League: Warriors' finances sound

Although the Warriors stand to record a loss of about $500,000 this year, they still regard themselves as the wealthiest rugby league club in the world.

This is not such an outlandish claim considering the club is financed by two men, Eric Watson and Mark Hotchin, whose personal wealth exceeds $400 million each.

It's also one of the main reasons why the Warriors are considered, despite reports to the contrary, one of the most financially stable of all NRL clubs.

NRL chief executive David Gallop confirmed this view when he said this week: "The Warriors are a well-managed club and have the lowest cost base of any club in the NRL.

"Without a leagues club they've presented a good business model for the game. Their current position is typical of the cycle a club goes through after a drop in on-field success. After some disappointment in 2004, they are in a rebuilding phase in 2005 and have been managing costs appropriately.

"It doesn't change our view on the club in any way."

Despite the pot of potential funds available, the club has attempted to set itself up as a sustainable enterprise that exists without dipping into the resources of its financiers.

The Warriors have been generally successful in meeting this goal and have reported small profits or broken even since Cullen Sports took over in 2001 - the year after the club lost $2.58m forcing them into bankruptcy - apart from last year when they had to pay out coach Daniel Anderson $500,000 on his contract after he was sacked.

The same can't be said, however, for the majority of their NRL counterparts, who are effectively propped up by revenue from leagues clubs which run gaming machines.

The Bulldogs, Eels, Roosters and Panthers are supported by extremely wealthy leagues clubs, with the Bulldogs' and Panthers' operations believed to earn more than $50 million a year from poker machines.

A large proportion of this goes to community projects but, suffice to say, when the clubs need money, they just dip into the well.

The well has proved generous and recent figures show that New South Wales clubs operate on average at a $2.5m loss, which translates to an overall loss of $25m a year.

Fortunately the product is extremely popular, otherwise the competition might have been wound up years ago.

A handful of other clubs are funded by News Ltd, which played a major hand in establishing the Super League in 1997, with the Storm and Cowboys 100 per cent owned by the media giant.

They also hold 75 per cent of the Broncos, who are one of the most consistent performers on and off the field and known as the only NRL club to post profits.

While the Cowboys are seen as good performers who are generally self-sustainable, much like the Warriors, the same can't be said about the remaining club in News Ltd's stable - the Storm.

The Melbourne side haemorrhages as much as $6m annually but News Ltd feels some degree of loyalty to them considering they were a compromise club resulting from the Super League war of the late 1990s.

As the only NSW club not to be financed by a leagues club, the Knights are the most vulnerable in the NRL.

Their ability to remain afloat was in no small part due to the fact they picked up NRL titles in 1997 and 2001 but a dip in their on-field performances has increased the pressure on them financially and they started the 2005 season with a reported $1.5m deficit.

Earlier this year, the Knights approached the Warriors to talk to them about their financial blueprint and there were even suggestions Eric Watson might add the struggling club to his portfolio.

A potential olive branch to struggling clubs is the likely increase in the money each receives from the television contract.

At present, this sits at $2.5m and it will rise to $3m in 2007 but there is talk this could jump to $4m in 2008, which will improve the solvency of NRL clubs.

Gallop is keen for the TV-deal grants to match the salary cap, which is presently $3.3m, which will also ease some pressure on clubs.

The Warriors' shortfall of about $500,000 this year is largely down to small crowds.

They average about 11,500 - only the Rabbitohs and Storm attract smaller attendances - when they had budgeted on crowds closer to 13,500.

"When people suggest that the Warriors are in financial trouble it borders on the preposterous," Warriors chief executive Mick Watson said in frustration.

"People think that we're about to close the doors but we are actually the wealthiest rugby league club in the world."

- HERALD ON SUNDAY