Super League war


The Super League war was the dispute over control of the top-level professional rugby league competition in Australia and New Zealand in the mid-1990s, between the Australian Rugby League and the Australian Super League.
Super League, backed by Rupert Murdoch and News Corporation, competed with the ARL, supported by Kerry Packer and Optus Vision, in and out of court for broadcasting rights and supremacy in the sport. Super League had attracted several clubs disenchanted with the existing administration, and introduced two new clubs, as it attempted to establish itself as the dominant competition. After much legal action, when the ARL tried to block the new league, Super League ran one season parallel to the ARL's in 1997. At the conclusion of that season a peace deal was reached and the two leagues united to form the National Rugby League, which continues today.

Background

Bradley Report

Prior to News Corporation's Super League proposal, the New South Wales Rugby League and Australian Rugby League had planned to rationalise the number of Sydney teams. In July 1986 the Daily Telegraph reported:
Following the expansion of the competition throughout the 1980s and 1990s many clubs were not financially viable in the long term. The NSWRL solution was to eject them from the competition when they no longer met prescribed criteria. Although Newtown were ejected from the competition at the end of the 1983 season, attempts to remove Western Suburbs were unsuccessful after court action. Thereafter the NSWRL introduced an invitation-based system whereby it could fail to invite a club, thus excluding it. This left clubs without the security of continued participation in the premiership.
On 9 April 1992 A blueprint for the expansion of Rugby League was tabled by the Premiership Policy Committee of the NSWRL, followed in August by an Organisation Review, by Dr G. Bradley, which was distributed to the premiership clubs. The Bradley Report, as it became known, was central to the ARL replacing the NSWRL as the governing body of the premiership. The report concluded that:
Each club received a letter of invitation for the 1995 season on 2 May 1994. Included were a number of admission criteria including the ability to "attract a minimum average home attendance of 10,000 people". Balmain, Easts, Gold Coast, Illawarra, Parramatta, Penrith, Souths, St George and Wests failed this criterion for 1995. After the privately owned Brisbane Broncos transferred a 20% share of their company to Northern Rivers Ltd, the new shareholders received the following:

