Fans – and arguably some teams and their owners – like rugby just as it is: homely, matey, blokey (but also family-friendly), old-fashioned and still, after 24 years, in many ways amateurish.
Callum MurrayCallum Murray is editor of Sportcal Insight and editorial director of Sportcal. He focuses on the work of the IOC and of the international federations.
What can you get for £210 million ($274 million) in sport these days?
Paris St Germain paid Barcelona a record $263 million for Neymar in 2017, and that same year Barcelona announced that a new contract signed by Lionel Messi gave him a transfer value of an apparently absurd $853 million – a figure that was, admittedly, designed precisely to make sure that transfer never happens.
Nevertheless, those figures only make spending £210 million on 27 per cent of an entire top-tier league in another long-established, popular international team sport sound like pretty good business. The league was English rugby union’s top-tier Premiership and the investor was CVC Capital Partners, the Luxembourg-headquartered private equity firm.
The £210-million investment was agreed unanimously by the 12 clubs that make up Premiership Rugby, the Premiership’s governing body (Premiership Rugby had turned down an earlier proposal for CVC to take a majority controlling stake, in a deal worth £252 million).
Mark McCafferty, Premiership Rugby’s chief executive, insisted that the investment would not simply result in wage inflation for players [a clear and obvious reference to football], but would instead be used to improve club facilities and increase the league’s global exposure and appeal.
Comparisons between football and rugby are, of course, invidious: for one thing, rugby union has only been a professional sport for about 24 years; football, practically for ever. But anyway, here goes.
Investment in rugby club facilities is sorely needed. On Saturday I went to Saracens’ Allianz Park in north London for a Heineken Champions Cup match against Glasgow. The match mattered – the winner would get a better draw in the quarter-finals of the closest thing rugby has to the Uefa Champions League – and the stadium was sold out.
A sell-out crowd in the Uefa Champions League is one thing. In the Heineken Champions Cup, it’s quite another
But a sell-out crowd in the Uefa Champions League is one thing. In the Heineken Champions Cup, it’s quite another. Saracens are a fine team. Their star player, Owen Farrell, the poster boy of English rugby, pulled out at the last minute with a hand injury, but the starting fifteen could still boast eight England internationals, and a couple more came on in the second half (meanwhile, Glasgow fielded eight Scotland internationals in their starting line-up). Saracens are presently in second place in the Premiership, having won it last season. They also won it in 2010-11, 2014-15 and 2015-16.
In both 2015-16 and 2016-17 they won the Champions Cup. They’re located in London. They’re one of the top teams in Europe – the rugby equivalent of, say, Juventus or Manchester United, but maybe a bit behind Bayern Munich (Saracens share a stadium naming rights sponsor with both Juventus and Bayern) and Barcelona.
Juventus’ Allianz Stadium seats 41,507 spectators; Manchester United’s Old Trafford, 74,994; Bayern’s Allianz Arena, 75,000, Barcelona’s Nou Camp 99,354. Saracens’ Allianz Park holds just 10,000 - that’s about the equivalent of a typical stadium capacity in the English Football League’s fourth-tier League 2 - and the club doesn’t even own it. It’s owned by the local Barnet Council and shared by two athletics clubs. Indeed, that 10,000 capacity can only be reached by building two temporary stands over each end of the running track.
Saracens don’t play all their matches at Allianz Park. Really big games, such as one against London rivals Harlequins in March, are staged at much bigger grounds: England’s Twickenham Stadium or, in the case of the Harlequins derby match, the London Stadium, the former Olympic Stadium which is now the home of the Premier League’s West Ham United.
But look elsewhere in the Premiership and it’s a similar story: only one club has a stadium capacity of over 20,000 (Leicester's Welford Road), apart from those sharing football grounds, such as Wasps (which now own Ricoh Arena but share it with Coventry City) and Bristol (Bristol City’s Ashton Gate).
The deal with CVC was signed because a new income stream was considered vital by Premiership Rugby clubs, given that collectively the clubs lose about £30 million a year, close to £2.3 million per club on average, with Worcester Warriors having lost £8 million and Harlequins £6 million in the past accounting year, while only Exeter Chiefs (the present Premiership leaders) made a profit.
Of course, it goes without saying that in a digitally-connected world there’s much more to a league than the capacity of its stadia. The deal means that CVC, which previously held a controlling stake in Formula 1 and believes that the Premiership is undervaluing itself, will run its commercial arm, but not the league itself. It has been reported that each club will receive a lump sum of £18 million and benefit from further increases in broadcasting and sponsorship revenues achieved by CVC.
The 2018-19 season is the first under the title sponsorship of Gallagher, the US insurance broker, and the second in an improved four-year broadcast rights contract with UK pay-TV broadcaster BT Sport, which involves 80 matches per season being shown live, of which five are also available free-to-air on commercial network Channel 5. So, the shop window for the Premiership (and its sponsors) is already there.
But for how long? Of the Premiership’s projected annual revenues of about £80 million, more than half is being contributed by BT Sport. “The biggest danger I see is, what happens if BT walks away from rugby?,” one knowledgeable source tells me. “It’s renewed a few rights, but it let LaLiga, Serie A and UFC go. By that I mean it didn’t even bother bidding.”
BT could decide that sport has served its purpose of mitigating its broadband risk and helping it to launch its own mobile service, and walk away from sport completely
Something similar could happen with the Premiership, the source argues. Indeed, BT could decide that sport has served its purpose of mitigating its broadband risk and helping it to launch its own mobile service, and walk away from sport completely.
In this case, Premiership Rugby would have no alternative but to return to Sky, the rival pay-TV broadcaster, which has previously been thwarted in its attempts to centralise the sport (at present, various competitions are available via a bewildering array of broadcasters, including BBC, ITV, Channel 4, BT Sport, Sky, Premier Sports and Channel 5).
“If BT Sport crashes to the ground, you don’t have a Premiership Rugby proposition,” the source argues. “All of the clubs except Exeter are losing money. But three of the club owners [Bath, Saracens and Bristol] don’t even care. They’re worth billions in certain cases. For them, it’s an expensive but affordable hobby.”
Meanwhile, back at Allianz Park, there was something appealingly homespun about Saturday’s game. In one of the club restaurants ahead of the game, those with hospitality tickets were treated to an ad hoc interview with two injured Saracens players, including Sean Maitland, of Scotland and the British and Irish Lions, leaning casually up against the bar as they talked, and mingling amicably with fans of both teams (Maitland previously played for Glasgow).
In the first half of the game, the scoreboard wasn’t quite working properly and, while you could watch the replays of contentious incidents, you couldn’t actually read the score (thankfully it was sorted for the second half). Games between Saracens and Glasgow have recently gained a reputation for outbursts of minor violence (this is a proxy version of England versus Scotland, after all), and the stadium announcers were ready with a burst of the 1970s pop hit ‘Kung Fu Fighting’ every time a melee threatened.
Rugby clubs are typically a long- and deeply-established part of the local community. The clubs tend to work collaboratively through partnerships with the likes of local councils, universities and other local sports clubs. Indeed, Saracens recently took a 50-per-cent stake in Mavericks, the club that competes in netball’s UK Superleague, renaming the club Saracens Mavericks.
The two clubs aim to share resources related to elite player performance, gain access to a wider fanbase, commit to community outreach programmes and integrate key business functions.
Fans – and arguably some teams and their owners – like the sport just as it is: homely, matey, blokey (but also family-friendly), old-fashioned and still, after 24 years, in many ways amateurish. Plus, there’s that simmering threat that half of Premiership Rugby’s revenues could be removed at a stroke. Does CVC really know what it’s taken on?