate that with the International Rugby Board, which might have some thoughts of its own on the subject. Its member nations have done quite well out of the current arrangement, after all.

But it is one of the possible solutions Jackson has suggested as the national body looks for ways to balance its books.

"If they could introduce something like a transfer fee, that would allow New Zealand to generate the money to be able to support a franchise like the Highlanders," he said.

Football fans are well versed with the transfer market but it is a foreign concept to rugby, where clearances are sought and granted without any money changing hands.

But Jackson, who co-authored Globalization, Sport and Corporate Nationalism, argues clubs who recruit players developed elsewhere should have to provide financial compensation. With the amount of New Zealand players heading to destinations in Europe or Japan, it could be a tidy earner for the NZRU and for some of our Pacific neighbours, who also lose a lot of talent abroad.

The money generated from transfer fees would pale in comparison to an increased share of the gate-takings from overseas games and a larger slice of the broadcasting rights, though. And Jackson believes the All Blacks dropped the ball on that score.

"They needed to go independent when rugby went professional in 1995. The fact they did not or could not do this meant that the UK national rugby unions, in particular, earned an enormous amount of money on the backs of the ABs."

NZRU chief executive Steve Tew sounded an ominous warning during last year's World Cup when he suggested the All Blacks might miss the next event in England in 2015 unless the IRB reviews its financial model.

Tew said competing at the World Cup cost the NZRU more than $13 million in lost revenue because all incoming tours were halted and it was not able to leverage money from its sponsors during the tournament.

Perhaps it was mostly posturing, but the NZRU has agitated for years for a fairer way to share the revenue the All Blacks' brand helps generate.

If the All Blacks, the global face of New Zealand rugby, are struggling, then what chance do the five Super 15 franchises have?

None, if you ask Jackson.

"It is not sustainable and they are going to have to make big changes, in my view."

Player payments and the costs of competing in the Super 15 are increasing all the time but the marketplace is not large enough to sustain any increase.

New Zealand is a small market of 4.4 million people. If 5% of Dunedin people, for example, attended a Highlanders game, then there would be a crowd of about 6000 people. If 5% of Melbourne attended a game, the crowd would be about 200,000 people.

Societal pressures are also adding to the challenge. The cost of living in New Zealand is high and people's discretionary income has dropped. Coupled with that there is a lot more competition for the entertainment dollar these days, Jackson said.