The Super League war

Proposals for a breakaway competition

In 1993 at an ARL general meeting, Brisbane Broncos CEO John Ribot put forward a proposal to play the Grand Final in Brisbane. In 1993 after a dispute over sponsorship, the Broncos had moved out of the 33,500 capacity Lang Park and into the 60,000 capacity ANZ Stadium. With ANZ able to hold almost 20,000 more than the league's then Grand Final venue, the Sydney Football Stadium, and with the Broncos now winning premierships, Ribot proposed not only moving the Grand Final to Brisbane in anticipation of a higher attendance not seen since the days of the Sydney Cricket Ground, and to also play the game at night to maximise television ratings and profits.
In May 1994, Ribot first discussed with some of the club's high-profile players the possibility of a hypothetical new competition with higher salaries. The structure for an alternate rugby league competition was outlined in an internal News document entitled Superleague on 12 August 1994. The objective was to form a News-owned company called Superleague Limited that would establish an elite Australasian rugby league competition with 12 privately owned teams, four of which would be owned by News. An internationally televised World Club Series would also be contested amongst clubs from Australia, New Zealand and the United Kingdom. News would receive a 15% management fee, profit sharing from the clubs it owned and other benefits. Revenue would be derived from sponsorship, free-to-air and pay television rights, gate takings and merchandising. The projected operational profit was $5 million by 1997 and $12 million by 1999.
One objective of the proposal was "to ensure that no other competition could exist in competition to Superleague". Accordingly, it was considered necessary to have at least four teams based in Sydney in order to maintain the game's largest base, and to ensure that all teams were privately owned. To ensure this outcome, the following steps were outlined:
  1. Approach four "continuing teams" to secure a 7-year commitment.
  2. Meet with representatives of the ARL in a "casual pleasant atmosphere" and offer "concessions", such as allowing the ARL to conduct Tests and to retain the profits from those matches. The ARL was also to be given a grant to promote the game.
  3. Meet at short notice with representatives of the 11 Sydney clubs and Illawarra, and offer a share in a team. Where there was more than one club in an area, each club was to be offered a percentage share.
  4. Announce that Super League was happening and to explain its structure.
  5. Deal with other clubs not included in the arrangements, such as the South Queensland Crushers.
The document noted that the co-operation of players and some clubs was essential for the new competition. It acknowledged that compensation might have to be offered to unwanted players and teams, and that it would be difficult to use current names and logos.
On 17 October, the board of the ARL resolved to hold a special board meeting to discuss several issues, including Super League and a "reduction in the number of Sydney teams". Three days later ARL Chairman Ken Arthurson warned the Brisbane Broncos that they faced expulsion over their involvement with Super League. He told the Sydney Morning Herald that "the League has the right, as you well know, to deny admission to any team in the Winfield Cup". Nonetheless, reports of a proposed breakaway competition continued, and on 6 November Arthurson rang his colleague John Quayle from England and instructed him to inform the President of each club that he wished to discuss the signing of 3 to 5 year loyalty agreements in order to continue playing in the premiership.
A meeting was held between Arthurson, Quayle, Cowley and Graham Lovett at the offices of News on 10 November. After querying the rumours of a breakaway competition, Arthurson was informed by Cowley that News would like to see a twelve team competition "with or without" the ARL, and that News was "seeking a slice of the television cake". Four days later, Arthurson had a further conversation with Cowley in which he stated that he would "never give ground on... the idea that in any game in which News Limited participates, the control of the game must rest with the ARL". Cowley replied that a proposal was being prepared for the ARL. In a meeting with each of the clubs, Arthurson reiterated that "the one thing that was not negotiable was the fact that we would never be a party to the accepted authority of the game losing control". He concluded that as "we've got all the players tied up and all the clubs tied up, it's pretty difficult to" start another competition.
News began developing the Super League proposal for presentation to the ARL and its clubs, the final draft of which was presented to News representatives on 13 December. It concluded that the economics of an Australian Super League were attractive compared to the existing competition. Three strategies where identified for its implementation:
  1. The Establishment Approach in which a proposal would be presented to the ARL, followed by negotiations "to make Superleague happen". Risks identified with this approach included being "strung along" or "outbid" by Mr Packer and the possibility that the ARL would be unable to deliver.
