Premiership backlash Why £275m plan to take over rugby is doomed
Clubs believe CVC bid undervalues elite game Concerns over release of international players
‘Given the rise in league revenue in recent years, it is not enough’
Premiership Rugby is expected to reject a £275million bid for a major share in England’s top league from a private equity firm – although two other finance-raising options are understood to be under strong consideration, Telegraph Sport can reveal.
Private equity firm CVC Capital Partners, which bought a 70 per cent stake in Formula One in 2006 for about £1.3billion and last year sold it to Liberty Media for around £6.2 billion, has made an offer to secure a 50 per cent holding in English club rugby’s elite tournament.
The deal, regarded in some quarters as a potential gamechanger for the club game, will be considered by owners at a board meeting on Tuesday.
However, the organisation’s rules state that such a financial inpremiership vestment requires unanimous agreement from clubs and it is understood that several believe CVC’S offer undervalues the tournament, despite combined losses of around £28.5million last year.
Rugby has seen its turnover rise dramatically to £70million this season, a rise of 88 per cent in five years, and those opposed to the offer believe that it does not reflect the potential growth of the league.
Premiership regulations also state that no entity is allowed more than a 25 per cent shareholding, which is currently split between 13 clubs, although the clubs would have the right to alter that if unanimity is reached.
However, it seems that the CVC’S valuation of the league at £550million has left some club owners underwhelmed while others have expressed concern at giving an outside body a major say in the sport’s affairs.
“Given the rise of the revenue over the last five years, the offer of £275 million is not enough,” said one senior club source.
“Selling 50 per cent or more of the league might give us a shortterm windfall, but it would result in lower central revenues going forward unless the investor is able to increase them significantly.”
Caution expressed over the CVC offer could make two other options that will be presented to club owners at the meeting on Tuesday more attractive.
It is understood that clubs will also consider an offer of smaller financial investment for a minority shareholding as well as an option to effectively take out a “mortgage” on future league revenues, giving the clubs a much-needed short-term cash injection.
Any new investment is likely to see the majority of clubs insist that it does not result in a hike in the salary cap and demand instead that the money is used to invest in facilities to grow the domestic game.
Saracens are currently looking for an investment for a £30million for a new stand at Allianz Park while Harlequins, Bath and Newcastle are also planning to upgrade their stadiums.
The prospect of an outside investor seeking to increase the commercial value of club rugby also raised fears of fresh aggravation with the Rugby Football Union over the release of top players to England, with the potential that clubs would demand more money from the governing body.
The RFU declined to comment, beyond saying that it would monitor developments, although one senior source claimed that a deal would require approval in a special general meeting.
“What will happen to academies and player development if profit is the motive?” asked the source. “How can the RFU inject huge amount of funding into a company who will be looking for a 9.25 per cent annual return on investment?”
The clubs, however, moved to allay those fears by insisting that any new investor would respect the current eight-year £225 million deal signed with the RFU in 2016, which secures greater access to England players and offers financial incentives for clubs to field English-qualified players.