Money talks as CVC set to reshape how we see rugby

“Big challenge is trying to keep that balance”

IT was July 2019 and the rugby season – on hiatus for most of the summer – was ratcheting up for a mammoth campaign. The World Cup was looming and Joe Schmidt’s Ireland were in the early days of pre-season to prepare for that assignment in Japan. Closer to home, there was a press briefing with Philip Browne, the IRFU’s long-time chief executive, on the agenda.

It was still holiday season and only a handful of journalists were in attendance for that briefing at IRFU HQ in Ballsbridge. There was much to talk about and digest during the hour-long chat with arguably the most powerful person in Irish rugby.

Ireland’s wretched Six Nations campaign, player contracts and a potential Thomond Park naming rights deal were all hot topics, but Browne, always careful and concise in his media dealings, would shed some light on how the game, here and abroad, was being reshaped behind closed doors.

CVC Capital Partners, the juggernaut private equity firm, had recently acquired a 27% stake in the English Premiership – in a deal worth more than £200million (€220million) – and it was believed they were having discussions with the Six Nations and Pro14 about similar deals.

Taking control of the commercial arms of the tournaments would be part of the agreement. Inevitably, the thorny issue of taking the likes of the Six Nations, the crown jewel of the European rugby calendar, off free-toair TV and sticking it behind a satellite subscription or internet paywall was put to Browne. His reply was telling. ‘The big challenge is trying to maintain the balance between free-to-air and the more lucrative pay-per-view or going right out into the digital space where people can buy highlights,’ he said at the time.

‘My kids don’t go to matches, they’d much rather be at home watching it on the television or on the laptop. It’s curious. It’s trying to find that balance.

‘The reality is there isn’t the same revenue available from selling rights to free-to-air platforms or broadcasters.’

So, there you have it. Everything is up for discussion, going forward. You’d imagine Browne would double down on that statement in the wake of the Covid-19 pandemic. The IRFU’s finances have been decimated by this sporting shutdown.

It has become apparent that the union has leaned on one revenue stream for far too long. Simply put, if they can’t fill Aviva Stadium on a consistent basis then the business model simply doesn’t work.

When you factor in that the men’s national team generates around 80% of the union’s total income then you fully understand that a business which reported record revenues last year can become a house of cards in the space of 12 months.

It’s the reason why CVC has been welcomed to the table with open arms. In May, it completed a deal with the Pro14 to acquire a 28% stake in the cross-border tournament. Browne confirmed that it was worth €33million to the union over the next three years, with a payment of €5.5million landing in the IRFU’s bank account immediately. A significant boost for a company – with almost 500 staff – which was burning through cash.

Negotiations with the Six Nations were put on ice when coronavirus struck, but Bernard Laporte – not for the first time – reportedly let the cat out of the bag last weekend when the president of the French rugby federation and World Rugby vice-chairman confirmed to the French union’s general assembly that a deal with CVC was ‘imminent’.

There have been reports ranging from €340million to €500million with regards to the proposed 14.5% stake in the championship. French publication

Midi Olympique predicted a figure of €450million to secure a significant slice of the Six Nations pie.

So, what does this mean for Irish rugby and the Six Nations as a whole?

CVC won’t spend long getting its feet under the table before it begins hatching its plans to make rugby more profitable on a global scale. This is a monstrous organisation with almost €70billion of assets. Currently, CVC has a portfolio of 86 investments, ranging from olive oil to a high-end funeral service known as ‘Nirvana Asia’. It owned Formula One for ten years before selling it to Liberty Media in 2016 for a significant profit.

CVC certainly seems to know how to package and sell things.

What may concern stakeholders, unions, players and fans, however, is how it goes about it.

Taking the Six Nations to the highest bidder or a collection of bidders is likely to be the first item on the agenda when CVC takes its seat at the top table in the coming months.

The current broadcasting deal with BBC and ITV (RTÉ and Virgin Media share the rights here) is set to expire after next year’s Six Nations.

It is believed that the Six Nations, guided by CVC, which is set to assume control of commercial rights, could sell off the 15 games in three tranches. By 2022, we could conceivably have a scenario where five games are free-toair, five are on Sky Sports and the other five on a streaming platform such as Amazon Prime.

Nothing will be off the table, going forward. The IRFU is set for a windfall, but it may cost them down the line.