League: When your kitbag is full of troubles

The Manly Sea Eagles' financial backing is mired in a spat between wealthy board members. Photo / Getty Images

The eight Sydney league clubs will come under more pressure than ever to merge or move this season as the financial crisis bites into their sponsorship, while income from the licensed clubs and their pokie machines continues to fall.

The likelihood is that some may privatise, as the Warriors, Broncos and Cowboys already have.

Over recent seasons those clubs have performed with some consistency and either made a profit or gone close to it.

The rest have not.

The Storm depends on a huge grant from owners News Ltd to stay afloat in Aussie Rules-mad Melbourne. The Sydney clubs and especially the Panthers and Parramatta, Souths, the Dragons and Bulldogs rely heavily on grants of around A$4 million ($5 million) annually from their associated Leagues Clubs.

Souths, the Titans and Manly enjoy the backing of wealthy board members who have their hands in their pockets. Newcastle has a groups of influential and well-heeled businessmen backers.

The Sharks and Panthers, which established in what were once extreme outer suburbs, are wealthy in terms of land bank but have no money for development - and you can only sell your assets once.

The poker machine tax introduced by the New South Wales government in 2007 is starting to tell on club grants, a cumulative effect after anti-smoking legislation and drink-driving enforcement had already cut the numbers spending at league clubs.

A survey of 34 New South Wales clubs, including seven NRL clubs, found that 70 per cent made a profit in 2004 but fewer than 50 per cent expected to do so in 2010. The combined revenue from those clubs fell A$56 million over the last four years.

The Eels paid A$6 million more in pokie tax in 2008 than they did in 2004. The club has made numerous staff redundant after an A$8 million loss for the year by the football club while the leagues club grant fell by A$1 million.

Boss Denis Fitzgerald has flagged the idea of privatising the Eels and the Sharks and Manly are also considering that change.

The Sea Eagles are at a ground that's falling down and in need of multimillion-dollar development. Their support on the Northern Beaches is fickle despite the Grand Finals of the past two seasons.

The wealthy board members Max Delmege and Scott Penn are at loggerheads, not least because Delmege has poured in A$15 million over five years only for the club to swing away from renewing the jersey naming rights sponsorship for his real estate company.

There remains pressure to shift a side to the Central Coast, with multimillionaire league supporter John Singleton owning the rights to games at the Bluetongue Stadium in Gosford where many teams have taken their "home" games in order to attract a bigger crowd than they get at, say, the Olympic Stadium in Homebush.

Crowd numbers and merchandising are the strength of the Broncos - they average more than 30,000 at home games and more than 15,000 is break-even at all clubs so their end-of-year balance sheet shows a return of around A$15 million more than the Sydney sides, which frequently tend to attract fewer than 10,000.

The NRL itself is in a healthy position for the immediate future, with major sponsors Harvey Norman, Victoria Bitter, Toyota and Bundaberg Rum all signed through to the end of the 2012 season.

A television rights deal worth A$80 million is in place with News Ltd. The NRL grants to clubs which total more than A$4 million to each of the 16 franchises are safe.

But with the Bulldogs running out without a jersey sponsor for 2009 and several other clubs reporting trouble in securing the money promised by sponsors as company accountants wade through the credit crunch, the league's bosses will be worried.

NRL chief executive David Gallop has already prepared the groundwork for helping ailing clubs and signalled that grants for the 2010 or 2011 year can be moved ahead if necessary to pull those in danger of folding out of the mire. But this is not a situation that can continue long term.