As CVC investment into Rugby continues at a frightening pace and terrestrial rugby coverage could be coming to an end, what position does this place the sustainability of rugby?
David Challis analyses the state of commercial rugby going forwards, referencing the role of private equity, the next round of television deals and where this places the commercial state of rugby.
It is important to take a holistic approach to this topic. Six Nations under a pay-TV wall, the profitability of club rugby and CVC rugby investment are all wrapped up together. Looking at any one in isolation is misleading. The whole picture must be considered.
The Problem with CVC deals in Rugby
The dangers of CVC investment in club rugby competitions are fairly obvious. Yet somehow appear to be roundly ignored. CVC has taken 27% of the Pro 14 and Premiership revenue in return for a lump sum of money.
Naturally, this is good in the short term for clubs, who are struggling to breakeven and compete with rising wage costs. However, going forwards what does this do for clubs, diminishing returns on television deals throws the sustainability of club rugby into further question.
The role of the CVC in packaging television deals could prove beneficial in the long run. However, if we are to take their involvement in Formula One as an indicator, things look grim for rugby. CVC has been accused of extracting money from the racing sport and leaving it poorer when it sold in 2016.
Is this the ‘end of rugby’ on Terrestrial TV?
This leads to a discussion about what continued private equity investment in rugby could result in. When the Rugby Paper broke the story that at the next round of television deals the Six Nations could leave terrestrial TV the rugby world went into meltdown.
People cried out that one of the last bastions had fallen away and the conglomerates had taken over. There has been hysteria underlined by the concern that placing rugby behind a paywall would make it less accessible. Thus hindering the growth of the game which should be the main concern of all.
For the already converted fan, however, rugby behind a paywall probably makes little difference. Most will continue to watch regardless. The change may also result in a superior product which in turn may attract more fans to the game.
Comparisons to Cricket and Golf, which have followed similar paths, have already been made. Many have pointed to these examples as reasons that rugby should avoid such a path. However, comparisons across very different sports with fan bases of different demographics rarely add up to much.
It is important to point out that is this point nothing is concrete. While we may be quick to mourn the loss of what some see has an historic institution such emotional reactions are likely to do more harm than good. When the rights go out to tender later this we will get a clearer picture of the situation.
Wider picture for World Rugby
Embed from Getty ImagesWhilst for many the loss of easily accessible Six Nations coverage is a big deal, where rugby is moving is the more pressing matter. With CVC increasing their stake in the sport and thus building more of a power base it will be intriguing as to what will be their next move.
The concept of a World League; which the Home Nations unions blocked last year, is one option. Again the purists may complain, but a competition which makes all internationals ‘meaningful’. At least in a more obvious sense to a non-rugby viewer, could be a very appealing prospect. It is not everyone’s cup of tea but to the already converted any change will seem unnecessary.
The prospect of changes to European club rugby is also likely. The likely outcome is some sort of packaging of Guinness Pro14 and Premiership television rights in order to align the competitions. More outrageous thoughts could see a British and Irish league but, this looks somewhat farfetched at this stage.
CVC Rugby and Investment: concluding thoughts
Rugby is still in its relative infancy with regards to professionalism and commercialization. While rugby fans like to think the sport is massive, in reality, viewing and participation numbers are and likely will remain to be a drop in the ocean compared to the likes of football.
This does change the expectations when looking a the possible effects of CVC involvement in rugby. Any deal relinquishing significant portions of control for a lump sum of money is a risky move. If television revenues do not increase then European club rugby could be in trouble.
The future of CVC involvement may be bright for rugby, if they can deliver on promises to grow the game then everyone wins. This may mean abandoning the traditional roots the fans seems to desperate to cling onto. Only time will tell and whilst we should look at all changes to the sport we love with a critical eye, hysterical and hyperbolic reactions that we have seen of late can only be detrimental for the game.
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