Excellent News from Scotland

by PhilBB Fri 19 Aug - 14:16

http://www.bbc.co.uk/sport/rugby-union/37128384

And a large hint to the wages the SRU are paying out.

by Dai Llewod Fri 19 Aug - 14:22

Interesting that he seems to favour the English football model.

by 123456789 Fri 19 Aug - 14:28

You'd hope that if they sell 51% of both of the pro clubs they'd use some of the money to create a new pro team. Fundamentally because it's hard to imagine a billionaire investing money into a professional rugby team would be overly concerned about the Scottish national team. A third team would allow us to have a team that operates in a Connacht sort of way (or certainly the way they used to). That way he could keep good Scottish players playing week in week out and probably afford to centrally contract the internationals at Glasgow and Edinburgh and in doing so give the SRU some kind of control over them.

The English football model is a ridiculous one to follow mind you, the idea that the Pro12 has anywhere near the marketing potential at the moment as the Premier League is absurd. His best hope would be to find an American with obscure Scottish ancestry and sell the dream to them.

by Dai Llewod Fri 19 Aug - 14:29

123456789 wrote:You'd hope that if they sell 51% of both of the pro clubs they'd use some of the money to create a new pro team.

Why would an investor invest in a business only to find that his money was to be used for another business?

by BamBam Fri 19 Aug - 14:42

Once a vendor has sold an asset, he is free to use the proceeds to do as he pleases

The SRU could blow it all on coke and hookers, what business is it of the investor?

by marty2086 Fri 19 Aug - 14:44

Dai Llewod wrote:
123456789 wrote:You'd hope that if they sell 51% of both of the pro clubs they'd use some of the money to create a new pro team.

Why would an investor invest in a business only to find that his money was to be used for another business?

That's what would happen anyway, you think an investor in Glasgow would think that some of it wouldn't end up going towards Edinburgh in some form?

by Dai Llewod Fri 19 Aug - 14:45

BamBam wrote:Once a vendor has sold an asset, he is free to use the proceeds to do as he pleases

The SRU could blow it all on coke and hookers, what business is it of the investor?

I'm confused now. I thought this was about relinquishing control in return for investment into the teams. Not an individual giving the SRU money in return for a team.

by Welly Fri 19 Aug - 15:07

Isn't the SRU selling shares of the club, so therefore the money it gets from the sales they can do with as they please?

£50-£60 million each i'm assuming?

SRU would be getting for 51% of Glasgow and Edinburgh around £100 - £120 Million and saving around £3.5 - £4 Million a year i'm assuming this is right?

How much is SRU making from Glasgow and Edinburgh.

by **LondonTiger** Fri 19 Aug - 15:15

Welly wrote:Isn't the SRU selling shares of the club, so therefore the money it gets from the sales they can do with as they please?

I could not work out what he was wanting. I certainly was under the impression he was looking for someone to stump up the running costs for 5/6 years rather than selling shares in the clubs.

His estimated budget for running a rugby club would not get far in the AP.

by Welly Fri 19 Aug - 15:18

LondonTiger wrote:
Welly wrote:Isn't the SRU selling shares of the club, so therefore the money it gets from the sales they can do with as they please?

I could not work out what he was wanting. I certainly was under the impression he was looking for someone to stump up the running costs for 5/6 years rather than selling shares in the clubs.

His estimated budget for running a rugby club would not get far in the AP.

Yeh your right basically i think.

It's a bit confusing.

by BamBam Fri 19 Aug - 15:19

"Somewhere along the lines of £7m or £8m is what it costs to run a really well-financed professional rugby team for a year. You take it on for a five-, six-, seven-year period and that's the kind of quantum we're talking about."

This makes it sound like a rental .. they pay £50m and get 6 years of control of 51%

by Welly Fri 19 Aug - 15:20

BamBam wrote:"Somewhere along the lines of £7m or £8m is what it costs to run a really well-financed professional rugby team for a year. You take it on for a five-, six-, seven-year period and that's the kind of quantum we're talking about."

This makes it sound like a rental .. they pay £50m and get 6 years of control of 51%

Who would want that?

by BamBam Fri 19 Aug - 15:21

No idea!

by Dai Llewod Fri 19 Aug - 15:25

It's almost besides the point. The point is that Union run teams are finally issuing calls for Individual investment. Because they know that Unions alone cannot and will not be able to cope with the rugby landscape in a couple of year's time, as the Union / blazer led model is outdated and soon to be unviable. It's a watershed moment in terms of a UNION RUN pro12 team openly admitting it's preferred model is not to be UNION RUN.

by marty2086 Fri 19 Aug - 15:32

Dai Llewod wrote:It's almost besides the point. The point is that Union run teams are finally issuing calls for Individual investment. Because they know that Unions alone cannot and will not be able to cope with the rugby landscape in a couple of year's time, as the Union / blazer led model is outdated and soon to be unviable. It's a watershed moment in terms of a UNION RUN pro12 team openly admitting it's preferred model is not to be UNION RUN.

