Saturday, May 31, 2008

Brand new Bunnies, by Brad Walker - Fairfax - 31st May 2008

South Sydney are set to be the biggest grossing Sydney-based NRL club for the second successive year, with the Rabbitohs' projected income for this season totalling $15 million.

It's a far cry from just three years ago when Souths operated on a mere $9.5m budget. But the problem they face - as with each of the city's other eight clubs - is that expenditure far outstrips their revenue. In the Rabbitohs' case, this year's deficit is expected to be about $1m - but only after some serious cost cutting over recent months that it is hoped will lead to the club breaking even next season before eventually becoming profitable.

As remarkable as it may seem to many outside the club, Souths are in a stronger financial position than last year when they earned $14m but ran at a loss of $4m.

Many of their Sydney rivals would have incurred similar losses last season without a cheque from their leagues club to cover the amount of their shortfall, and few generated income above $10m.

Unlike their rivals, Souths don't currently have a leagues club and even when they did, it rarely made money - ensuring the Rabbitohs were weaned off the poker machine dependence threatening the game long before the NSW Government upped the taxes, which - combined with anti-smoking legislation - are being blamed for endangering the future of other Sydney clubs.

While some may not survive, the Rabbitohs will - and without relocating to Gosford - because of the steps put in place since members voted to sell a 75 per cent stake in the club to Russell Crowe and Peter Holmes a Court at the start of the 2006 season.

Because of their disappointing on-field performances this season, the perception may be that nothing much has changed at Redfern but as their rivals begin to seriously consider for the first time alternative revenue sources to fund their teams, the new Souths are ahead of the game and boast the biggest sponsorship, the largest membership and the most lucrative stadium deal of any Sydney club.

However, transforming the decaying club has required significant expenditure and last year the Rabbitohs spent $18m.

The new owners had high aspirations for Souths and Holmes a Court, in the role of executive chairman, seemed determined to ensure that whatever he thought would help make the club more successful was done - sometimes with little regard to the cost.

As a result, the off-field staffing numbers at Souths grew from 13 to 48 - more than double what most other clubs employ and a figure that has now been cut to 22 - as Holmes a Court focused on increasing revenue to match spending. With another multimillion-dollar deficit looming, the club did what most other businesses would do and began slashing costs to try and not only meet the $1.5m to $2m shortfall initially budgeted for this year but reduce their losses even further.

Whether or not Holmes a Court and Crowe fell out over the financial situation is the subject of much speculation but the main concern of the Oscar-winning actor is thought to be getting his beloved team winning again in the belief that success on the field holds the key to success off it.

Holmes a Court is only a recent convert - firstly to Souths and then the game - but the West Australian-born businessman is an innovator and his idea to separately sell naming rights for the club's home and away jerseys - as well as their training kit, a first in the NRL - resulted in the value of Souths' major sponsorship deals more than doubling.

But with Souths struggling at the bottom of the table after just one win from 10 matches, the decision taken before the season to hold out for a more lucrative away sponsor has not paid off.

In addition, merchandise sales, membership numbers and attendances at ANZ Stadium - where Souths receive a guaranteed income of about $100,000 per match but can earn more if the crowd passes a certain figure - are also affecting the club's bottom line but also have the potential to turn around when the team starts performing again.

Media Man Australia Profiles

South Sydney Rabbitohs


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