For Love and Money


For the benefit of those immune to its mysterious and brutal charms, 2008 marks the centenary season of Rugby League in Australia. Beginning with the season media launch held in the quaint, inner suburban surrounds of Birchgrove Oval, the site of the code’s first official Australian match, few opportunities have been missed by the game’s fans, administrators and media backers to wallow in the kind of cavity forming nostalgia that generally accompanies such anniversaries in sport’s new era of corporate professionalism.

However, a jarringly unfestive note was struck last month when the National Rugby League (NRL)’s administrative supremo, David Gallop, bluntly announced that a number of the game’s major Sydney clubs were in danger of imminent extinction due to their impoverished financial state.

The NSW Government’s 40 per cent poker machine tax, combined with its introduction of smoking bans in licensed premises, has led to catastrophic revenue shortfalls across Sydney’s NRL clubs and their affiliates in recent years. This in turn has led to a rash of indignant editorials in the major Sydney dailies railing against the State Government’s vampiric leeching of the game’s lifeblood.

Sydney Morning Herald veteran reporter Roy Masters said the pokie tax was "undermining the traditional source of revenue in the code’s heartland". His Fairfax stablemate Phil Gould predicted that NSW Labor "could well be remembered as the Government that presided over the demise of Rugby League as we know it in this State".

Australian Rugby Union boss John O’Neill mused recently that the rapid growth of AFL and soccer – the twin "gorillas in the room" of Australian sport – has essentially pitted Rugby League and Rugby Union against each other in a dogfight for survival. In light of this analysis, one question begins to loom large for League: does a game that has become dependent on problem gambling for its financial survival deserve to survive?

"I think League people became complacent about where their money was coming from and it has come back to bite them," one of the game’s elder statesmen, Greg Alexander, said in an interview with Radio National in May.

At the tail end of his Premiership, Bob Carr conceived a huge tax hike on registered clubs’ pokie profits as a way of covering the sharp drop in stamp duty revenues incurred by his government’s highly unpopular vendor tax on the sale of investment properties. The move prompted a predictable backlash from the club industry, and a threat from millionaire ad man John Singleton to launch his own $5 million advertising blitz against the Premier if he didn’t back down. Carr memorably labelled the phone call he received from Singleton on the subject as "the closest thing to blackmail I have ever received in the eight and a half years I’ve been Premier." Singleton responded with a crack about neither Carr nor his Treasurer Michael Egan understanding the importance of pokie funding for junior sport because neither man had children.

The clash was a tabloid news editor’s dream, and crystallised the resentment that those in the traditional Labor heartland had long harboured towards Carr. It was the bookish Premier with a fondness for Gore Vidal versus the beer swilling populist with commercial control over the most powerful radio broadcaster in the state, Alan Jones.

"He has no interest in the game whatsoever and good luck to him," Singleton said at the time, "but it is the social fabric that ties us together in NSW and Queensland, at least, and to put your boot into the main community fabric of this state, I think is unwise, unworldly and foolish."

But Carr refused to back down, arguing that for every $100 Leagues Clubs took from poker machines, only $9.60 went to Rugby League, and another $3 to community projects, after which the clubs received $1.50 back as a tax rebate.

So, along with massive infrastructure issues and a flattening property market, Morris Iemma inherited the problem of the pokie tax when he took the reins of Government in mid 2005. In addition to immediately scrapping the despised vendor levy, Iemma sought to mollify the forces of clubland by lowering the pokie tax threshold. In May this year, he also agreed to allow up to 150 clubs to defer their pokie tax payments for up to 18 months, in response to a plea from Clubs NSW to help soften the blow from the indoor smoking bans. However, with so much serious infrastructure work to be paid for, Labor was never likely to jettison such a rich stream of revenue entirely.

Prior to the mid 1990s, Rugby League was a semi-professional, blue-collar sport played in ramshackle suburban grounds by men who did so largely for love, and who by necessity held down employment outside of the game. Commentators of a certain vintage now reminisce about the days when star first grade players turned up to afternoon training in utes caked in brick dust, after a hard day’s graft on the building site.

In 1994, Rupert Murdoch’s grandiose attempt to professionalise the sport through the creation of Super League created a schism in the game that in many respects has yet to be resolved. The major legacy of his attempted putsch was the creation of the fully professional Rugby League player, with his dramatically inflated salary and excess leisure time in which to misbehave. The economic buttress for this new order was to be the rivers of gold that would flow from the television rights deal struck with pay television provider Foxtel, a subsidiary of Murdoch’s own News Limited corporation.

