Sponsorship revenues attached to two of Australia’s four main sporting properties are on divergent paths this season, according to new research by SportBusiness.

Extensive research into the Australia market this year puts the Australian Football League’s total sponsorship revenue at between A$56.8m (€32.9m/$35.8m) and A$61.6m per year in 2020, and Rugby Australia at A$17.5m per year, highlighting a widening of the gap between the two properties.

Cricket Australia and the National Rugby League generated about A$49.1m and A$47.3m respectively, according to the research.

Winners and losers

The AFL has always posted higher sponsorship revenues than Rugby Australia, but recent seasons have seen Rugby Australia’s total shrink, while the AFL continues to grow.

The AFL’s sponsorship rights comprise its men’s and women’s leagues – the AFL and AFLW.

Rugby Australia is responsible for rights related to the national men’s and women’s rugby union teams, including sevens rugby, and the Australia territory rights to Super League rugby, as well as the national women’s league (Super W) and other national competitions.

SportBusiness estimates that Rugby Australia had already lost almost A$5m in sponsorship revenue last year, before the Covid-19 pandemic struck, based on the exit of banking group HSBC, a decreased fee from Australian airline Qantas and other non-renewals.

HSBC quit its A$1.5m-per-year Rugby Australia deal as part of a strategic switch to cultural properties like Opera Australia and the Queensland Gallery of Modern Art, and a club sponsorship with the Sydney Swans AFL team.

Qantas is understood to have agreed a 40-per-cent discount for its team naming rights and main shirt rights to the Wallabies and Wallaroos (excluding the women’s sevens team) for the next two seasons.

Less valuable Rugby Australia deals with strong brands like Dove Men+Care and Falken Tyres also lapsed at the end of 2019.

The AFL also lost some sponsors at the end of 2019, notably a A$2m-per-year deal with confectionary brand Mars and a sub-A$1m-per-year deal with sports drink Gatorade, but won new business from Australian supermarket Coles, worth about A$3m per year, and replaced Gatorade with the Coca-Cola-owned rival Powerade.

The extension of its main naming rights deal with Toyota, signed in March 2019 and worth, on average, A$18.5m per year over five years, also kicked in this year.

Overall, Rugby Australia announced a loss of A$9.4m for 2019 at its AGM in March, while the AFL recorded a surplus of $27.9m in its 2019 annual report.

Executive stress

The Covid-19 pandemic has put unprecedented pressure on the finances of both organisations, but the AFL is again coming out better in terms of public perception.

At chief executive level, the AFL’s Gillon McLachlan, in the role since 2014, has been lauded for his response to Covid-19.

Among other measures, he announced that the AFL would stand down around 80 per cent of full-time staff for two months from March 30 to May 31. The executive level would take a pay cut of at least of 20 per cent.

Rugby Australia’s Raelene Castle announced similar measures, with three-quarters of the governing body’s staff [about 75] standing down for three months from April 1. Castle herself took a 50-per-cent reduction in pay.

While McLachlan was complemented for his statesman-like approach to the crisis, Castle’s handling of the short-term lay-offs at a meeting with Rugby Australia staff was widely reported in the Australian media as a “corporate clustef***”, quoting a source in the room.

Bad publicity

Castle’s job is reportedly on the line, highlighting the instability at the core of Rugby Australia based not only on its finances, but the failure of the national team relative to other eras, the damaging dispute with former player Israel Folau and the failure to seal a new broadcast deal.

The Folau dispute dogged the federation during the 2019 Rugby World Cup year. Folau was banned from the team for homophobic social media posts but took Rugby Australia to court to in an unfair dismissal claim. Rugby Australia reportedly settled for about A$8m in December.

The incident divided the nation between those who agreed with Rugby Australia’s approach and those who thought Folau has been punished too harshly to placate sponsors. It is highly unlikely Qantas would have renewed if Folau had not been banned.

In contrast, the AFL is a rare case among Australia sports to have avoided controversy in recent years. Its commercial approach, says one source, is secretive and led by figures with wider experience of the business world who do not seek publicity.

The AFL also has complete control over the sport’s sponsorship activity down to club level, with contracts for every sponsorship deal scrutinised by an AFL department set up to ensure compliance with the AFL’s rules and objectives.

Grassroots

Interviews with numerous agencies and rights-holders in Australia have indicated that the divergence in commercial fortunes can be explained to differing development strategies that predate recent difficulties.

One agency source summarised this as follows: “With rugby, they believed benefits trickle down from the Wallabies. The AFL trickles up from the grassroots.”

Although Rugby Australia reported 81,000 people playing rugby in clubs and 34,000 in schools in 2018, and more than 70,000 playing sevens, at all levels of Aussie Rules, participation was about 1.65 million in 2018, driven largely by the continued rapid growth in women’s and girls’ football.

The source told SportBusiness: “The AFL is such a successful institution because it is built around fans from a wide mix of income groups – and the reason grassroots is so important is because entire family networks are involved, father, mother, drop-off and pick-up – and in this, rugby union is not even close to the AFL.

“With Rugby Australia, it’s been left to the private school system, which also takes young boys from the [Pacific] islands to run as feeder programmes.

“This works to an extent, but junior programmes haven’t been rolled out west of Sydney, or in Queensland and Melbourne.”

It is understood Rugby Australia plans to address the grassroots problem, partly to create a greater opportunity for brands to associate with the values of the sport at every level.

Marketing agencies however are also critical of the governing body’s lack of promotion of its star players in as era when the team itself is not providing “quintessential Australian moments” in terms of trophy wins.

Sources say it will be interesting to see how the next generation of schoolboy internationals and under-20s are managed, when they get in the senior squads.

In 2019, the Junior Wallabies made the final of the World under-20s championships, and in sevens, the Australian Schoolboys and Australian under-18s teams have won major tournaments, offering hope that the trickle down from the Wallabies can become a torrent once more.