Offer of £275M to buy 51% ownership of the Premiership from the ex-owners of F1

First topic message reminder :

The deal seems cheap to me but a sign of things to come and as always the devil is in the detail of whether the clubs maintain any voting rights against a 51% share.
I can't imagine the RFU are too happy about it but the sooner the game is returned to the power of the domestic fan the better and the jamborees at Twicks can remain just that...jamborees.

www.bbc.co.uk/sport/rugby-union/45417946

Recwatcher16 wrote:Yes Secret, long may your faith in Browne et al continue. The interesting time will come when it doesn't.
The Aussies have had to deal with too many factors outside their control in order to fund their top tier and have left the grassroots to wither.

I've had long enough in the doldrums, Rec...at International and Club level.  Ireland doesn't exactly come into many people's heads when thinking about high rolling rugby Union sides of the past.  So I already know what dissatisfaction feels like.
Wherever Irish rugby is going long term - back down or further up - nobody can deny that it was a heavy Union influence and involvement that gave us this perhaps brief bounce into the very top layer of the sport in this era.  It's been a long term vision, its been long term problem solving and pre-planning in fine detail from child to man player that has brought Irish Provincial success at club level and Irish International success at that level.

I don't consider myself that old but I can't deny I'm old enough to have formed my lifelong views on most things.  We don't usually have dramatic conversions from my age on.  I know you love your preferred model Rec.  All the best with it, certainly your right to promote it and embrace it as your model of choice.
For my part, I'd never in the remainder of my lifetime champion a model for Ireland different to the one we have.  I'd never welcome some big foreign (or local) billionaire coming into Leinster and buying up its history as his plaything for a decade or two before selling on.  Nope, that's just not a philosophy I can warm to or buy into.  

I don't see any moral value in self-made billionaires 'owning' Provinces.  Union ownership gives me a sense of 'ownership' of all Provinces because they all tie into Ireland international.  It's what the players want - to wear that Green and represent their Nation.  In Ireland there is a clearly defined path to that ultimate goal and it's joined up organisationally.  We don't have a situation where a foreign owner of Munster has no interest in the journey of the International team and doesn't mind impeding the development (withholding players etc) if it makes business sense to him.  In Ireland it makes business sense for Provinces and International to closely cooperate on targets - it makes business sense, professional sense, profit sense and in the end, cultural unity sense.  Nothing bad about any of that.
Will it continue to flourish or face massive pressures?  The future will tell.  But no blunt antagonistic Private club v Union system in Ireland will create a smoother model than the one we already have.

https://www.theguardian.com/sport/2018/sep/16/pro14-in-talks-with-investors-about-exploiting-its-commercial-rights

Brendan wrote:So if we have the professional game given all the money (that they aren't making, as every professional team in England and France would make bigger losses if they weren't getting subs.  It for for access to player from the League not the club otherwise Sarries would be getting a much bigger pay out compared to any other team) and the union only funding grassroots you would end up with the RA situation.  If you fund all levels on a basis of needs v return you get the IRFU/NZ model.

Firstly who says the IRFU model is better than any other? Ireland have had a good season. But up to the Lions tour England were doing better than Ireland. Who is to say they will not do so again this year? The same applies to the club game. Leinster winning one European Champions Cup does not mean that Sarries or Exeter will not win this season.

Secondly, Where is the professional game given all the money? Certainly not England as a quick look at the RFU's accounts will show.

Finally, as for the RFU paying the league for access not the clubs that is incorrect. The clubs own the players contracts not the league. The RFU wanted to pay clubs according the number of internationals they provide in order to reward player development. The clubs agreed between themselves to pool the payouts to maintain a competitive league.

CVC have made an improved offer, that leaves the current shareholders with a majority holding, but gives the investors control of the marketing.

Some other offers were also received before last Friday's deadline.

"Firstly who says the IRFU model is better than any other? Ireland have had a good season. But up to the Lions tour England were doing better than Ireland. Who is to say they will not do so again this year? The same applies to the club game. Leinster winning one European Champions Cup does not mean that Sarries or Exeter will not win this season."
Exiledinborders, I think since this a discussion is about the money side of the sport maybe his/ her point is about the financial model of the IRFU and the provinces, not the team's results. From memory only one Premiership English club made a profit this year. Most are running up serious debt. The IRFU and the provinces are not in any financial difficulty. They are too dependent on the international team to fund everything else but they're solvent and look like remaining so. Saracens are indeed on the up but they are also up to their eyeballs in debt. Long term this pattern of pro teams getting more and more in debt isn't sustainable.

