SYDNEY (Reuters) - Dumping the Western Force from Super Rugby enabled Rugby Australia (RA) to post a surplus of A$5.2 million (£2.8 million) in 2018, but it could have long-term benefits, the governing body said on Monday.
RA chose to cut the Perth-based side ahead of the 2018 season following an agreement with the competition's governing body SANZAAR to reduce the number of teams as it faced a backlash from fans and broadcasters after an ill-fated decision to expand to 18 teams in 2016.
The cut saved RA about A$6.48m last year, having spent almost A$12.17m across five Super Rugby sides in 2017. In total the organisation was able to make almost A$15m in cost savings.
"One of the reasons why we went back to four (Super Rugby teams) was to improve the financial health of the organisation," RA chairman Cameron Clyne told reporters after the annual general meeting in Sydney.
"But we also needed to make the (Super Rugby) teams more competitive and in 2018 and 2019 the teams have been, so you are starting to see uplifts in broadcast (numbers) and if that continues then you see better revenue flows."
One of the major concerns facing SANZAAR was the number of uncompetitive matches that had developed in Super Rugby, which adversely affected television viewing numbers and fan engagement, he added.
Australia's playing stocks were also spread too thin across five teams, often relying on journeyman players from South Africa and New Zealand to fill out their squads.
Their sides also endured a 40-match losing streak, which lasted longer than two years, to teams from their trans-Tasman neighbours, before it was broken last May.
"We are now beating New Zealand teams in 2018 and 2019," Clyne said. "So that is a sign the teams are playing better and more attractive football."
Despite 2018 being one of their "better financial years" Clyne said lost revenue due to the Rugby World Cup in Japan later this year would see it operate at a loss in 2019.
RA expects it will face reduced domestic broadcast and matchday revenue of almost A$33 million because of the tournament, although World Rugby will offset some of those losses with a grant of A$19.4 million.
"We always make a loss in World Cup years because we play less test matches. There are only three test matches in Australia," he said.
"(But) there is no question that a World Cup year, particularly if your team does well, allows you to leverage off that.
"Hopefully we can come back with the Cup and then build off that in 2020."
(Reporting by Greg Stutchbury in Wellington; Editing by Amlan Chakraborty)