  2. The Early Defection Approach envisaged that exclusive and reciprocal obligations to News after a proposal had been made. Only if the ARL responded favourably to the proposal, News use the first strategy.
  3. The Rebel Approach involved News manoeuvring with stakeholders to strengthen its position, signing up key clubs on confidentiality agreements and then securing the agreement of the ARL and unsigned clubs.
The proposed structure of the competition included:
Arthurson responded to this proposal saying that it was "totally unacceptable" and reiterating that each club "had signed an agreement drafted by the League's legal advisers committing themselves to remaining with the League for the next five years and not to play with any other organisation."
On 22 December, News sent five clubs - Brisbane, Canberra, Newcastle, Cronulla-Sutherland and the Western Reds - a document entitled Super League Confidentiality Deed. The purpose of this document was obtain feedback from these clubs with the view to making small adjustments prior a full presentation to the ARL in February. Throughout January 1995, News developed a presentation for the ARL and met with officials from the Auckland, Cronulla-Sutherland, Illawarra and St George clubs. On 25 January, ACP provided News with a report entitled Superleague Options that identified the "current proposal" as "News Super League via Clubs/ARL". It proposed that Super League would fund the ARL, the clubs and Super League Europe. News was also to take a management fee and buy pay television rights for $4,000,000 per annum. News did not agree with these figures.
News presented its proposal to the ARL on 30 January. The key points were.
  1. There would be a 12 team competition that would be an integral part of an international competition, with a worldwide audience of tens or even hundreds of millions.
  2. The existing 20 team competition would continue, along with the ARL's "pivotal role" in administering the game. The ARL would run the State competition and Test matches, and be responsible for the judiciary, referees and junior development. The existing 20 clubs would be shareholders in the licensed, privately owned Super League teams, thus eliminating any breach of players' contracts. The 20-club competition would be the "breeding ground for the stars of the future".
  3. The franchises would be based in Sydney, Queensland, Newcastle, Canberra, Melbourne, Adelaide, Perth and Auckland.
  4. The current financial status of the game was a net loss. The Super League proposal would allow the clubs to benefit from News' global media network, and make it possible for $100m to be invested in rugby league.
  5. There would be a "fully representative Board of Directors", with three franchise board members and the ARL represented. The chairman of the ARL would be the chairman of Super League.
  6. Profit distribution between the ARL and News would be negotiable.
This Super League proposal was an alternative to the existing ARL plan of a 14 team competition outlined in the Bradley Report which the ARL was already in the process of implementing. However, a solid financing would be made available to the League. In terms of free-to-air television rights, Kerry Packer retained the rights to the 20 team competition and would have been eligible to bid for the FTA rights to the new 12 team Super League.
Three days later, the ARL faxed a letter to each club three delegates to a meeting on 6 February to obtain "their position in relation to the 'Super League' proposal and the League's role, if any, in that proposal" and to give the clubs "some certainty about their future". At this meeting, News presented the Super League proposal concept to the clubs' representatives, reaffirming the role of the ARL. After the News representatives had left the meeting, Arthurson confirmed that the ARL "does not want to be part of the News proposal" and sought from each club a statement of its position. The clubs that had not signed a confidentiality agreement with News expressed their commitment to the ARL, whereas the representatives of Brisbane, Canberra, Newcastle and the Western Reds indicated that they would only play in a competition owned by the ARL. All clubs were then reminded by the ARL's solicitor, Colin Love, that "you all signed an agreement to remain loyal to the League for the next five years... this agreement will withstand any legal challenge". A motion was unanimously carried that "it be recommended to the Board of Directors of the League that any clubs not signing the new Agreement by 9 am on 8 February 1995, or in the case of the Western Reds, by 9 am on Thursday 9 February 1995, be expelled from the 1995 competition." News was then informed that the clubs had unanimously rejected the Super League proposal.
On 7 February 1995, the ARL faxed a letter to each of the clubs, accompanied by a draft deed that was to be signed by 9am the following day. The letter stated that:
The coercive approach employed to signing this legal agreement was ruled in later litigation to be in breach of the Trade Practices Act.

