Australian Rugby Critical Analysis - Case Study Example

Running Header: Critical Analysis and Management Plan Student’s Name Lecturer’s Name Course Title Date Introduction Australian Rugby Background Information Rugby Union was initially started in Australia with the establishment of the initial clubs, with Sydney University Club being the oldest. This club was established in 1864. The game was extensively embraced such that, by 1874 there were adequate clubs to establish a Sydney Metropolitan competition. Southern Rugby Union was also formed in that year. In 1892 the Queensland Northern Rugby Union which was created in 1883 and the New South Wales Southern Rugby Union changed their names to Queensland and New South Wales respectively. As the senior union, New South Wales was in charge of managing all outgoing and incoming tours, and for Australia representation on the global rugby board until 1947. In 1947, there was an agreement among different State Unions that the Australian Rugby Union future would be served better by development of a single administrative body (Rugby Football History, n.d., p.1). Extra motivation arose in 1948 when Australia was invited by the global board to specifically take a position on the Board. In 1949, the country held the Australian Rugby Football Union inaugural meeting, with 11 representatives from Victoria, New South Wales, Tasmania, Queensland, Western Australia, and Southern Australia. The New South Wales president of Rugby Union took the role of guiding in the Australian Rugby Football Union formation and management of activity via his chairman role (Nma.gov.au, n.d., p.1). Australian Rugby however experienced great crash of its fortunes in early 1970s, after which an intensive survey was conducted on its future, present, and past, yielding to a re-appraisal of Rugby World Cup coaching techniques and administration reconstruction. In 1985, there was incorporation of the Australian Rugby Football union into a company and later on in 1997; the company simplified its name to the Australian Rugby Union Ltd (CCN, 2008, p.1). Australian Rugby Union is a World Rugby member and is made up of eight member unions who stand for each states and territories. The union manages wallabies which is the Australian national rugby union team. The union operations and performance are currently guided by the organization constitution that was adopted in 2012. Based on the constitution, the union contains a national governing body that is responsible of management and coordination of all union’s activities in the entire country. The body’s roles include organizing, promoting, and fostering rugby games in Australia at all levels. It is involved in driving integrity, strategy, governance, policy, managing all national programs, competitions, and teams, as well as representing interests of Australians on international bodies. It also interacts with the international bodies for Australian rugby benefits. The union also has super rugby clubs whose role is to manage high performance teams that participate in different rugby competitions. Other parts of the organization include national rugby championship club, which is responsible for managing teams to take part in local rugby completion, schools and local clubs for recruiting and training new players for future absorption in senior clubs, and member union affiliates or national governing body affiliates, which is responsible for conducting responsibilities and roles of member unions or governing body in each region. Thus, the Australian Rugby Union can be said to be comprised of a complex organization management matrix (Nhru.com.au, 2015). Australian Rugby Union Financial Management and Financial Crisis The Australian Rugby Union is a limited company containing eight member unions. Each member of the union has its own management which is responsible of all its internal activities. The Union members are highly managed based on their locally organized operations. Thus, the members’ internal management focuses on generating enough finances to maintain their players or clubs based on their local plans. Members receive grants directly from the state government based on their performance and scheduled activities. They also try to employ other measures to generate enough income to cater for their expenses which include players, coaches and managers payment, funding their internal activities, and also funding their training and talent nurturing centers among other activities. The members therefore develop their independent financial statements that demonstrate their income inflow and outflow and indicate the financial position of the individual member (Reds Rugby, 1999, p.51). The ARU on the other hand is responsible of all national and international rugby activities in the country. It generates its income from selling tickets for participation during these activities and also from other money generating investment made by the company for instance grants from the national government, and sponsorship. It is also responsible of maintaining its members financially, and thus, it normally allocates a considerable amount of its earnings to its members based on their contribution in the generation of the total company’s income or individual member’s needs, particularly billing out a member that is not able to handle its debts or expenses. ARU therefore plays a major role in determining the success of all its members’ operations (Australian Rugby, 2012, p.1). The success of any sports organization is highly determined by its ability to generate enough finances to cater for its operations, and also its ability to manage the earned finances to ensure a high level of efficiency. The organization inability to generate enough or to effectively manage the generated cash results into financial crisis. ARU has been facing financial crisis that have highly impacted its general activities for a number of years now. The organization’s financial crisis began in 2011 after the World Cup scheduling in New Zealand interfered with the organization’s schedule. The organization normally generates its income through inbound tours where a number of test matches are done. These test matches attract a number of audiences and sponsors who eventually give a considerable amount of earnings to the organization through ticket selling and endorsement. In 2011, the organization failed to host Northern Hemisphere inbound tour in June, and instead took part in a shortened Tri Nations Championship. This resulted to reduction of test matches by for matches, an aspect that resulted to reduction in the 