Little bored this bye week?

alex

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I've just written a report on the Wests Tigers for a uni assignment :smiley:

I'm studying commerce at Sydney Uni and one of the subjects I'm taking is on Business Alliances. While everyone else was doing pretty standard ones - OneWorld, Star Alliance etc, I tried to think outside the box and did the Tigers joint venture. Anyways, here's what I wrote, hope it doesn't bore you too much. Enjoy…

**Background**
The Wests Tigers are a professional Rugby League team competing in the National Rugby League (NRL). The NRL was formed in 1998 under a partnership arrangement between the Australian Rugby League and News Ltd to administer the National Competition1\. It is the major Rugby League competition in Australia with 16 teams comprised of 3 from Queensland, 10 from NSW, 1 from Canberra, 1 in Victoria & 1 in New Zealand.

Wests Tigers Rugby League Football Pty Ltd is a company, limited by shares, established under a joint venture agreement between the Balmain Tigers DRLFC, Western Suburbs DRLFC and Western Suburbs Leagues Clubs at Ashfield and Campbelltown2\. Wests Tigers are one of two joint venture teams in the NRL, the other being the St George-Illawarra Dragons who were the first joint venture club in NRL history, formed in 1998.3

The Balmain Tigers and Western Suburbs Magpies no longer compete in the NRL, however both teams still compete in the second tier competition, the NSW Cup. Western Suburbs and Balmain continue to stand alone in junior levels and have resisted pressures to merge through all grades4.

**Strategic Rationale**
The well-documented war in 1997 between Super League (News Ltd) and the Australian Rugby League (ARL) resulted in a compromise that by the year 2000, the National Rugby League (NRL) competition would be contested by only 14 teams. With the Wests Magpies struggling on field in the NRL competition, it was decided by the club in the middle of 1999 that to survive the cull they would be required to merge their senior team with another club's team. After initial talks with the Canterbury Bulldogs failed an agreement was reached with the Balmain Tigers5\. By the time of the arrival of the NRL in 1998 Wests were still struggling for survival. Their on-field performances in 1998 and 1999 were dismal, finishing last in both seasons. By mid 1999 the NRL's looming 14-team competition for 2000 had triggered a merger between Wests and their fellow founders of 1908, Balmain.6

The alliance gave both clubs the opportunity to combine funds, facilities, staff, players and some levels of junior talent in an industry where resources such as these can be the difference between success and failure. At a time when crowd figures were at their lowest, there was also the need to draw on each club’s fan base in order to create one large supporter group, an underlying foundation to any professional sports club.

**Alliance Design**
The Constitution of the company provides for a shareholders’ agreement between the two parties, with 50% equity entitlements held by Balmain and 50% by the Wests Group. Both parties to the shareholders agreement provide five Directors of the company plus a Company Secretary who is also the CEO of Wests Tigers, who hold office for a period of three years. The Chairman of the company is provided, in the first term of 12 months, by Balmain Tigers, and the second term by Western Suburbs Magpies. They then alternate. The Board of Directors is required to meet as and when required, and has established a monthly cycle7.

The firm also uses a co-option value creation logic as the two parent companies were originally competitors and still compete against each other in the NSW Cup. Balmain and Wests merged in order to create a team which would be able to be a competitive contender in the NRL.

In regards to the value chain, both firms contribute equally to each activity.

**Alliance Management**
In a Sydney Morning Herald article from 2009, Wests Tigers CEO was quoted as saying:

"there are lots of relationships that are important in this role but that's the key one for me - the relationship between a head coach and a CEO and then through to the board is critical," said Humphreys, whose business experience includes senior management roles at Qantas and British Airways.
"I'm very confident that Tim (Sheens, the Head Coach) and I will enjoy a good working relationship. I'm not saying we'll agree on everything - I'm sure there'll be things we disagree on but we'll manage that in the right way."
Asked if that management included the possibility of showing Sheens the door if the wins didn't start coming, Humphreys said: "Tim's been around this game for a long time and faced that issue on more than a couple of occasions."We'll manage those things as they come along”8.

Several members of the management team at Wests Tigers all have a common bond. Stephen Humphreys (CEO), Tim Sheens (Head Coach) and Ben Elias (Board Member) are all former players. This connection between three of the joint venture’s top level managers increases the likelihood of relational assets being developed. Furthermore, both parent firms are foundation clubs from 1908\. Hence, they have a common bond in that they have a long and proud history and can base their relationship on the basis of strong histories.