That's exactly what he said if you put words in his mouth

He said they are open to the idea not tat its their preferred model

by marty2086 Fri 19 Aug - 15:33

BamBam wrote:"Somewhere along the lines of £7m or £8m is what it costs to run a really well-financed professional rugby team for a year. You take it on for a five-, six-, seven-year period and that's the kind of quantum we're talking about."

This makes it sound like a rental .. they pay £50m and get 6 years of control of 51%

Its a licensing approach, its what the NZRU are using for their teams in Super Rugby

by **profitius** Fri 19 Aug - 15:41

marty2086 wrote:
BamBam wrote:"Somewhere along the lines of £7m or £8m is what it costs to run a really well-financed professional rugby team for a year. You take it on for a five-, six-, seven-year period and that's the kind of quantum we're talking about."

This makes it sound like a rental .. they pay £50m and get 6 years of control of 51%

Its a licensing approach, its what the NZRU are using for their teams in Super Rugby

Whats in it for the investors? How do they make their money?

by marty2086 Fri 19 Aug - 15:45

profitius wrote:
marty2086 wrote:
BamBam wrote:"Somewhere along the lines of £7m or £8m is what it costs to run a really well-financed professional rugby team for a year. You take it on for a five-, six-, seven-year period and that's the kind of quantum we're talking about."

This makes it sound like a rental .. they pay £50m and get 6 years of control of 51%

Its a licensing approach, its what the NZRU are using for their teams in Super Rugby

Whats in it for the investors? How do they make their money?

They run the business on behalf of the SRU, if its only 51% up for sale the SRU would still invest and have a say but the day to day would be done by the investor.

Not sure if profits, if there are any, would be split or the investor keeps those.

The NZRU control all contracts in their model so would be interesting to see if the SRU do the same

by Pot Hale Fri 19 Aug - 17:00

Selling majority control effectively gives the buyer control. Unless Dodsen is going to insert some caveats around that. And the more caveats he inserts, the less the value. And at a certain point, 51% control becomes meaningless.

An investor can insist as part of the deal that purchase money be used for the business and not splurged elsewhere. Glasgow or Edinburgh are not exactly churning out profits currently.

Dodsen is looking to have operating costs - and that's not just player salaries - met for a period of time. Clearly he's going to inflate that figure publicly to push the value.

One benefit to SRU is current cost savings on their own budget.

Different shares could be issued for different purposes e.g. Voting shares vs dividend.

Having access to players for test matches could be part of the agreement in this hybrid model.

Interesting story. Wonder where it will go?

by Welly Fri 19 Aug - 17:46

good timing with Rennie going to Glasgow.

by TJ Fri 19 Aug - 21:43

Stupid idea. It was tried before and no one would put their money in. I hope it never happens.

It will create no more money total in the pot unless someone simply gives money to the team.

by marty2086 Fri 19 Aug - 22:12

TJ wrote:Stupid idea. It was tried before and no one would put their money in. I hope it never happens.

It will create no more money total in the pot unless someone simply gives money to the team.

Really? If The SRU and an outside investor rather than just the SRU surely means more money to work with?

by TheMildlyFranticLlama Fri 19 Aug - 22:53

TJ wrote:Stupid idea. It was tried before and no one would put their money in. I hope it never happens.

It will create no more money total in the pot unless someone simply gives money to the team.

I doubt the queue of people waiting to pump £50 million into Scottish rugby is very long so I wouldn't worry

by TJ Fri 19 Aug - 23:07

marty2086 wrote:
TJ wrote:Stupid idea. It was tried before and no one would put their money in. I hope it never happens.

It will create no more money total in the pot unless someone simply gives money to the team.

Really? If The SRU and an outside investor rather than just the SRU surely means more money to work with?

Why would it - unless the "investor" never gets their money back. the revenue stream remains the same.

by marty2086 Fri 19 Aug - 23:32

TJ wrote:
marty2086 wrote:
TJ wrote:Stupid idea. It was tried before and no one would put their money in. I hope it never happens.

It will create no more money total in the pot unless someone simply gives money to the team.

Really? If The SRU and an outside investor rather than just the SRU surely means more money to work with?

Why would it - unless the "investor" never gets their money back. the revenue stream remains the same.

The SRU have been forced to focus resources on rugby, outside investors can grow beyond and increase revenue streams and the overall brand

by TJ Sun 21 Aug - 7:36

Really? What are these extra revenue streams that an outside investor can tap but the SRU cannot?

by Stone Motif Sun 21 Aug - 8:40

TJ wrote:Really? What are these extra revenue streams that an outside investor can tap but the SRU cannot?

