SRU braced for bad times despite £20m CVC windfall
ANY investment in sport at present has to be seen as a major vote of confidence given the uncertainty surrounding a full resumption of play. A multi-million-pound, long-term investment is doubly welcome, especially when the agreed sum is the same as the one that was on offer months ago, before the coronavirus crisis.
Little wonder, then, that
SRU chief executive Mark Dodson greeted the news of the agreement between
CVC Capital Partners and the PRO14 so positively. In return for a 28 per cent share in the tournament, the private equity firm will pay around £120million, with Murrayfield’s share being “north of £20m” according to Dodson himself. The Irish, Welsh and Italian unions – the latter having become members of tournament organisers
Celtic Rugby – will also receive a significant share, as will PRO14 itself. As Wales and Ireland each provide four teams to the competition compared to the two from Scotland and Italy, they will receive larger sums.
The payments will be spread out over several years, with the first tranche being handed over almost immediately. While the SRU still expects to be hard-hit by the suspension of play, the money will at least mitigate the impact of the shutdown. Which specific aspects of the Scottish game will benefit from the new source of finance has apparently yet to be decided, as Dodson explained yesterday.
“We’re very clear about what we’re going to do with the money itself,” he said.
“The money is going to be safeguarded, ring-fenced in the account. We want to ensure that this money exists in our balance sheet and supports work we’re doing to deal with the impact of the coronavirus.
“We realise the pro game is compromised and [there are] questions over restarts. We’re well aware of the difficulties clubs have and there is hardship everywhere. This money will be ring-fenced until we know what this pandemic will mean to us in the long term.
“We’ve got to understand the new future. We’ve been expanding for the past ten years and now you’re going to see a period of retrenchment. Nobody knows the future for rugby, be it grassroots, professional or international. We’ll be looking closely at how we get over this bridge from where we are now to when the pandemic subsides.
“As far as we’re concerned this deal will not be touched. It’s safeguarded until we decide on how we’re going to deal with the whole pandemic issue and what impact it will have in our business and it will be used in a sensible and sustainable way.”
CVC had a controlling interest in Formula 1 from 2006 to 2017 and was regarded by some as favouring a shortterm return over the long-term stability and prosperity of the sport. However, Dodson is confident that no such problems will arise within rugby, and that the PRO14 and CVC can work together to their mutual benefit.
“Whatever deal they struck with Formula 1 and how that worked is another issue. On this deal they have committed a significant amount of money to the league, and the ambition is that everyone would earn more. The whole purpose of inviting an investor into the league is that it can supercharge revenues.
“The idea is that we can bring extra money into the league for everybody, them included, so our whole purpose is to make sure this is how we maintain PRO14’s growth. The growth has been pretty substantial.
“They understand rugby. As we went into Covid-19 , it was a shock for everyone. They took their time to think about how they wanted to deal with it, it took longer to conclude because of that, but we’ve come out with a solidarity around the sport itself and a deal we’re very happy with on both sides.
“This deal sees a longterm sustainable league. We understand that there’s going to be disruption for up to nine, 10 months through coronavirus. They are looking way beyond that: it’s a commitment to our league in the longer term. In real terms it’s going to take a good number of years to supercharge the commercials without it. So they’re seeing this as very much a long-term play.”