The one club that officially made a profit was Exeter, the suggestion is that some creative accounting as well went on to make that the case

As far as I know all the top rugby leagues are televised all over the world in the last few years.  The problem with rugby is that the market is tiny outside of the main playing countries.  These main countries would rather watch their own league than another country.  It's not like there are people in China or the US that want to pump money into rugby but haven't been convinced by the current marketing department.

If the pound drops by a bit next year overseas money (such as HC) will be more valuable.  While F1 is a smaller market in rugby heartland it is much bigger as an international setup.  Imagine if you only got to see international rugby once a year in your country.  They also can't take money from countries with lots of money looking to improve their international standing.  Unless of course they play games in other countries.  I am sure Quatar would love to play some games in their stadiums to show sport can be played there in the heat.

One thing that is rarely mentioned is that the club's are not in any of the big cities (reletive) apart from London (which only has two clubs).  Sale are near Manchester but don't have any name recognition. Newcastle (soccer mad) and Bristol are in bigger areas.  So while England has a large population the premiership clubs don't as much.  Of the top 20 place 4 are in the pro14, 6 in the Prem and 10 without any (As far as I can tell)  not great for marketing

marty2086 wrote:The one club that officially made a profit was Exeter, the suggestion is that some creative accounting as well went on to make that the case

Wasn't it something about sponsorship that was coming from the owners businesses akin to what Man City and PSG are doing in soccer.

I suppose the Six Nations final will go to Monaco from now on. So there are bonuses to the F1 model.

Brendan wrote:

marty2086 wrote:The one club that officially made a profit was Exeter, the suggestion is that some creative accounting as well went on to make that the case

Wasn't it something about sponsorship that was coming from the owners businesses akin to what Man City and PSG are doing in soccer.

It could have been, that could be where the creativity comes in. Overpay as a sponsor rather than 'loaning' the money, maybe a model we'll see more of

The £225 million the RFU paid for 'releasing players for international duty, as well as meeting the English-qualified players target and academy standards.' Looks like it was way too big a fee and a waste of money in the long run. Will the RFU pay similar again in the future and receive zero % of prem rugby?
They would have been better off spending more in 2016 for 50% and making those league rules.

Brendan wrote:As far as I know all the top rugby leagues are televised all over the world in the last few years.  The problem with rugby is that the market is tiny outside of the main playing countries.  These main countries would rather watch their own league than another country.  It's not like there are people in China or the US that want to pump money into rugby but haven't been convinced by the current marketing department.

If the pound drops by a bit next year overseas money (such as HC) will be more valuable.  While F1 is a smaller market in rugby heartland it is much bigger as an international setup.  Imagine if you only got to see international rugby once a year in your country.  They also can't take money from countries with lots of money looking to improve their international standing.  Unless of course they play games in other countries.  I am sure Quatar would love to play some games in their stadiums to show sport can be played there in the heat.

One thing that is rarely mentioned is that the club's are not in any of the big cities (reletive) apart from London (which only has two clubs).  Sale are near Manchester but don't have any name recognition. Newcastle (soccer mad) and Bristol are in bigger areas.  So while England has a large population the premiership clubs don't as much.  Of the top 20 place 4 are in the pro14, 6 in the Prem and 10 without any (As far as I can tell)  not great for marketing

When LI return to the Premiership there will be three clubs in London which is seven times larger than the next largest City in the UK and ten times the size of the largest city with a Pro14 team.

In any case when it comes to attracting audiences the city sizes are very misleading as some cities only contain the city centre rather than the wider metropolitan area. For instance the Leicester urban area is larger than Edinburgh's even though on the list of cities it is smaller. Sale are in the second largest conurbation in UK and Wasps in the third largest.

From Wiki (so might not be great)
Greater London 9.8m, Sarries, Quinn's
Greater Manchester 2.6m, Sale (lowest attendance in the prem)
West Midlands 2.4m, None - should a team be created here like they are doing in Northern France
West Yorkshire 1.8m, Leeds (or it's new name) would need a helping hand to get back
Greater Glasgow 1.2m, Warriors - growing but still a way to go
Liverpool 0.9m, None
South Hamshire 0.9m, None is there a club in the championship that could be jumped up
Tyneside 0.8m, Newcastle
Nottingham 0.7m,
Sheffield 0.7m
Bristol 0.6m, Bristol
Belfast 0.6m, Ulster
Leicester 0.5m, Leicester
Edinburgh 0.5m, Edinburgh
Brighton & Hove 0.5m, None
Bournemouth/Poole 0.5m, None
Cardiff 0.4m, Blues (dropped all the people from Ponty)
Teesside 0.4m,
Stoke on Trent 0.4m,
Coventry 0.4m, Wasps