606v2 Thick Post Detector wrote:

Beep beep beep beep. Beep beep beep beep. Beep beep...

by TJ Sun 21 Aug - 9:03

Well tell me then what these extra revenue streams are?

the only way an outside "investor" gets more money into the teams is if he basically gives them money. An true investor would want their money back plus a return on it altho in sports many just give the teams money with no expectation of even getting their stake back.

by Pot Hale Sun 21 Aug - 16:55

TJ wrote:Well tell me then what these extra revenue streams are?

the only way an outside "investor" gets more money into the teams is if he basically gives them money. An true investor would want their money back plus a return on it altho in sports many just give the teams money with no expectation of even getting their stake back.

Well the Welsh regions are all privately owned and they're not making a fortune.

On the other hand, perhaps a union and private investor working collaboratively might come up with a more creative and successful approach since the teams and a nascent fan base are already established. This is what the Irish provinces have been looking to achieve with the IRFU and what Browne was likely hinting at with his annual report comments. From a union point of view, I presume you'd want all your professional teams working to the same model, unless you decide that one of them should be a development club like what should be happening within Wales.

by Irish Londoner Sun 21 Aug - 17:31

If this was Dragons Den, I think even Duncan Bannatyne would be calling "I'm oot!".

If there is a rugby club any where in the world valued at £100 million I'd like to hear about them, given that £50 million apparently buys you a half share of Glasgow or Edinburgh.

If they can get some expat with a lot of money then good luck to them, but as a financial investment it makes no sense, if you wanted to invest in Scottish sport then that sort of money would go a long way and generate a much better return if you put it into Rangers or Celtic and if you were serious would probably get you a major shareholding in a Premier League football team or your pick of any Aviva side.

by Irish Londoner Sun 21 Aug - 17:37

Dai Llewod wrote:It's almost besides the point. The point is that Union run teams are finally issuing calls for Individual investment. Because they know that Unions alone cannot and will not be able to cope with the rugby landscape in a couple of year's time, as the Union / blazer led model is outdated and soon to be unviable. It's a watershed moment in terms of a UNION RUN pro12 team openly admitting it's preferred model is not to be UNION RUN.

Glad you agree, so presumably no more moaning when Irish investors pay Johnny Sexton's wages or Rory McIlroy shoves a few quid towards Ulster ?

by Stone Motif Sun 21 Aug - 19:08

[quote="Pot Hale"]

TJ wrote:unless you decide that one of them should be a development club like what should be happening within Wales.

yeah, that worked out great for Ireland. So great they stopped doing it.

by Dai Llewod Mon 22 Aug - 9:49

Irish Londoner wrote:
Dai Llewod wrote:It's almost besides the point. The point is that Union run teams are finally issuing calls for Individual investment. Because they know that Unions alone cannot and will not be able to cope with the rugby landscape in a couple of year's time, as the Union / blazer led model is outdated and soon to be unviable. It's a watershed moment in terms of a UNION RUN pro12 team openly admitting it's preferred model is not to be UNION RUN.

Glad you agree, so presumably no more moaning when Irish investors pay Johnny Sexton's wages or Rory McIlroy shoves a few quid towards Ulster ?

Why would I moan at that? I think it's great and just helps to shows that indepenently run rugby is the way to go.

The moaning stems from the half cut approach where one organisation controls 4 out of 12 teams in a league. That's a preposterous scenario by anyone's standards.

by Irish Londoner Mon 22 Aug - 11:15

Dai Llewod wrote:
Irish Londoner wrote:
Dai Llewod wrote:It's almost besides the point. The point is that Union run teams are finally issuing calls for Individual investment. Because they know that Unions alone cannot and will not be able to cope with the rugby landscape in a couple of year's time, as the Union / blazer led model is outdated and soon to be unviable. It's a watershed moment in terms of a UNION RUN pro12 team openly admitting it's preferred model is not to be UNION RUN.

Glad you agree, so presumably no more moaning when Irish investors pay Johnny Sexton's wages or Rory McIlroy shoves a few quid towards Ulster ?

Why would I moan at that? I think it's great and just helps to shows that indepenently run rugby is the way to go.

The moaning stems from the half cut approach where one organisation controls 4 out of 12 teams in a league. That's a preposterous scenario by anyone's standards.

Let's just say that there have been complaints about it previously......

I think the IRFU would be very receptive to anyone who wanted to invest/take a stake in the Provinces, however as I pointed out above the chances of anyone coming forward in any of the PRO12 nations with the sort of money the SRU are asking for a share in Glasgow/Edinburgh is highly unlikely as a business investment, a "sugar daddy"/philanthropist might come forward on the understanding that at best they might break even but that's about it.

