How the NRL is Affecting Telstra’s Bottom Line

The National Rugby League

Telstra’s Relationship With the National Rugby League (NRL)

Telstra Corporation Limited is Australia’s largest telecommunications company. The company offers a wide range of services, most of which include telecommunication and technological services. Currently, Telstra provides approximately 17 million Australians with retail mobile services, 4 million Australians with retail fixed voice services and 3 million Australians with retail fixed broadband services. The telco possesses an international presence spanning 20 countries.

Telstra is a naming rights sponsor and digital partner with the National Rugby League (NRL). Naming rights sponsorships are a form of agreed advertisements between a corporate organization and an event or facility. In these agreements, the corporation is able to freely advertise its brand using its name on facilities and events for a set period of time – which is why the NRL is also referred to as the NRL Telstra Premiership. Telstra’s digital rights give the network the right to offer content curated by the NRL on its digital platforms. Telstra customers can stream NRL content live, fast and even data free.

An example of the perks of naming sponsorship rights; Telstra is able to add its brand name to theNFL related logo.

The traditional NRL logo alongside the NRL Telstra Premiership Logo. Telstra is able to create this logo and add its brand name to the NRL’s due to the naming sponsorship rights they purchased from the league. Source

Telstra’s Grievances with the National Rugby League

Telstra holds that the gross misconduct displayed by a number of NRL players during the 2018 to 2019 off-season reflects poorly on the association and therefore the telco. This off-season, tagged the ‘Summer From Hell’ has been fraught with scandals, with at least one incident a week. Kicking off with pictures of Canterbury players dancing in the nude as part of their Mad Monday celebrations, the rest of the off-season left a trail of equally inappropriate incidents.

From nude parties to domestic violence and substance abuse charges, it is safe to say the telco was left unimpressed by the scandalous behaviour portrayed by its players. The last straw was the charge of aggravated sexual assault served to Jack de Belin against a 19 year-old woman — a charge to which he has pleaded not guilty.

As reported by Adam Proszenko of The Sydney Morning Herald, the telco has threatened to tear up their naming and digital rights contract with the NRL should they be unable to take a stance on the disgraceful antics of their players.

The telco’s current deal with the NRL awards them naming rights until the end of their current broadcast deal, which will conclude after the 2022 season. Aside from naming rights, the telco is a digital partner to the league, a perk of a contract deal believed to be worth around $20 million.

Has Telstra Really Been Affected by the Allegations Brought Against Players?

Telstra, by association, is deeply affected by the misconduct of these players. By being a naming-rights sponsor, it can be perceived that the network not only supports but endorses the behaviour of these players. Having a brand associated with scandal is not good for business.

On the other end of the scale, there are plenty of customers who can differentiate the sponsors from the league and the players. With most individuals being able to separate corporate support from individual conduct, Telstra does not have to worry about the negative effects of being associated with the NRL and its players.

What is Telstra’s Plan Going Forward?

It’s now a top priority for NRL CEO Todd Grenberg to address Telstra’s concerns. Broadcast and streaming revenues account for the bulk of the profits brought in by the NRL, and losing a major sponsor such as Telstra would be a massive financial hit. On the other hand, the NRL cannot afford to be seen to bow to corporate pressure in making decisions about disciplining their players.

In an affidavit sworn by Grenberg, he states ‘If the view of the sponsors is that the conduct of the player (De Belin) or allegations made against them is such that he should not be permitted to continue to participate in the NRL competition, the failure to suspend or stand down the player has potential to cause significant further damage to the reputation of the NRL competition. The decision to permit the player to continue to participate in and be associated with the NRL competition is one for which the NRL is directly responsible.’

In line with new policies enacted by the NRL, it seems Telstra’s executives have been placated. When asked if the firm still considered tearing up their contract, a spokesperson stated: “The individual cases are a matter for the courts and the policy changes announced at the beginning of the season were welcomed.” If the NRL can clean up their image and Telstra is publicly shown to be unsupportive of misconduct, it could achieve the best outcome for both parties.

Sources

 

Neil Aitken

Having worked in 3 countries for 4 telcos on both voice and data products, Neil is in a position to give you the inside track. Get beyond the marketing messages to the best plan for you.