**Alliance Performance**
The creation of an alliance dashboard will allow a quick overview of the Wests Tigers in regards to specific Key Performance Indicators. To measure the performance of the Wests Tigers alliance, membership volume, sponsorship, crowd figures and on-field success will be used to form the performance dashboard. Objective measures such as survival will also be analysed, as well as subjective measurement from the CEO.

_Membership_
There are two forms of club membership available - ticketed and non-ticketed. Ticketed members pay an up-front fee which in turn gives them tickets to a number of their club’s games amongst many other benefits including merchandise and social events. Non-ticketed members still pay a fee to receive the membership benefits, but forgo the tickets package. Club members are an extremely important ingredient to the success of the Wests Tigers as they are in essence a shareholder in the firm.

Wests Tigers current total membership stands at 6,600 members – up 64% on 2009’s figures9\. This was the third biggest increase in the NRL, behind the Parramatta Eels and the Canterbury-Bankstown Bulldogs. Considering the Eels and the Bulldogs featured heavily in the 2009 semi-finals, their increase can be associated with that.

The Wests Tigers have the 9th highest membership figure in the NRL. Being based in a city where the fan base is spread across nine clubs, membership is often hard to come by, so the Wests Tigers have achieved great results in this category.

_Financial_
As the Wests Tigers rely on funding from their leagues clubs, the profitability of these clubs is essential to the joint venture’s survival. Both Wests Leagues Clubs are very successful, with Wests Campbelltown recording a profit of more than $47.5million for 200910, reassuring its stance as one of the major leagues clubs in Sydney. One of its main competitors, Souths Juniors, recorded retained profits of just over $36.5 million11

_Sponsorship_
Closely tied in to the financial performance, sponsorship is one of the main forms of funding for every NRL club. In 2010, the Wests Tigers introduced a unique sponsorship deal which saw the introduction of two joint major sponsors - Proton Cars and MKB Contracting. Management from the Wests Tigers were interviewed in the Inner West Courier Newspaper, and had this to say about the new sponsorship deal.

“This new sponsorship model will yield a financial return well in excess of $1 million for the Wests Tigers and reinforce its position as one of the NRL’s most progressive clubs,” club spokesman Wayne Cousins said.
“To have two of our existing sponsors in Proton Cars and MKB Contracting becoming joint major sponsors shows the strength of what our brand can now deliver”, Mr Humphreys said.
“This is the third time Proton has now renewed their sponsorship and their fifth consecutive season as a major sponsor. “Their renewal decision speaks volumes for the return Proton has seen from their investment in our club. “Although Proton were approached with alternative NRL sponsorship options, we were always confident of the strength and integrity of our brand.” Mr Humphreys said it was a great boost for the club to have MKB step up from the shorts sponsorship to share the major sponsorship in 2010.
“Wests Tigers have proved to our organisation over the past 12 months that they can deliver strong commercial returns” said Proton Cars Australia managing director John Startari.12

The strength of the alliance’s brand is reflected in Proton’s decision to stay on as major sponsor for the fifth consecutive year. In the early stages of the alliance, Wests Tigers had significant trouble holding onto major sponsors for a long period of time. From their initial year in 2000 until 2006 when Proton signed on, Wests Tigers had a different major sponsor each year. This instability created uncertainty within the alliance about their corporate attraction and could be considered a measure of poor performance. Since these troubled times, Wests Tigers have now developed themselves into a brand in which other business see as a great investment opportunity. Sponsorship is in essence a form of a strategic alliance between Wests Tigers and their major sponsor. The sponsor contributes finances, while the Wests Tigers give Proton and MKB marketing benefits in terms of public exposure.
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_Crowd Figures_
Another measurement of the performance of a business in the NRL is their crowd figures. This is measured by the ticket sales at the team’s home games. High crowd figures are usually associated with several factors, including the on field success of the team, as well as the playing talent in the team. Wests Tigers boast very strong crowd figures, a testament to the management of the organisation.

One of the main factors that strengthens crowd figures is the effectiveness of the membership campaign each year. As discussed earlier, Wests Tigers have experienced high growth in membership for 2010\. This is coupled with an 11% rise in average home crowd figures between 2009 and 2010.

Large crowd figures are essential for the survival of any NRL club. Once the draw is finalised by the NRL and match days and times are allocated, the individual NRL clubs control all aspects of their individual home games. All game day revenue from these matches is controlled by the individual NRL club13\. Majority of the revenue coming from game days is from ticket sales. Therefore, the performance of the alliance is dependent on the strength of crowd figures.