However, for a variety of reasons relating to the eventual settlement of the Super League "war" between Murdoch and League’s establishment forces, these golden rivers today amount to barely a trickle into the coffers of the Sydney football clubs. The fact that the NRL is now essentially owned by News Limited, a media company concerned with its own profit margins, means that NSW Rugby League clubs are now more reliant than ever on their "traditional source of revenue" – that is, grants from their Leagues Clubs based almost entirely on poker machine takings. By contrast, the interstate clubs North Queensland, Brisbane and Melbourne – both directly owned and funded by News Limited – are making solid profits and drawing healthy crowds, completely independent of any gaming cash.

When poker machines were first introduced into NSW clubs in 1956, they were seen as a means to further the club industry’s basic charter; to provide social benefit through the funding of community projects such as junior sport, and more specifically the local first grade football side. However, the immense sums of money that these machines would come to generate was neither predicted nor planned for. The concomitant expansion of the club industry was similarly unexpected.

Fifty odd years on, the social cost of these machines is as much of a statistical reality as the price of petrol. Study after study has found that the machine gaming industry draws the bulk of its immense profits not from the casual middle class gambler throwing his/her spare change at these totems once or twice a week, but from the two per cent of serious problem gamblers within the population.

There is also a well established link between poker machine preponderance and Sydney’s lower socio-economic areas. In 2003, official figures showed that there were 12 poker machines per head of population in Bankstown, as opposed to only one per head in leafy Ku-ring-gai. A recent NSW Government report revealed that some western Sydney families were spending up to three quarters of their disposable income on machine gambling, with families in Fairfield, the worst hit area, accounting for $2500 per adult per year – a staggering 78 per cent of each family’s disposable income. This is the state of affairs in Rugby League’s working class heartland.

"The community uses the club, it’s not sort of an ivory tower for the board of directors," former chairman of NSW Rugby League told the ABC’s 7.30 Report in 2003. "If it looks like Las Vegas – what chance have most people in Belmore got to go to Las Vegas? They come through the Leagues club, walk through the rainforest, hear the waterfall, have a subsidised meal and they love it."

To their credit, South Sydney’s "Hollywood saviours", Russell Crowe and Peter Holmes à Court, took a stand against the tradition of Rugby League clubs being funded by gaming cash when they re-opened their renovated Leagues Club premises this year, sans poker machines.

"We know there’s a disproportionate number of machines in lower income areas in the State," Holmes à Court said last year. "I would point out there are no machines in the bloody nice suburb in which I live. We know that 30 to 70 per cent of the money that goes through poker machines, depending on the study that you read, consists of welfare payments."

Despite this principled stance born of professed "corporate responsibility", Souths lost a massive $4 million last year, and currently sit last on the competition table after recording just two wins in 12 matches. Holmes à Court recently resigned as chairman following a reported rift with Crowe, and the club’s future looks far from certain.

All of this stands in stark contrast to the AFL, whose vaults are currently brimming with huge sums of TV rights cash and associated corporate coin. Its clubs, raised on a diet of paid memberships since birth, have no great reliance on gaming revenue. Their match day crowds routinely dwarf those of the NRL, the majority of whose clubs now play in cavernous, soulless stadia to minute crowds, purely for reasons of financial necessity (ANZ Stadium at Homebush, for instance, pays NRL clubs somewhere in the vicinity of $100,000 for each match they commit to playing there).

In March this year, a bill introduced by Family First Senator Steve Fielding aimed at restricting poker machines to racetracks and casinos was referred to the Senate’s community affairs committee after receiving support from both Labor and the Coalition. The bill would employ punitive Federal tax increases, rising from 1 per cent of pokie revenues in 2009-10 to 30 per cent by 2018-9, to achieve its objective. From the end of this month, Fielding will be joined in the Senate by anti-pokies campaigner Nick Xenophon, and together the two will effectively hold the balance of power.

If they get their way, the days of Vegas in Belmore – and, by extension, a viable national Rugby League competition – could well be numbered.

Launched in 2004, New Matilda is one of Australia's oldest online independent publications. It's focus is on investigative journalism and analysis, with occasional smart arsery thrown in for reasons of sanity. New Matilda is owned and edited by Walkley Award and Human Rights Award winning journalist Chris Graham.