Fresh blow for Rugby Australia as Qantas ends 30-year sponsorship
Rugby Australia, the national governing body for rugby union, has been dealt another financial blow after major sponsor Qantas, the Australian airline, announced it will end its 30-year association with the code.
Just days after announcing massive salary cuts for its executives, Qantas said it had reviewed five key sporting sponsorships and would not be renewing its sponsorship of RA beyond its current deal, which expires at the end of the year.
It has also ended its cash sponsorship deals with Cricket Australia and Football Federation Australia, the national governing bodies of cricket and soccer respectively, in favour of 'payment in-kind' (PIK) support, including free flights and marketing, for the next 12 months.
It is understood that RA turned down the offer of a PIK agreement with Qantas in favour of attracting a paying sponsor.
The airline said its decision has been made in a bid to save the company up to A$20 million ($14.24 million) per year as it deals with the financial fall-out from the coronavirus pandemic and the grounding of the majority of its fleet.
In a statement, Qantas said: “Regrettably, Qantas is not in a position to continue its 30-year relationship with Rugby Australia beyond the end of this calendar year.
“Qantas has had a very long association with Rugby Australia and the Wallabies, and we’ve stuck with each other during difficult times. Unfortunately, this pandemic has been the undoing. Like all Australians, we’ll continue to cheer them from the side lines.”
Qantas has been the official airline of RA since 1990 and in 2004 became the official naming rights partner of the men’s national team, the Wallabies, putting its name and logo on the team's shirt. It also is the naming rights partner for the Australian men’s and women’s rugby sevens teams.
The decision comes as Qantas faces unprecedented financial pressure due to state and international travel restrictions, which have devastated the aviation industry.
Last month, the airline announced an A$2 billion loss due to the cost of making workers redundant and sweeping write-downs of the value of its fleet of planes, which still remains largely grounded.
Rob Clarke, RA’s interim chief executive, said: “While its obviously disappointing to lose such a loyal partner, it is understandable given the world we are now living in, and the challenges we are all facing.
“There aren’t many 30-year partnerships in Australian sport, and I want to thank Qantas for everything they have done for our great game.
“Alan [Joyce, Qantas chief exeuctive] and his team have been transparent and collaborative in discussions with us and they have now given us the opportunity to prepare for 2021 and beyond.”
Qantas’ exit is the second major sponsor RA has lost in the last year, after international banking giant HSBC decided against renewing its six-year deal in December, and leaves RA searching for new title sponsor during one of the most turbulent periods in its history.
In June, the governing body was forced to cut 40 per cent of its staff (47 staff members in total) as part of emergency measures put in place to withstand the pandemic’s financial effects, after announcing losses of A$120 million the previous month.
It also asked remaining senior staff to take a permanent cut of five per cent in their base salary, while a further 30 contractors and casual workers also had their roles terminated to reduce the company’s wage bill by A$5.5 million.
Meanwhile, uncertainty remains over the game’s next domestic broadcast deal from 2021 to 2025.
In Feburary 2019, RA put out a tender for the next five-year cycle as its current rights agreement with pay-television operator Foxtel and commercial broadcaster Network Ten, worth a total A$285 million, ends this year.
However, in November, former chief executive Raelene Castle rejected an offer from Foxtel worth A$35 million per year in hopes it would trigger a bidding war between broadcasters. That bidding war failed to materialise and she resigned from the post in April amid criticism of her leadership.
It has since been reported that the next broadcasting rights deal is likely to be worth no more than A$20 million per year, representing a A$15 shortfall on the previous Foxtel offer, and down from the previous deal with Foxtel and Network Ten worth A$57 million per year.
Earlier this month, RA recruited Adam Foulsham, an experienced financial and operational executive, as its new chief operating officer tasked with reducing operating costs at RA by A$15 million over the next few months to counter the expected shortfall.
The coronavirus pandemic has had a devastating impact on the airline industry, which has affected rights holders due to the sector’s heavy spending on sports sponsorship. To read more insight, head to https://sportcal.com/Insight/Sponsorship/130920