The prospect of professional sports clubs merging to form “mega-franchises” is being explored by industry leaders amid a radical rethink of the pro sports landscape.
The concept, in which single organisations would run a stable of teams across multiple codes, is understood to be gaining traction among some sports executives.
Documents obtained under the Official Information Act reveal the idea was put forward during a recent industry-wide consultation on the challenges facing professional sport led by former NZ Rugby boss Steve Tew.
Stuff has not seen Tew’s final report for Sport NZ, which formed the investment case for a $4.6 million government bailout of professional clubs across rugby, league, football and netball.
However, consultation papers reveal medium and long-term solutions to professional sport’s Covid-accelerated malaise were also sought, with Sport NZ warning it cannot continue to artificially prop up an unsustainable model.
* Basketball New Zealand boss Iain Potter slams funding snub: ‘It’s a kick in the guts’
* Covid-19: Government’s $265 million sporting lifeline, but who is first in the queue?
* Netball ‘at risk’ without immediate government support, says sport’s chief
* Wellington Phoenix receive nearly $1m, Warriors $200k from Sport NZ relief package
“Parties need to appreciate that they will need to be open to options that they would not normally be open to,” the Sport NZ discussion document read.
In a submission to the working group, Netball NZ chief executive Jennie Wyllie called for a major rethink of the franchise model, floating the idea of “mega franchise operations delivering teams that play different sports”.
“There is commonality in many of the services that could be cross-functional and enhanced if sufficient scale is achieved,” Wyllie submitted.
Wyllie told Stuff she believes New Zealand’s sporting ecosystem is not big enough to sustain the number of professional teams it does.
“There is no longer a place for standalone franchises in New Zealand,” Wyllie says.
“We’re all chasing the same ideal. If you were to sit down with any franchise or club, they would probably have the same core fundamentals like ‘have the most engaged fans’, ‘be financially viable’ … everyone has the same desire, but is anyone actually achieving it?
“We’re a small country and if we all think we’re all going to deliver to these, all we’ll be doing is cannibalising one another in a very small market.”
Despite the financial challenges facing sports as a global recession looms, New Zealand’s professional sports market looks set to become further congested in the next couple years. NZ Rugby is exploring the possibility of getting a professional women’s competition off the ground, while the Phoenix are in the process of trying to secure a licence in the W-League.
Wyllie believes the only way professional sport will survive is for organisations to shake “institutional thinking”.
She says she is not advocating for a one-size-fits-all approach, as each sport and league has varying ownership models in place, but there are clear opportunities for teams with geographical or values-based alignment to merge.
“I don’t want to over-simplify things, because it’s not simple,” says Wyllie.
“At the end of the day, what teams deliver in the back office, whether you think finance, commercial and governance, those functions are all the same. They’re slightly different when you talk about the teams you’re marketing, but you could have a mega franchise that takes a few of these sports in under one umbrella and you’d get the ability to get synergies across so many workstreams.”
Wyllie points to several examples of multi-code clubs in operation overseas, including FC Barcelona, which has professional football and basketball teams in its stable, and, closer to home, the AFL’s Collingwood club, which has expanded its brand over the past few years to include teams in the AFLW and the Super Netball competition.
Phoenix chairman Rob Morrison is also calling on sports to break out the siloed approach and look for opportunities to work together.
Fronting a media conference on Friday as the Wellington-based team prepared to fly out to Sydney ahead of the A-League restart, Morrison told reporters one silver lining of the current crisis is it will force sports executives to address systemic issues.
“Professional sports have to look at doing things differently,” Morrison said.
“If you look at a city like Wellington in terms of 450,000 people – you have the Canes, you got us, you got the Pulse, the Saints. Actually, do we need all that infrastructure behind individual sports franchises? Why aren’t we talking and saying what we can share here? What’s achievable in terms of synergies?”
Morrison’s Welnix Group has had previous attempts to align the Wellington sports franchises, purchasing a 12.5 per cent stake in the Hurricanes in 2012. The group’s vision was to create a professional sporting hub, incorporating shared gyms and sports science facilities, along with back office functions such as human resources, marketing and IT. But without a majority share in the Hurricanes, the plans proved difficult to implement and the group quietly exited the franchise in 2018.
“When Welnix took over the Phoenix in 2011 there was a desire to see how far we could push the relationship with other codes,” Welnix spokesman David Dome told Stuff in 2018 after the group sold its stake in the Hurricanes to Caniwi Capital.
“While there were some synergies that took place, the hoped-for synergies at a much bigger level never eventuated so Welnix decided we might as well move off in a different direction.”
Super Rugby franchises may be more open to such partnerships in the future, with the Covid crisis exposing NZ Rugby’s top-down business model as tenuous.
NZ Rugby is currently undertaking a review of the future of Super Rugby, with the five franchise licences up for renewal this year. The Aratipu project, led by Blues chairman Don Mackinnon, will include a review of the ownership and equity structure of the clubs.
Further consultation and review is of the professional sport landscape is also set to get underway at Sport NZ level following Tew’s initial report.
Sport NZ boss Peter Miskimmin says his organisation has made it clear that on-going government investment in professional teams or competitions is not a politically palatable nor prudent solution.
The next phase for the national body is initiating discussions within the industry of how it can future-proof itself.
“That initial tranche of money was about getting [the organisations] through to July 1, and then hopefully now there’s broadcasting revenue starting to flow again, along with match day revenue,” says Miskimmin.
“What we are talking to everyone about now is what are some of those bigger changes they can now make to future proof their clubs and their leagues? In New Zealand we are a very small market and getting scale and efficiency is difficult, so what opportunities are there around merging, sharing and collaboration?
“Our job is not to direct or impose in any way, so part of the trick moving forward is creating an expectation, and that comes from the minister [Grant Robertson] and our board that we do not want to continue to invest in unsustainable parts of our system.”