From afar: Fine line between profitability and community

Despite concerns about "selling our rugby assets", it has been announced that the Hurricanes and Crusaders have found a licence arrangement that suits all parties, but the Blues and Chiefs are yet to get the nod of approval from the New Zealand Rugby Union.

The Highlanders must be letting out an audible sigh of relief that they have been excused from this drawn-out and complicated process.

Initially, the NZRU's main goal in seeking these licence agreements was to inject extra capital, sharpen governance and find some new approaches to the Super rugby product.

Ultimately, if these goals are achieved, the NZRU has a lot to gain, but what is in it for investors?

More often than not, professional sports teams have not been sound financial investments (with exceptions such as Manchester United). So what motivates an individual or consortium to put their hands in their pockets and help out the NZRU?

Economist and philanthropist Gareth Morgan has taken a 12.5% share in the Hurricanes and the multi-millionaire is the first to admit this will not generate huge profits.

Buying a share of the rugby franchise is part of Morgan's bigger vision that involves several Wellington-based franchises including the Phoenix and possibly twenty/20 cricket or netball franchises in the future. His vision involves getting these franchises to work together and share resources (create joint ticket deals, season passes, and a high-performance sports facility), so the Wellington region and its community will ultimately benefit.

It is a lofty vision, especially in parochial New Zealand where we fight over scraps when it comes to a share of our small market.

This parochialism raises the other worrying aspect of these licence agreements. The Wellington Rugby Football Union holds a 50% share in the Hurricanes, and there is still a 12.5% share available to other provincial unions in the Hurricanes area. How are struggling unions meant to step up when they can't even stand on solid and sustainable ground?

Doesn't this defeat the purpose of injecting extra capital into the game if the NZRU gives with one hand at one level, and takes away with the other at a higher level?

The franchises also seem to be getting mixed messages. It is okay, for instance, that 62.5% of the Hurricanes franchise is in the hands of provincial unions, but the Chiefs governing structure has been told by the NZRU it is too provincial union-oriented and needs to be more commercially-focused.

Rather than aspiring to be like Manchester United, I hope the franchises and the NZRU are inspired by the model that works for the Green Bay Packers, a publicly-held corporation that is immensely profitable, where the franchise has flourished despite being based in a town with a population of 102,000.

The Packers have managed to not only survive but to thrive, and Green Bay was named by ESPN as the best franchise in all of sport.

The Packers have sold out nearly 300 consecutive home games, have 80,000 names on the waiting list for season tickets, and were the 11th highest-revenue team in the NFL in 2011.

Packers management suggest they are so successful because they constantly maintain the product on the field and the community's warm feelings about that product. They walk the fine line between profitability and community.

If Morgan's lofty vision of getting different sports codes to work together for the sake of Wellington, and the Chiefs' on-field performance and connection to their community is not forgotten, maybe the New Zealand Super rugby franchises under their new licence arrangements will be able to walk this fine line, too.



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