Almost twenty-five years since rugby union embraced professionalism, the sport stands at a crossroads both internationally and domestically, with the proposed introduction of the Nations Championship.
The future of the sport will be shaped by crucial decisions to be taken in the coming weeks and months. They will determine whether it continues to grow and reach its undoubted potential.
The Six Nations (England, France, Ireland, Italy, Scotland and Wales) are considering an offer from private equity investor CVC. It is reportedly worth some £100m to each of the unions, for a 30% stake in the competition.
CVC has also acquired a 27% stake in Premier Rugby in England. Rugby union’s future development now has CVC as a major power broker.
Thursday’s meeting in Dublin convened by World Rugby to discuss plans for its Nations Championship competition no doubt influenced the timing of the Six Nations story.
World Rugby CEO Brett Gosper gives update on ‘positive and constructive’ meeting today with key stakeholders on Nations Championship concept. pic.twitter.com/0Ash6RehXx
— World Rugby (@WorldRugby) March 14, 2019
World Rugby confirmed that in partnership with sports marketing company Infront, they would guarantee a £5bn investment over an initial 12 year period. This would cover media and marketing rights, but not involve any equity sale.
The format would see twelve teams in each of the three divisions. The top division would comprise the six Six Nations sides in a northern conference. A southern conference would be the four Rugby Championship sides (Argentina, Australia, New Zealand and South Africa) plus two others, currently Fiji and Japan.
Sides would play each other once with the top two in each conference playing off in a final game. The other two divisions would repeat the same format. It would also see relegation and promotion between all three to provide a pathway for emerging unions.
Following positive meetings with rugby’s major stakeholders in Dublin today, here is the proposed Nations Championship format. pic.twitter.com/7lOzBgHWC7
— World Rugby (@WorldRugby) March 14, 2019
Stakeholders were already lining themselves up to question the credibility of the Nations Championship concept before the Six Nations story emerged. If the CVC/Six Nations deal goes ahead then it surely kills off the Nations Championship.
The International Rugby Players Council expressed concerns the new format would seriously impact on player welfare and the game’s integrity.
The Pacific Nations were initially shocked to discover they were being excluded from the competition. They warned of their ultimate demise should the tournament go ahead as originally reported.
This prompted World Rugby to release their current proposal which does provide for inclusion and development for those nations outside of Tier 1.
This week England’s Premier Rugby and France’s LNR released a joint statement. Their view was that the Nations Championship breached the San Francisco agreement of 2017. This set the framework for the structure of the international calendar until 2032. In their belief that World Rugby was excluding professional leagues from talks and not involving all stakeholders in the process, they agreed they would “take any action to preserve their rights and competitions”.
However, after releasing initial financial forecasts, World Rugby now appear confident their proposal will receive the backing of all stakeholders.
Statement by Sir Bill Beaumont
In a statement issued by World Rugby, Chairman Sir Bill Beaumont stated:
“There was strong recognition that World Rugby’s Nations Championship proposal, based on a true pathway for all, has been developed with great care, extensive evaluation and with the global game at the forefront of our thinking.
“We are encouraged that the format revisions and robust financial model has been well-received. Everyone, not just the established teams, will benefit, accelerating the development and competitiveness of the global game.
“However, as you would expect in an ambitious, complex and multi-stakeholder project, not everyone is in full agreement on the way forward, including the matter of promotion and relegation.
“This is a pivotal time for the game, and we will continue to engage and consult, but only by keeping the best interests of the global game at heart will we be able to achieve something truly impactful for the future success and sustainability of the game.”
Show me the money!
Financially rugby union finds itself in a precarious position at international and domestic levels of the game.
The Welsh Rugby Union is considering changes to their regional structure to deal with significant financial losses. In England the RFU has embarked on major cost restructuring so it can continue to meet its elite game commitments.
Player wage inflation in France is still a drain on Top 14 resources.
While, in the southern hemisphere, Super Rugby cannot attract the level of interest in the competition to match the unquestionable talent on display.
The Six Nations proposal and World Rugby’s Nations Championship are being driven by a need to secure greater levels of revenue to guarantee financial sustainability.
It’s felt the sport is yet to get anywhere close to maximising its earning potential, especially from the sale of broadcast rights.
The involvement of outside investors and commercial partners, such as CVC and Infront, provides an opportunity for immediate revenue injections that leagues and unions cannot generate themselves through organic growth.
CVC’s injections are thought to be £200m for the Premier Rugby stake and £600m for the Six Nations stake. The deal with Infront will see some £1.5bn of additional revenue for World Rugby. These are game changing numbers, but what is the cost to the sport they could bring?
Beware those bearing gifts
CVC and Infront, along with any other potential external investors, are not in this for the good of their health. They see an undervalued product. They will look to exploit this to its fullest extent in advance of their future exit.
Broadcast rights are the key element of revenue growth for rugby union. Rights holders all see massive potential to be gained from a more coherent strategy to the way they are sold.
At present there is a mix of broadcast partners, both free-to-air (FTA) and pay TV.
The balance currently struck between maximising viewers to drive interest and growth in the game, largely from FTA providers and the financial rewards the pay TV market provides, will come under increased pressure.
Pay TV and other digital platform providers will be in position to offer the level of financial growth that investors would be seeking under their respective models.
As the stakeholders of what is still a relatively young professional sport gather to discuss the different options available to shape its future, in what direction will they take it?
The balance between financial sustainability and sporting competition is something all professional sports have to weigh up.
They are not the easiest of bedfellows at the best of times. If we had to choose, we suspect the lure of financial reward will ultimately win the day.
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