The war planning continues

In the weeks following the 6 February meeting with the ARL, Messers Cowley, Smith and Ribot offered players and clubs huge sums to bring them across to the new competition.
At least one loyal club took the view that Super League, perhaps in an altered version, was not out of the question. In a letter dated 16 February 1995, Mr Hudson, the chairman of the board of Manly-Warringah, wrote to Mr Quayle: "there are great advantages for News Limited in getting their current proposal, or some version of it, finally accepted. Hence, we feel that the proposition is not 'dead and buried' and that attempts to de-stabilise the competition will continue. There is a vulnerability in this which News Limited have identified. Their twelve team competition has just four teams in Sydney. They can see that a Sydney club can only survive with great difficulty financially and logistically, against the competition provided by one city clubs, and now a two club city. If the situation of the eleven teams in Sydney is not addressed in some way by the League, the threat of a take-over, or such like, will continue to loom large. We suggest that a plan to address the problems of the eleven Sydney clubs vis-a-vis their colleagues in other cities and in other states is urgently needed." The letter went on to request that the question of the Sydney clubs be considered by the Premiership Policy Committee on an urgent basis.
The committee did consider the letter at its meeting of 14 March 1995. The meeting unanimously agreed that the "future structure of the Winfield Cup competition should contain fewer Sydney clubs". The committee also expressed the view that "the Board should convene as soon as possible to demonstrate leadership on the issue of fewer Sydney clubs".
The Premiership Policy Committee decided to push forward with a plan to reduce the number of Sydney teams before any player, coach or club had moved to Super League. The ARL had handed out loyalty agreements for the clubs to sign, then immediately went about a plan to get rid of clubs.
In the meantime, a meeting of the board of the ARL, held on 20 February 1995, received a report from the League's solicitor, Colin Love, that all clubs, except Brisbane and Canberra, had signed Loyalty Agreements. The board agreed to accept the amendments proposed by Canberra and to have Mr Love continue to negotiate with the Brisbane Broncos on outstanding issues. Agreement appears to have been reached shortly thereafter.
In mid-March 1995 a meeting took place between Cowley and Arthurson. The minutes of the ARL's board meeting of 24 March 1995 record Arthurson's report of that discussion. According to Arthurson's account, the discussion had been cordial. Cowley had assured him that News would still be pursuing the principle of Super League, but had given an assurance that any proposals in respect of its establishment would be made directly to the ARL and not to the clubs.
On 16 March 1995, Ken Arthurson wrote to each of the clubs, referring to the meeting with Paul Cowley. The letter included the following: "Mr Cowley has given me an assurance that, even though News Limited supports the principle of a Super League, any further approaches to clubs will be made through the Australian Rugby League. I accept that these assurances were given to me in good faith and I will keep you informed of any further developments if we are approached by News Limited in the future. That is the positive news. Unfortunately, I have also been presented with evidence that representatives from some clubs have been speaking with representatives of News Limited in relation to the participation of these clubs in a Super League, after the clubs signed the loyalty deed. It is important that all clubs realise that those clubs which have had discussions with News Limited regarding the Super League proposal after signing the loyalty deed, are likely to be in breach of their obligations in the deed. As Chairman of the Australian Rugby League, if I receive evidence of any clubs having any further discussions with News Limited or any other party in relation to their involvement in any other competition, I will consider such involvement a serious breach of the loyalty deed and I will be recommending that the ARL consider the expulsion of those clubs from the ARL competition and legal action under the deed."
On 23 March 1995, a meeting took place within News. The participants included Messrs Cowley, Smith and Ribot, together with News Ltd. owner Rupert Murdoch. Notes from the meeting stated that the first attempt to build an Australian Super League had been unsuccessful, because News had made some wrong assumptions. In particular, it had been assumed that the threat of clubs defecting to an alternative competition would pressure the ARL to accept the concept and that the ARL had the ability to grant television rights to News. News' position had been weakened because the clubs did not think that News would follow through with a rival competition outside the ARL. Moreover, Kerry Packer had dominated events, in large measure because of his threat at the meeting of 6 February 1995 to sue clubs in the event of breach. This threat had "spooked" club officials. What was needed, according to the notes, in order to set up a competition in 1997 or, perhaps, 1996, was a second, more aggressive approach. Building an Australian Super League to capture television rights would cost $60 million over four years. Super League would be owned and operated by News.
The key elements of the more aggressive approach were to:
a) Sign up all the players required for a ten team Australian competition, at approximately twice their current earnings;
b) Mount a challenge to the "Five Year Agreement" binding the clubs;
c) Credibly mount a rival Super League without the "ARL Establishment", even though the "best" outcome was for the ARL to co-operate.
Clearly enough, Murdoch approved the option of the "rebel competition".
Thereafter, detailed planning took place within the News organisation. The planning was recorded in a chart designated as the "war room" chart. The expression "war room" was apparently a reference to Mr Smith's office at News. The planning group prepared a schedule of about 200 target players, considered to be the ARL's "core playing strength". A "Presenter's Outline" was drafted, setting out, in effect, a sales pitch designed to persuade players contracted to ARL clubs to sign with Super League. Plans were formulated for approaches to be made to players and coaches in various parts of Australia and New Zealand. The plans included making travel arrangements under false names in order to preserve secrecy.

ARL response

The board of the ARL met at 12 noon on 1 April 1995 to consider the Super League situation. Three representatives of PBL and two from Optus and Optus Vision joined the meeting. Mr Powers, on behalf of PBL and Optus Vision, stated that these organisations would provide human and financial resources to assist the League in stemming defections to Super League. Mr Powers said that Channel Nine and Optus were prepared to commit $13–20 million. He also stated that the quid pro quo would include the League making some changes to accelerate the reduction of teams and the signing of player contracts with the ARL, instead of the clubs. The board resolved, that:
a) the Canterbury-Bankstown, Cronulla-Sutherland and Canberra clubs be requested to show cause why they should not be excluded from the competition;
b) a committee be established to identify and sign players to League agreements; and
c) Mr Leckie, representing PBL and Optus vision, be appointed as a director of the League.
In the course of the meeting, Peter "Bullfrog" Moore arrived. Moore was a director of the League and ARL as well as being a director and chief executive of Canterbury-Bankstown. Moore had been actively involved in supporting Super League, and in securing the signature of the Canterbury-Bankstown coach Chris Anderson to a Super League contract. Moore, a long time and personal friend of Ken Arthurson, offered his resignation from the League and ARL outside the meeting. His resignation was reluctantly accepted.
Immediately after the meeting, the League issued a press release. This stated that any players or coaches who had agreed to be associated with News would not be considered for representative selection. It also warned that the ARL would vigorously pursue through the courts any player found to have breached his obligations to the ARL. The press release indicated that the League, with the support of Channel Nine and Optus, through Optus Vision, would commit substantial resources to establishing financial incentives for players to play exclusively in the ARL competition.
On 6 April 1995, News agreed to indemnify the Canberra Raiders against any action by the ARL or the League in consequence of the club contracting with News or supporting Super League.