Ireland is tiny (As we all know)
Dublin 1.9m L
Belfast 0.7m different to one above U
Cork 0.4m M
Derry 0.24m U
Limerick 0.16m M
Lisburn 0.12m U
Galway 0.08m C
Newtownabbey 0.06m U
Bangor 0.06m U
Waterford 0.05 M

If CVC are serious about marketing they would need to grow the area covered but not sure now likely it would be. Places like Brighton and Portsmouth must have sizeable clubs as it is in the south.

I know that size doesn't mean attendance but lack of size sure limits it

Depends on how you define conurbations but in any event Wasps are in easy reach of much of the West Midlands.

Report in the Times that the Six Nations are in talks with CVC:  https://www.thetimes.co.uk/article/six-nations-in-talks-with-equity-firm-cvc-capital-partners-fwp7z0mcd

Sorry it is behind a paywall, but effectively story states that the Six Nations Unions have started "Project Light" looking to maximise TV and marketing revenues for the competition. Suggestions are that the TV rights for both Six Nations AND AIs will be sold as an amalgamated package, which would put a dampener on Pichot's League of Nations plan.

Not sure if the CVC discussions are an as well or instead of plan. 

Article also states that Pro14 are is discussions with CVC to sell a similar stake (27%) as PRL.

If CVC were looking to control global rugby tv and media rights then the premiership is the easiest initial chip to get.

Start thinking bigger, take Premiership first, look for 6N (starts getting into France), pro14 (gains access to SA) but also can control HC at that stage. Access to SA can be route into SuperRugby and Rugby championship (and those teams would already be seeing the money CVC can generate from AIs so might be tempted). Also the 7s game is there for capture. If they were to acquire all of that control for 1.3-2.0bn (the individual acquisition costs be what they'll be) then you could think about controlling and providing an aligned continuous rugby feed through their delivery channels from Friday morning through Sunday night (being 72 hours of commercial content to a global audience) and align the various seasons to maximise the weekends over the year.

They made their fortune on 18-20 grand prix weekends with a couple of practices, qualifying and a race that's finished inside 2 hours. Think about all the content they'd have.

Maybe I'm talking crazy conspiracy, but these groups work on larger scales. Premiership rugby is a big fish in European rugby, but CVC are playing a game where premiership rugby is the first pawn being taken off the board.

It's why I often laugh when I hear people say these private self made men are only in rugby as club owners for the fun of it, as a hobby, as a plaything for their loose change. And we hear that many of them inject more money than they get out etc etc. Well, apart from that casualness being no way to run a business, it's also been pretty much a lie as many of these private owners know the shakers, movers and influencers in rugby promotion/broadcasting these days. They know years in advance what the plans in the pipeline are. They know how to place themselves as inviting buy-in options if rugby could get a global operation set up. So like always, these men are businessmen, placing themselves for long forecast profits.
No shame in that either if that's where the rugby world is going. Nothing I'll be able to do to stop it. But please, in the debates, less chat about the decent skin owners who are only in it coz they were brought to their first game by their grandads in the late 60s.

Oi. I am one of the owners of Leicester Football Club thank you very much, and I did not do that to make a profit. Harrumph (well the shares were free because I was a season ticket holder way back when)

I guess this is the 6 nations and by implication NH rugby throwing down a marker to WR and the SH on money sharing and world league.

I hope that CVC has an eye for streghtening the B6N too so that there are 10-12 national teams and 3 strong leagues in Europe which should make to pot bigger as it would be seen as a European game.

thebandwagonsociety wrote:If CVC were looking to control global rugby tv and media rights then the premiership is the easiest initial chip to get.

Start thinking bigger, take Premiership first, look for 6N (starts getting into France), pro14 (gains access to SA) but also can control HC at that stage.  Access to SA can be route into SuperRugby and Rugby championship (and those teams would already be seeing the money CVC can generate from AIs so might be tempted).  Also the 7s game is there for capture.  If they were to acquire all of that control for 1.3-2.0bn (the individual acquisition costs be what they'll be) then you could think about controlling and providing an aligned continuous rugby feed through their delivery channels from Friday morning through Sunday night (being 72 hours of commercial content to a global audience) and align the various seasons to maximise the weekends over the year.