Given that I think the current Irish system will continue well into the foreseeable future.

by Dai Llewod Mon 22 Aug - 11:27

I don't think many of the independently owned rugby clubs out there are owned as a "business investment" as you put it.

Rarely to rugby clubs make profit.

by Kingshu Mon 22 Aug - 11:29

Not sure if any of you remember but Edinburgh was in Private Ownership in 2006–07

You can read a bit more in wiki

by Pot Hale Mon 22 Aug - 17:08

Stone Motif wrote:
Pot Hale wrote:unless you decide that one of them should be a development club like what should be happening within Wales.

yeah, that worked out great for Ireland. So great they stopped doing it.

Bigger country, greater resources. it isn't stopped, it's reduced. As Connacht have got more successful. Welsh Rugby can't afford four regions right now. Everything is spread too thin.

by Stone Motif Mon 22 Aug - 18:51

Pot Hale wrote:
Stone Motif wrote:
Pot Hale wrote:
TJ wrote:unless you decide that one of them should be a development club like what should be happening within Wales.

yeah, that worked out great for Ireland. So great they stopped doing it.

Bigger country, greater resources. it isn't stopped, it's reduced. As Connacht have got more successful. Welsh Rugby can't afford four regions right now. Everything is spread too thin.

Righto. By reduced, I take it you mean more money and more foreign players. In other words, it's stopped in any meaningful sense.

by Pot Hale Mon 22 Aug - 20:11

Stone Motif wrote:
Pot Hale wrote:
Stone Motif wrote:
Pot Hale wrote:
unless you decide that one of them should be a development club like what should be happening within Wales.

yeah, that worked out great for Ireland. So great they stopped doing it.

Bigger country, greater resources. it isn't stopped, it's reduced. As Connacht have got more successful. Welsh Rugby can't afford four regions right now. Everything is spread too thin.

Righto. By reduced, I take it you mean more money and more foreign players. In other words, it's stopped in any meaningful sense.

I think they've less foreign players than they used to. Yes, they are now earning more money and receive more from their union although not as much as the other three. Their overall operation isn't as big as the other provinces.

by Pot Hale Mon 22 Aug - 21:34

Dodson talked about more than investment.

Most try to paint their organisation as a picture of nirvana, but Mark Dodson doesn't bother. To the head of the Scottish Rugby Union, there's really no point.

"...,we understand that we have to look at ourselves," says Dodson. "If we don't do something with the Pro 12, I think it's a bleak prospect.

"We're finding it very difficult to hang on to our top players. Even the people who aren't leaving are demanding more. Unless we do something different we're going to struggle."

Scotland have, more or less, maxed-out on their revenue streams. They've sold the naming rights to Murrayfield to BT. They've got broadcast revenues that are now at the top of their cycle and it's still not enough. On Saturday, Dodson will announce record turnover of £47.3m - "an historic high" - but it does little to breach the financial gap when some of the English and French heavy-hitters have got multi-millionaires (or billionaires) at the helm "hoovering up the best players in the world."

The notion of expanding the Pro12 into America has been floated in the recent past. It's still floating. The embryonic plan would see one or two American clubs from the east coast parachuted into the league in time for the 2018-19 season.

These clubs would have coaching and player assistance from the Celtic nations in the beginning, a sharing of knowledge of personnel. Super Rugby has shown that the travel issue can be overcome with clever scheduling and enough money in the game. Quite where the Italians fit in is not clear.

It sounds fanciful, but you can't mistake Dodson's intent, driven by a need to bring more money into his organisation to avoid an exodus of talent.

"We've got to identify markets that matter and we have to be open-minded," he says. "To stay as we are isn't really an option. It's been out in the press that we will look at the eastern seaboard of North America (New York, Boston, Atlanta) to explore a new market that could provide a new team or two teams along with broadcast income. I think it's something we have to do.

"I understand why people would think it unrealistic. What we are doing now is working with individuals who are testing those markets for us. We're going to find out if it's feasible. We have to see if the big cities, and their businesses, want to invest.

"Our indications are that there is an amount of interest from American rugby and corporate America. There'll be a process that takes place over the next two to three months that will flush it out. There's a new mindset in the Pro12 now. I think it's appropriate that we do this - and that we do it with some speed.

"We don't want to leave this to 2020, we have to make this happen in a fairly short period of time or find something else. We're seriously investigating the possibility. I'd like to think it'll happen. It's the most attractive market that we can see."

by Exiledinborders Mon 22 Aug - 22:06

I found the article quite confusing. For instance:

BBC Article wrote:You pick a number out of the air - £8m-£10m per year- and he says nowhere near.

"I'm not interested at that price because that's barely a year's money," he remarks.

That just does not make sense. If an investor puts in £8-£10million a year that is doubling the funds available. Why would he not be interested?

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