United Kingdom and New Zealand sign with Super League

To ensure that it could have control of representative fixtures, News signed the Rugby Football League and New Zealand Rugby League organisations up on 6 April 1995.
A further meeting of the Australian Rugby League board of the League took place on 7 April 1995. Among other things, the board discussed the actions of News in completing arrangements with the New Zealand Rugby League and the Rugby Football League. This was a matter of considerable significance to the League, since test matches between Australia, Great Britain and New Zealand had been conducted through the New Zealand and British Leagues.

ARL lifeline conditional

A document dated 11 April 1995 summarised "deal terms" between the League and ARL and Channel Nine/Optus Vision. This provided for Channel Nine/Optus Vision to fund player contract commitments up to $40 million. The League and ARL were not to change the competition, format and frequency of the competition in a materially adverse way without the consent of Channel Nine/Optus Vision. The rights period under existing television agreements were to be extended for a further five years, with Channel Nine/Optus Vision to have a first and last right of refusal. Channel Nine/Optus Vision's funding commitment was non-recoupable, except as follows:
a) If the League and ARL agreed, it could be recouped over time out of fees received for television rights;
b) It could be recouped out of monies received by the League and ARL for assignment of player contracts;
c) The commitment could be used as a set-off against the cost of exercising the right of refusal for renewal of the television rights agreement.

The war at its peak

During April, News made a concerted effort to sign up target clubs. By this stage, some had lost key personnel to Super League. Club representatives were told that if they did not join Super League, they would face rival clubs established in their area. Advertisements appeared in the media, giving publicity to the fact that prominent players had signed with Super League. News also placed advertisements advising players who had signed with the ARL that their contracts might be set aside because News had signed the English and New Zealand Rugby Leagues. Frequent meetings took place between News representatives and "rebel" clubs to obtain their support in implementing the proposed arrangements. In particular, meetings took place between News representatives and those clubs on 13 and 18 April 1995.
7 clubs signed to Super League on 20 April, the Auckland Warriors, Brisbane Broncos, Canberra Raiders, Canterbury Bulldogs, Cronulla Sharks, North Queensland Cowboys and Western Reds. Penrith signed on 3 May.
The deeds were expressed to be operative for periods of between three years and nine years. Subsequently, on 4 May 1995, Penrith entered into a deed in similar terms, although the indemnity was wider, extending to liability under any joint venture arrangement. On 12 May 1995, the existence of the deeds to which the eight clubs were parties was publicly announced.
A new competition, to be called Star League, was announced on 1 April 1995 comprising these teams and Adelaide Aces and Newcastle based Hunter Mariners. In retaliation, the ARL did not select players signed to Super League clubs for representative fixtures in the 1995 season, including State of Origin and the World Cup.

The players

A total of 307 players and 10 coaches entered into Super League contracts. Of those, three players subsequently had their contract cancelled by agreement and four players had their contracts cancelled following proceedings in the New South Wales Industrial Commission. Consequently, at the date of the hearing of the appeal, 300 players were parties to the current Super League contracts. None of these had proceedings on foot seeking cancellation of the contracts. The public were told that 42 of the 300 contracted players had signed on or prior to 2 April 1995.
Counsel representing the intervening coaches and players prepared a schedule listing the 300 players. The schedule specified, in each case, whether the player was party to an ARL club contract and, if so, the year in which the contract expired. A summary of the contractual status of the 300 players is as follows:
Players who never had ARL club contracts - 28
Players who had ARL club contracts expiring in 1995 or earlier - 109
Players who had ARL contracts expiring in 1996 or later - 163
Of those in the third category, 30 had contracts expiring in 1997 and only 7 had contracts expiring later than 1997.

