Rugby: Super franchise for Kings could cut Sanzar payday

Sanzar's likely 15 per cent windfall in broadcast fees could be significantly reduced if South Africa is awarded a sixth franchise.

The Herald on Sunday understands that, in early negotiations with News Corporation, the media giant has put forward an improved ballpark figure to buy the five-year broadcast rights for Super 15 and Tri Nations from 2011.

Sources say the increase is somewhere between 15 per cent to 20 per cent on the existing deal but final details are still being hammered out.

Direct comparisons between the new offer and the existing offer - US$323 million ($426 million) for five years - are hard to make, due to key differences in the structure this time as the South Africans have sold the Currie Cup rights separately.

Those involved are working on the percentage increase rather than the absolute figure but that could be revised down if the Southern Kings are awarded the 15th franchise.

News is believed to have intimated that there will be one offer based on the Victorian bid winning the licence and a lower figure should the rights be awarded to the Port Elizabeth-based Kings. The difference is believed to be significant.

The commercial ramifications will be considered by the team brought in to arbitrate after South African and Australian executives were unable to reach an agreement on which bid to endorse.

A stalemate was reached on Thursday when South Africa said their preference was for the Kings and Australia pushed for Melbourne. Sanzar rules require a unanimous agreement.

New Zealand executives are believed to favour the Melbourne bid but have stayed on the sidelines believing it is up to the two competing nations to reach agreement.

The stalemate has frustrated New Zealand officials who argued weeks ago that such a situation was inevitable.

"We are not surprised at the situation," said NZRU chief executive Steve Tew. "We suggested that a decision was reached on a majority rather than unanimous basis. But our two partners said they were confident they would reach an agreement."

The Australian bid comes with a higher broadcast value as it fits the high-value criteria of creating more local derbies.

The new format will be split into three conferences with the new team to be attached to the Australian division.

Melbourne makes logistical sense as well as opening the prospect of rivalries brewing between Victoria and New South Wales, Queensland, ACT and Western Australia.

If the Southern Kings come into the conference, they will add an enormous travel burden not only to the Australian conference but also New Zealand teams will have to play more games in the Republic too.

News believes that the introduction of the Kings will not engage fans in the same way as the Melbourne side.

One theory floated is that the South African Government will plug any funding gap - that is they will contribute the difference between what News would have paid had Melbourne got the franchise.

It has also been touted that the Southern Kings could still enter the Super 15 in 2011 even if Melbourne is handed a franchise.

Their entry would be at the expense of one of the existing South African teams - with the Lions and Cheetahs the most vulnerable.