Yes, it could fairly and squarely be called a New Zealand fan's worst nightmare. But it might also be the dream scenario for the SANZAR rugby alliance as the southern hemisphere superpowers head back to the market, desperate to beef up their main revenue stream.

Believe it or not, Australian rugby might just be the saviour of SANZAR. If not now, maybe in the not so distant future. It's certainly the country that holds the most upside in terms of potential growth in an alliance that's pretty much tapped out in New Zealand and operating somewhere near maximum levels in South Africa.

But Australia? Well, let's just say that right now the SANZAR product of Super Rugby and the Rugby Championship has a long, long way to go before it can be anywhere near to challenging the accepted order on the Aussie sporting landscape.

There is serious money available in the Australian broadcasting market. That much we now know. The AFL rakes in $A250 million a year for its TV rights, and the NRL is not far behind with an annual take of around $A200m. At the moment SANZAR barely manages to scrape the surface of that sort of coin.

With each of the three partner nations splitting TV money roughly in three equal parts, Australian rugby's annual broadcasting income is around $A25m, which puts it behind even football's $A40m-a-year deal. In a crowded winter footy market, rugby runs a distant fourth out of four in Australia.

Australian rugby's new boss Bill Pulver, who succeeded the highly visible but controversial John O'Neill, makes no secret of the fact that he's got a heck of a battle on his hands. Coupled with the sport's under-achievement in capturing the hearts, minds and wallets of the television audience (and, to a lesser extent, the live one too) are some serious financial challenges facing the code.

"Australia operates as arguably the world's most competitive winter sports market," Pulver tells the Star-Times in an exclusive interview from his Sydney office. "The AFL and NRL enjoy, respectively, $250m and $200m of broadcasting revenue a year. We've also got what we call soccer, which has landed in a bit of a sweet spot as Australia goes increasingly multicultural.

"To put it in perspective, about seven per cent of Australians participate in or support rugby. So it's a little different to New Zealand where you guys basically have it as a religion over there. My style is not to sugar-coat this stuff. When your industry has issues that you need to face up to, you've got to be open and honest about it because absent that, it's going to be difficult to deal with those issues."

Despite recording a financial windfall off the back of last year's British and Irish Lions tour - lifting ARU revenue to $A140m, and generating $A10m in cash reserves - the financial picture remains bleak in the Australian game. Cost-cutting and belt-tightening have been the order of the day since Pulver took charge, with the ARU slashing $A6m from salaries and development programmes, and players forced to accept a 20 per cent pay cut. With the five Super Rugby franchises said to be losing at least a combined $A5m annually - only the Reds are reported to be remotely profitable - and with crowds at both franchise and test level mired in a notable decline - the Waratahs attracted just 16,000 fans to their all-Aussie season opener - Pulver says it's about the sport cutting its cloth and surviving off the "periodic windfalls" that come round.

"We're in a tough financial situation. At ARU level we did in excess of $140m revenue in 2013 on the back of nine wonderful Lions matches. But that revenue will drop to about $100m this year and in 2015 it will fall further to about $80m because of the financial impact of the World Cup.

"The reality of where rugby is today the next major windfall doesn't happen till 2025 - the next Lions tour. It's a cyclical issue, and as a consequence we're trying to introduce initiatives that will grow revenue. But in the short-term we have to cut our expenditure cloth according to what we can afford."

It's not all doom and gloom in the Aussie game. Their Super Rugby conference looks as strong as it's been since expansion, the long-awaited national championship has finally been green-lighted and there are high hopes that Ewen McKenzie has turned the corner with the Wallabies. Folau, too, is fast emerging as the shining star the code desperately needs.

But there's still a deep feeling among diehard rugby people in Australia that the code is under-performing in its own market, and being held back by the restrictions of the SANZAR partnership. Whereas rival codes are able to provide a steady diet of compelling prime-time product for broadcasters, rugby is stuck with competitions that provide too much fare at either unfriendly times or with minimal local interest.

Veteran Australian rugby scribe Greg Growden, a noted critic of the ARU's management style, wrote on ESPNscrum.com of a report compiled by a leading sports management consultant that raised some fairly pointed observations about the SANZAR alliance.

Growden said the paper stated that whoever agreed to a sixth South African side and a team from Argentina being included in an expanded Super Rugby competition, "weren't looking after the interests of Australian rugby".

According to Growden, the report added: "Australia needs a dramatically changed competition structure geared to providing the volume of product attractive to Australian audiences. The inescapable strategic issue is the absence, under the current and proposed Super Rugby competition structure, of sufficient locally attractive matches to generate the revenue needed. Either the management of Australian rugby has the courage to face up to that reality and force change, or it will continue over the precipice it has now reached."

Clearly these are delicate times in the SANZAR alliance as they hammer out their latest product to take to the broadcasting market. South Africa sets the agenda for change because it brings in the lion's share of the TV money and, at the moment, what it wants it gets. New Zealand provides the rugby "cred" and status, but a tiny and pretty tapped out commercial market. And with Australia it's all about that potential.

It's why New Zealand Rugby boss Steve Tew treads carefully when asked about what the Aussies bring to the table of the SANZAR alliance. The three countries may present a powerful collective front, but there are massive tensions as they search for the optimum product.

"Clearly Australia has got well-documented challenges in front of them," said Tew shortly before last week's $NZ2.9m profit announcement. "Bill has been very clear from the day he arrived that their financial situation is in need of some pretty serious attention. He's worked pretty hard to bring their costs back and try to increase their income.

"We actually see Australia as having enormous potential. It's a big market, very close to us and rugby has got a lot of growth potential. But it's a different market, and it's a lot harder for them with the competition they face. We do what we can but in the end there's a competitive tension that we must preserve as well."

Pulver says there is "nothing more important" than SANZAR's next TV deal. "As part of our financial resurrection the single biggest opportunity in front of us is to negotiate a much stronger broadcasting deal, and clearly it's paramount to make sure Australian rugby gets a substantial increase in revenues."

But Pulver refutes the notion that Australia's destiny is too tied to the demands of its partners. "We have control over our own destiny. If we play smart, creative and entertaining rugby and we have all the plans in place to drive success for Australian rugby, the fans will want to go to games, they'll want to watch it on telly, and they will help drive the revenue growth the game needs."

Tew says it's in New Zealand's interests for the Aussie game to be healthy, and is adamant rugby retains advantages over the rival codes. "We're a truly international game, and if you're good enough to play for your country it results in some pretty international and global experiences."

The problem is the mega-rich Aussie broadcasting market cares principally about domestic product. And right now rugby is playing a losing game attempting to wow that audience.

- © Fairfax NZ News