Rugby league in court

On 3 February 1995, Brisbane Broncos started Federal Court action against the NSWRL over salary cap rules. On 30 March 1995, News commenced legal action against the ARL, NSWRL and six clubs, alleging breaches of the Trade Practices Act.
On 25 September 1995, the ARL commenced legal action in the Federal Court of Australia to stop the new competition beginning in 1996. Justice James Burchett handed down his findings on 23 February 1996. He found that the ARL owned rights to all club colours, logos, names and jerseys. Justice Burchett also said that News Corp had acted with "dishonesty" and "duplicity".
Formal orders were given in the Federal Court on 11 March 1996 to prevent any alternative rugby league football competition being held until 2000. The scope of these orders was reduced on appeal to the Full Court on 13 March 1996, but still precluded the start of the Super League competition. Rupert Murdoch described the court decision as "1-nil at half-time".
All Super League teams forfeited the first round of the ARL competition, except for Auckland Warriors, who claimed two uncontested premiership points from their unplayed match against Brisbane Broncos. Most Super League players played in the ARL season of 1996, with the notable exception of St George's Gorden Tallis who sat the season out, and did not play again until he joined Brisbane Broncos in 1997.
British Rugby League boss Maurice Lindsay announced on 20 March 1996 that a new competition named Global League would be created, using the same players as the now-banned News competition, and featuring clubs such as Cronulla Dolphins, Canberra Vikings and Penrith Cats.
On 4 October 1996, Federal Court Justices John Lockhart, Ronald Sackville and John Van Doussa set aside all of Justice Burchett's previous orders, clearing the way for the Super League Telstra Cup to commence in 1997. ARL Chairman Ken Arthurson wrote, "I was furious, hurt, bewildered... I felt as if had been run over by the Southern Aurora." Lindsay, who led the British game into Super League was ecstatic at the victory, comparing it to "winning a cup final".
The ARL appealed but their case was dismissed on 15 November 1996 in, according to Arthurson, "less time than it took to play a half of football." Following the court decision, Kerry Packer met with Rupert Murdoch to resolve their differences over rugby league, and on 17 January 1997, Packer's Nine Network announced that it had secured free-to-air broadcast rights for Super League. On 22 January 1997, Ken Arthurson announced his resignation from the ARL.

Aftermath

Creation of the National Rugby League

With twenty-two teams playing in two competitions in 1997, crowd attendances and corporate sponsorships were spread very thinly, and many teams found themselves in financial difficulty. On 23 September 1997, the ARL announced that it was forming a new company to control the competition in 1998 and invited Super League clubs to participate. On 7 October, Rupert Murdoch announced that he was confident that there would be a single competition in 1998, and on 19 December 1997, representatives of clubs affiliated with the Australian Rugby League gathered at the Sydney Football Stadium to decide whether to accept News Limited's offer of a settlement - eventually voting in favour by 36 votes to 4. As a result, in the following months the National Rugby League, jointly owned by the ARL and News Limited was formed. The conditions of this merger controversially included an agreement to reduce the number of teams competing in the NRL to 14 by the year 2000.

Broadcasting rights

In 1998, Packer's Nine Network secured the free-to-air broadcasting rights for the NRL until 2007 for $13,000,000 a year. In 2001, C7 Sport unsuccessfully attempted to buy the pay television NRL rights until 2006 for $72,000,000 per annum. After Nine resigned these rights, and acquired the AFL broadcast rights, C7 was shut down in March 2002, leaving Fox Sports as the dominant Australian pay television sports network. As a result of the failure of C7, its owners commenced legal proceedings against parties, including Fox Sports, Foxtel and the NRL Partnership, for damages of $1 billion. In 2008 the case was dismissed.
The free to air rights were renewed in 2005 until 2012 for an amount of $40,000,000 a year.
Foxtel was originally half-owned by News Corporation and half-owned by Telstra. On 30 October 1998, PBL purchased a quarter share in Foxtel from News Corporation for $160,000,000.

Costs

Due to legal costs, the Australian Rugby League posted a $9,500,000 loss in 1996. News Limited has claimed that the entire Super League exercise cost them $100,000,000, however, an article in the Australian Financial Review on 5 August 2005 has put the cost at as high as $560,000,000.

Background