2011 anticipated revenue by $16 million. The organization recorded deficit of $7.5 million in 2011, after the payment of affiliate unions and members. This incident acted as the beginning of financial crisis in the organization (Rugby.com.au, 2012, p. 1). In 2012, the organization tried to recover from the financial deficit created in 2011. Although its determination through effecting financial management techniques paid off a little, the organization was not completely able to cover the deficit. In 2012, the organization recorded an operating deficit of about $3.7 million. This was despite of an increase in its revenue from what was recorded in 2011 by $3.3 million (annual report, 2012, p. 90). In 2013, the organization managed to generate a high income of about $100 million following successful Lion tours. Despite the wallabies defeat at the end of the tours, the tours managed to generate a considerable high income to the organization. Nevertheless, the organization received turnover was only $10 million, which clearly indicates that the organization could have been in a bad financial situation without Lions tours (Teclab, 2014a). The organization demonstrated a poor performance of all its five franchises employed to generate extra income to the union. Only the Queensland Reds franchise generated profit for the organization, out of the five franchises. Despite this, some of the organization’s members have been experiencing financial and performance problems, with Western Force losing Emirates; their chief sponsor, an aspect that resulted to a deficit of about $1 million in their budget, and Melbourne Rebels retaining their struggling state since its formation in 2010 and even after being financially boosted by the ARU (Teclab, 2014b, p.1). In addition, Waratahs was recording poor attendance, which impacted its finances and in 2013, it also experienced loss of its main sponsor; HSBC. This increased its financial problems by 50 percent. Force has also been poorly performing, making Brumbies and Reds as the only teams that attract more audience and maintain their sponsorship (Caleb, 2014, p.1). Although the organization demonstrated a new hope in its financial status in 2013, the situation did not last long. The ARU announced a loss of $6.3 in 2014 and that of $9.8 in 2015 (Abc.net.au, 2014, p.1). The 2015 loss was attributed to interruption of the organization’s annual inbound test due to the world cup. Out of the normal organized six tests, the organization only managed to conduct two tests, an aspect that impacted its overall revenue. The 2014 and 2015 financial deficit can also be attributed to the above mentioned factors among others, where Melbourne Rebels financial assistance is cited as the main cause of the current financial burden in the organization (ESPN, 2016, p.1). Another major contributor of the current financial position of the ARU is high salaries paid to its players. The organization have been experiencing poor performance from different members, an aspect that has played a great role losing high audience that it has always maintained in the past. However, despite of poor performance, the organization was still paying its players with the same superstar rates. This added to the organization expenses with the current struggling situation. Rugby is also experiencing fierce competition from other games in the country that include cricket, and football which are drawing more and more viewers and audience, generating more ticket income, an aspect that have made sponsors to prefer such games over ARU sponsorship (Caleb, 2014, p.1). The above analysis clearly illustrates that ARU has been performing poorly financially and its situation is still pathetic. This is based on the fact that there have not been any improvements in most of the aspects that have been propagating the organization’s current financial condition (Stensholt, 2014, p.1). Crisis Communication The financial crisis identified in the ARU has widely been reported in various sports media news situated in the Australia and at international level. This is one major form of communication used to broadcast the message to most of the organization’s stakeholders, particularly the public and sponsors. Different news centers have taken the initiative of posting news related to the ARU financial condition in their sites. This includes a brief analysis of the situation in some cases and what should be anticipated. A number of sports news sites have made a step further by trying to keep a constant trend of what has been happening since the organization recorded the initial deficit in 2011, and forecasting what may happen in the future, based on various factors. This has highly provided an extensive insight to most sponsors, making some to consider quitting. Nevertheless, the media has also tried to harness the situation and to eliminate biasness that could have been initiated by reporting negatives only. This has been done by updating the public on measures that are being employed, or that are in process, to manage the situation (Masters, 2015). Besides normal reporting, the media has also taken an initiative of interviewing various members of ARU management in different occasions. These interviews can be taken as official statements from the URA management to the stakeholders. The interviews shed light on what is causing some of the losses that organization is experiencing, what the organization is doing about the situation, the main challenges that the organization is experiencing while trying to handle the situation and the organization future anticipation based on the success and failure of the employed measures. The interviews provide a more satisfying and reliable information regarding the situation, other than simple reporting by the media, which can be bias or exaggerated in one way or another (Gravel, 2016, p.1). Another technique that the organization has employed to communicate crisis to its stakeholders is by online provision of its financial statements for free. The organization has been uploading all its annual reports from 2003 to 2015. These reports are very comprehensive, providing the most important details about the organization’s financial position. They are clearly document and thus, anyone who understands financial statements can easily deduce the situation out of the provided data. Nevertheless, the reports do not give further analysis of the situation or provide detailed information regarding the cause of the situation. This can only work as a reference to confirm what the media is reporting (Annual Report, 2013). Impact of