Refer to Appendix Table 1 for the average crowd figures for 2007 - 2010.

_On-Field Success_
As CEO Stephen Humphreys said on Radio 2SM in October 2009, “we see earning our place in finals football as the minimum level of on field performance”14\. Having only made the finals series once in their ten year history, Wests Tigers are the only team to not have made the finals in the last four years. However, in that year - 2005, they went all the way to the Grand Final and won the Premiership.

Many in the club have faced criticism for the lack of finals football the Wests Tigers have played in considering the standard of players they have in the team. Most of the criticism has been directed at coach Tim Sheens, who has been given an ultimatum from CEO Stephen Humphreys - “the 2011 season (will be) his last in charge of the Tigers if they do not feature in this year's play-offs.”15

In regards to the parent firms - Balmain and Western Suburbs, who compete in the second tier competion, the NSW Cup, they have experienced some success. Balmain and Wests have featured in the finals series for the last three consecutive years, with Balmain making the Grand Final last year, finishing runners-up.

**Objective Measurement**
An important goal of the Wests Tigers is survival. While parent clubs Balmain and Wests were unable to survive the turbulent times in Rugby League in the late 1990s, Wests Tigers has developed themselves as a club who are strong financially, have a brand that is attractive to corporate sponsors, and have recorded some of the strongest crowd figures in the industry.

The Wests Tigers experienced some instability in club management in 2009, with new CEO Scott Longmuir being forced to resign over an alleged dispute with coach Tim Sheens. In essence Longmuir felt the Tigers should be run as a business, while Sheens was adamant about running the merged entity as a football club16\. However, the appointment of Stephen Humphreys to the role of CEO in mid-2009 saw stability restored to the Wests Tigers, who are now experiencing growth and excelling expectations in many facets of the business.
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Questions? Concerns? Criticisms?
 

alien

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Good work.

I would have thought that the main goal is to win premierships though. There is no point in surviving if you can't win premierships.
 

alex

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@alien said:
Good work.

I would have thought that the main goal is to win premierships though. There is no point in surviving if you can't win premierships.

Yeah I spoke to my lecturer about this and he said mention it, but as it's from a business perspective focus more on that stuff.

But yeah I totally agree, winning premierships is linked to everything else - memberships, crowds, sponsorships etc
 

Kul

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nice work dude
You should touch on membership of Wests and Balmain (actual membership, not season ticket holders)

also for some insight into the financial position of the club, check out here:
http://www.weststigersforum.com/news-and-views/first-grade/news-a-views/109-report-from-the-balmain-agm-sheens-and-humphreys" onclick="window.open(this.href);return false;
 

Centaur

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Not sure if this assignment is some sort of extraordinary exception, but all university assignments require cited references, usually from at least 10 different written sources (ie websites don't cut it). I would anticipate that if you are studying Commerce at USyd that you should most definitely get some references into the body of your assignment.

This is the reason that most other students are choosing the likes of StarAlliance and OneWorld - because there are going to be many text books and business journals which discuss these alliances.

I don't want to detract from your effort or the body of your assignment in any way, I just think the referencing is something you should consider.
 

alex

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@Centaur said:
Not sure if this assignment is some sort of extraordinary exception, but all university assignments require cited references, usually from at least 10 different written sources (ie websites don't cut it). I would anticipate that if you are studying Commerce at USyd that you should most definitely get some references into the body of your assignment.

This is the reason that most other students are choosing the likes of StarAlliance and OneWorld - because there are going to be many text books and business journals which discuss these alliances.

I don't want to detract from your effort or the body of your assignment in any way, I just think the referencing is something you should consider.

Yeah that's what all the numbers are throughout the report… When I'm writing it I use footnotes, then once I'm finished I add all the in text referencing after that (the Uni requires we put a word count on our submission form, if i have in text referencing it adds to the word count, so I do it this way to get the word count then add it in after)
 

alex

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They don't specify how many resources we should use, but obviously the more range you have the better. Hence why I've included websites, newspapers and radio programmes…
 

alex

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@Kul said:
nice work dude
You should touch on membership of Wests and Balmain (actual membership, not season ticket holders)

also for some insight into the financial position of the club, check out here:
http://www.weststigersforum.com/news-and-views/first-grade/news-a-views/109-report-from-the-balmain-agm-sheens-and-humphreys" onclick="window.open(this.href);return false;

Kul you legend, I spent so long looking for that sort of stuff!
 
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