The business of rugby

Only a few months the predictions were dire – an exodus of key players could see the All Blacks dethroned as the world’s best.

Now the world is hailing the current team as possibly the best of all time, reinforcing the strength of New Zealand’s principal brand, the black jersey.

And global brands appear to be lining up to be associated with it.

In January, New Zealand Rugby (NZR) ended its relationship with Coke (and Powerade), but only to replace it with a deal with Pepsi, owners of Gatorade.

A contract with global insurance group AIG, signed in 2012, is worth a reported $80 million over five years. That deal is believed to be second only to a deal with adidas, believed to be worth closer to $30m a year.

On-field performance clearly drives the business that is rugby in New Zealand financially, but in the professional era, the reverse is also likely to be true.

An increasingly professional management of the code as a business helps protect performance.

NZR’s latest annual report showed a loss of $463,000 in 2015, but this came after a string of profits and in Rugby World Cup year, typically more expensive, with fewer home games.

Grant Jarrold, a partner at Deloitte, who is also chairman of the Crusaders and author of an annual report on the state of provincial unions, says New Zealand rugby is generally in good shape financially, and improving.

As well as maximising revenue, rugby unions face a dual challenge: giving provincial organisations the resources to continue to develop talent for the future, while paying the top players enough to keep them in New Zealand, in the face of higher offers from overseas.

Jarrold said ‘‘obviously’’ the value of the black jersey helped New Zealand rugby, with players willing to forgo better pay overseas to be part of the team.

However, unions knew the gap could only ever be so big. Are the players paid enough?

‘‘The proof is in the pudding,’’ Jarrold said, pointing to the depth of talent, ensuring that even after some of the All Blacks’ greatest retired or headed overseas this year, performance had only improved. ‘‘If we’re retaining the best possible talent . . . and we then have a strong All Blacks team and strong Super [Rugby] teams and a very strong NPC [national provincial championship] competition . . . then [the players’] job satisfaction and the pay must be okay.’’

Meanwhile, grants to provincial unions have been rising steadily in recent years, from $8.3m in 2012, to $9.6m in 2015, NZR annual reports show. In 2015, $16.9m was spent on game development, up $1m on the previous year.

New Zealand seemed in even better shape compared with its counterparts, with the Australian Rugby Union reporting its worst financial performance in a decade in 2015, and South Africa beset by political issues.