Crisis to the Organization The ARU financial crises have highly impacted the general operation of the organization in the country. One of the main impacts of the current situation is degradation in the performance of most of the organization’s teams. Team performance have highly been impacted by the current situation where by three out of the fives team are demonstrating poor performance in the field and financially. This could be attributed to reduction in the level of training comfort that the players were used to. The organization has employed various techniques to cut cost. These measures could in one way or another influenced the quality of training and management offered in different teams or members clubs, consequently, reducing the team performance. Financial crisis in the organization has also resulted to the reduction of the players’ salaries. The organization considered reduction of the salaries at certain percentage will reduce on its expenses and increase the organization ability to handle other organization needs (Pandaram, 2013, p.1). This could have resulted to reduction in the players’ motivation and hence their enthusiasm. Thus, the financial crisis issues can be said to have indirectly resulted to another poor team performance. The situation also creates uncertainty to the organization players. The organization’s inability to handle most of its major activities due to the current situation, and extended clubs or teams’ financial struggle, make it hard for the players to project on their future in the organization. The recent reduction of their payments demonstrates a great threat to what may happen in the future. This may kill their moral or push them into establishing something else to do in case things go out of hand. This will result to divide of attention, energy and dedication, an aspect that may contribute to aggravated situation of poor performance. The team members may also consider leaving the organization to international clubs that give more competitive salaries, for instance japan or France, particularly if the player is more of mercenary minded (Smith, 2016). The current situation has also affected the organization sponsors. The poor performance has contributed by the organization financial crisis have resulted to poor audience to the ARU games involving the poorly performing teams. This has resulted to lack of trust and reliance on the team by most of their main sponsors. Sponsors focus on using the team to advertise their products, to a wide range of people. In addition, they depend on the team popularity to influence the team loyal fans to purchase their products. When the team is unable to influence its fans, it loses its ability to influence others, and thus, their endorsement does not create any difference to the company or it creates a negative effect. As a result, the sponsors consider withdrawing, to support a team that would make a difference in their marketing main stream. Thus, the financial crisis can be said to attract more and more crisis to the organization, particularly to its teams (O’Brien, 2015, p.1). The current financial situation has also created a major strain in the organization management role. Instead of focusing more on improvement of the organization general performance to acquire a higher competitive advantage compared to other sports, the current situation is draining the management in establishing a reliable and lasting solution to financial issues. Managers are getting more pressure from withdrawn sponsorship and poor audience response among other aspects that are directly connected with enhancement of the organization’s financial performance. This means, there is little attention given on the current poor teams performance or strategies needed to deal with poor teams performance. Thus, the organization management may never be able to simultaneously handle all the problems the organization and its members are experiencing. The situation is also destroying the reputation of the ARU officials in the position today. Financial crisis are in most cases perceived to be initiated by poor management. In this case, the current officials in the organization may never get a chance to change their career or advance, since they will be feared to cause a similar situation in any other organization they maybe employ in the future (Rugby.com.au, 2016, p.1). The current situation is also affecting the organization such that it is hard for the organization to grow and expand as it could have been anticipated years ago (Binner, 2014, p.1). The financial crisis limits the amount of money that can be invested on new facilities, high skilled trainers, exposure of new team members, managers training, new academies operation, sponsoring the talent young, but poor individuals, and players’ motivation among others. Nevertheless, this has been made impossible by the current financial situation in the organization. The organization is hardly able to manage the three teams that have been recording poor performance since it does not have enough finances to invest on their improvement. Thus, the organization’s development is highly impacted. Evaluating Employed Crisis Management Strategies and their Success The organization has tried to employ various strategies to handle the current situation and to put it under control. One strategy that the organization has employed to manage this is cost cutting. The organization has considered reducing the players’ payment from $13000 per test match to $10000 per test match. This will cut on the organization spending per person by $3000. Another strategy that the organization has also introduced $200 grassroots club teams props to be able to disentangle itself from the swamp, in order to owe the upper hand in the game. Although the organization has been using its resources to fund any strategy that encourages the growth of new talents, it is not able to do so at this time and thus, each club must find ways to survive (Smith, 2016). The organization has also tried to use its limited resources to bill out teams that are in extreme financial conditions. The organization as well as the Australian government is trying to support Melbourne sporting market with intention of reviving the franchise. The organization in 2015 used a total of $6 million to support the club and around $3.6million in 2014. The organization is also reported to be considering taking offer Western Force as a way of resolving its financial problems. The organization hopes to employ this strategy to ensure that the organization will manage to overcome the current situation and