They made their fortune on 18-20 grand prix weekends with a couple of practices, qualifying and a race that's finished inside 2 hours.  Think about all the content they'd have.

Maybe I'm talking crazy conspiracy, but these groups work on larger scales.  Premiership rugby is a big fish in European rugby, but CVC are playing a game where premiership rugby is the first pawn being taken off the board.

CVC have agreed a deal with 6Ns - £300m for 15% according to the Times.

With the deal with Premiership already signed, that with Pro14 (£115m for 27%) due to be signed next month they effectively have a stake in ERC. Apparently Lions are in their sights next.

Not having the Times report to hand what is the deal set to cover in terms of duration? £300m is a few premiere football players wages so seems pretty cheap to me though what rights they actually get from a 15% shareholding would also be interesting as presumably it still leaves the Unions firmly in charge which is probably a good thing seeing what their involvement in F1 did for the sport.

For the £300m they get 15% of all future commercial rights to 6Ns and to the AIs played by 6Ns teams. It is a permanent stakeholding and would thus value the 6Ns (and AIs) at £2bn

LondonTiger wrote:For the £300m they get 15% of all future commercial rights to 6Ns and to the AIs played by 6Ns teams. It is a permanent stakeholding and would thus value the 6Ns (and AIs) at £2bn

Does anyone have the figures about how much the 6Ns/AI generate commercially at the moment - in other words how long will it take for the £300m to be covered and when it turns into profit for CVC? E.G. if the commercial rights of the games make £50m a year then 15% of £50m = is £7.5m that would take 40 years to even clear the original £300m investment - even a return of £200m a year means 10 years.

Either CVC are playing a very long game here or something else is going on.

Irish Londoner wrote:

LondonTiger wrote:For the £300m they get 15% of all future commercial rights to 6Ns and to the AIs played by 6Ns teams. It is a permanent stakeholding and would thus value the 6Ns (and AIs) at £2bn

Does anyone have the figures about how much the 6Ns/AI generate commercially at the moment - in other words how long will it take for the £300m to be covered and when it turns into profit for CVC? E.G. if the commercial rights of the games make £50m a year then 15% of £50m = is £7.5m that would take 40 years to even clear the original £300m investment - even a return of £200m a year means 10 years.

Either CVC are playing a very long game here or something else is going on.

Presumably they think that they can use their international connections to grow the sport. Take rugby and sell the rights in places that traditionally have been difficult to reach. Their are expats all over the globe to market the games to via television they can provide a small base audience from which to grow the profile. CVC must be confident of growing the pie so that their slice increases year on year or they wouldn't bother.

formerly known as Sam wrote:

Irish Londoner wrote:

LondonTiger wrote:For the £300m they get 15% of all future commercial rights to 6Ns and to the AIs played by 6Ns teams. It is a permanent stakeholding and would thus value the 6Ns (and AIs) at £2bn

Does anyone have the figures about how much the 6Ns/AI generate commercially at the moment - in other words how long will it take for the £300m to be covered and when it turns into profit for CVC? E.G. if the commercial rights of the games make £50m a year then 15% of £50m = is £7.5m that would take 40 years to even clear the original £300m investment - even a return of £200m a year means 10 years.

Either CVC are playing a very long game here or something else is going on.

Presumably they think that they can use their international connections to grow the sport. Take rugby and sell the rights in places that traditionally have been difficult to reach. Their are expats all over the globe to market the games to via television they can provide a small base audience from which to grow the profile. CVC must be confident of growing the pie so that their slice increases year on year or they wouldn't bother.

It's possible but I don't see it - I think the BBC/ITV/IRB already sell the rights to the 6Ns to anyone who wants them outside the six countries involved and in this day of you tube and other media I'd suggest anyone who wants to watch the highlights of Wales V Italy can do. I'll await to be presently surprised.
Possibly a lot of it hinges on what they have agreed are "commercial rights" - for example does that include money for things like sales of replica kits?

Most of the 6 nation Unions make most of their money from the 6 nations Ireland and Wales Unions Generate about 80m a year, so at a guess the commercial rights to the 6 nations are around £40m
million per Union. At a rough guess this would make CVC 36m a year, if they increase revenue its maybe 6/7 years to break even and profit from then on in.

If the 6N sell all the AIs as one package shared out among the unions that would be more than currently. It would mean the SH countries would need to buy the whole package to see their team.

Selling the AIs as a package will bring in a nice bit