set the club back on its feet (Stuff.co.nz, 2016). The organization has also considered identifying new sponsorship that will aid in extensive marketing of the organization’s teams competition. The organization has signed free TV airing for a period of years. This will cut on the organization expenses and attract more revenue through advertisement (Stensholt, 2015). The organization is also fighting for more broadcasting rights to get more airtime on different stations. This is anticipated to increase the organization ability to attract more audience and hence making more money from adverts and tickets selling. It has also tried to employ new communication and ticket selling techniques with intention of accessing more audience. There is currently an established online system that will allow the organization’s fans to purchase the ticket through the organization’s website. This is anticipated to increase the number of sales and to attract more audience even at the international level (Brumbies.com.au, 2015, p.1). Effectiveness of the Applied Measures Although the organization is employing various measures to save the situation, their efficiency is yet to be known. Most of the involved individuals have raised questions on various strategies employed. For instance, the introduction of bills to be paid by new glass root clubs has raised question on who is supposed to support the other. Most grassroots clubs feel that they should be provided more resources by the organization to nurture talents without discriminating the poor. The request for payment is interpreted as a way of destroying the growth in the grassroots clubs. Moreover, the amount charged may never manage to bill out the organization from its current situation (Craddock, 2014, p.1). Billing out of the organization teams may also be in vain, if more measures are not employed to better the performance of these teams. Moreover, supporting these teams seems to burden the organization more than saving it from its current situation. Melbourne has been billed out twice and each time more money is used (Payten & Pandaram, 2016, p.1). However, the team has not shown any major improvement and thus, it is not anticipated to generate anything extra to the organization any time soon. The Western Force situation is worsening such that it has to be taken away from its current management. Thus, this strategy may not help in saving the company’s financial situation, but it will make it stand as a whole when the situation is rectified (Masteralexis et al., 2011, p.117). Reduction of players’ salary is a bad idea to the organization. Although it results to a measurable quantity of savings, this move kills the players’ morale and desire to support the management in this fight, by working harder. This could have eliminated the current situation experienced in Melbourne and Western Force. The selfish move of reducing players resulted to selfish move of creating a situation where the organization teams’ members fail to employ any effort to make their clubs generate enough to support themselves, especially during the current hard financial time (Cully, 2016, p.1). Identification of new sponsors for free airing of the organization teams’ competition is a great move that can easily revive the organization performance. However, it should be coupled with strong team that will demonstrate great level of skills and power, to recapture its high audience. Other measures such as selling their tickets online may also increase the level of ticket sales and hence, increasing the revenue. The two measures may change the situation in case they will be applied as required (Ferkins & Shilbury, 2010, p.238). Possible Improvement The organization has been making profit until in 2011 when the inbound tours were reduced. Moreover, the organization was able to generate very high revenue in 2013 inbound tour. This simply means that inbound tours play a major role in determining the organization revenue. In this regard, the organization should focus on developing strong teams that will make Australians proud during these tours. Winning teams with strong game will highly attract audience, not just in Australia, but also in all other involved countries (Arbib, 2012, p.1). Development of strong team will help in regaining the sponsors trust, and also in attracting new sponsors. It will also give the organization a chance to have more TV airtime and eventually regain its old glory. To manage this, employees’ salary should remain intact and other motivation skills and strategies should be employed to make them more determined and focused in winning. Thus, more should be invested in couching and training to make a strong team (Beech & Chadwick, 2004, p.132). Recommendation The success of any sport organization is highly determined by how well it is managed. Management in this case involves both financial control and team development. Team development involves nurturing of skills to create a strong and winning team. This assists in capturing more audience and sponsors, and eventually generating more income to the organization. In this regard, a sport organization experiencing financial crisis should highly focus on restoring its lost glory to make audience, sponsors, and grantors believe in them again. This can only be done by working on team performance which acts as one way of marketing the sport. Selection of talented and highly skilled players, and ensuring that players demonstrate their prowess in any game they paly would do better in reviving the organization financial condition, than employing other strategies that weakens the teams. Conclusion ARU has been experiencing financial crisis since 2011, and up to now, the organization has not managed to employ effective measures to handle the situation. Based on the analysis, ARU situation was caused by interference of its operational schedule, a situation that is repeated every time there is a world cup competition. The organization teams’ performance is deteriorating year after year, an aspect that makes them lose their main sponsors. Although the organization has managed to employ various measures to curb the situation, they have not yet managed to harness the situation. The employed measures are not highly effective in handling the situation. In this regard, the organization is recommended to consider rebuilding the team skills and playing power to create a high competition for their opponent. This is anticipated to ignite the initial attention the organization received from its audience and sponsor. 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