Margin__Walker wrote: ↑Tue Sep 20, 2022 9:42 am Interesting article outlining some of the challenges
https://www.thetimes.co.uk/article/coul ... -r5006pvzh
SpoilerShowCould NFL model give English clubs route out of crisis?
Domestic game has lost £500m in professional era and relies far too heavily on rich owners, yet French league is in rude health. Alex Lowe asks where rugby in this country goes from here
Alex Lowe
, Rugby Correspondent
Tuesday September 20 2022, 12.01am, The Times
Let’s not pull any punches. The state of play in the Gallagher Premiership, a league that is thrilling on the field and enjoys growing fan engagement, is grim. Five of the 13 member clubs are in effect up for sale, with many owners suffering investor fatigue from losing millions each year.
Some clubs are reaching out to potential suitors. Mick Crossan has said that he would sell London Irish for £1. Newcastle Falcons and Gloucester are also believed to be open to offers. Simon Orange at Sale Sharks tweeted in July that he would be up for “partnering with a billionaire” (if he could find one).
Wasps have been struggling financially and Worcester Warriors have been brought to their knees by debt and alleged mismanagement, with questions being asked about whether the £15 million Sport England pandemic loan, with a 20-year repayment at only 2 per cent interest, was used as the government had intended.
The RFU is under pressure to strengthen its scrutiny of club owners and their business plans. It really should be the job of Premiership Rugby (PRL) but it was set up in 1996 as a commercial entity with no regulatory power. That needs to change.
“The governance of the Premiership is completely and utterly inappropriate,” Mark Evans, the former chief executive of Harlequins and Melbourne Storm, said.
The wider rugby landscape is littered with challenges. The club season clashes with the international season, denuding both. The Premiership will have its England stars on parade for roughly half of the fixtures.
England, meanwhile, will complain about a lack of access and a shortage of preparation time. It has been ever thus since the game went professional in 1995 and the RFU sat on its hands while the clubs snapped up all the players.
The concussion issue presents an existential crisis for rugby. One headmaster at a private school said recently: “If we have to get parents to sign a waiver that permits their child to play then it’s all over.”
Nevertheless the potential for growth at the professional end of the sport has been identified by organisations with clout. CVC, the private equity firm, has invested about £1 billion in rugby while Roc Nation, the talent agency, says it wants to elevate the sport by turning the players into stars.
That potential will be tethered while club rugby remains weighed down by its politics, its conflicts and its governance structures — but there is a growing acceptance across the league that the Premiership model is broken. The big question is how to fix it and what the future of the club game should look like.
A ten-team league? Two fully professional divisions? An NFL-style franchise system run centrally by PRL. The RFU has, within the past decade, investigated raising capital to bring the Premiership more directly under its control. Would it do so again?
How did it come to this?
“I don’t think the game has been sustainable since it turned professional,” one senior club executive said. “I’ve heard recently that the clubs have lost £500 million since the start. The competition is fantastic but it is not commercialised as well as it should be.
“We are paying players too much money and not getting the relevant income in. We are losing millions a year and the current situation of wealthy owners covering the costs just can’t go on.”
The spending on salaries has been driven by the international game, where the England players receive up to £25,000 a Test in return for selling out Twickenham and generating upwards of £10 million in revenue for some fixtures. That has had a knock-on effect and the elite players have benefited from being paid by two masters — but the club game has failed to keep pace commercially.
PRL made a dog’s dinner of its most recent television-rights deal so BT Sport re-signed for about the same as it had previously been paying, at about £40 million a season. The French Top 14, by contrast, achieved a 17 per cent uplift in its deal with Canal+, worth £390 million over four years, 40 per cent of which goes to a thriving second tier.
CVC injected £200 million into PRL when it bought a 27 per cent stake, which gave the clubs a cash windfall of about £13 million each. Although earmarked for facilities, the money was swallowed up by the pandemic and the clubs now receive 20 per cent less in annual commercial income as a result of the deal.
The pandemic led to clubs checking their spending on players, initially imposing a league-wide pay cut, then lowering the salary cap from £6.4 million to £5 million as they battled to stay afloat, precipitating smaller squads and an exodus of big-name overseas players. The clubs are now essentially propped up by wealthy owners and long-term government loans.
Does the league need a commissioner?
“There is a reason why we have never fixed the business model in the Premiership and that is because you can’t get it through 13 voting clubs,” Evans said. “It is a ludicrous situation where you have to call a meeting of 13 shareholders who are all conflicted. It needs far more executive power.”
Simon Massie-Taylor, the chief executive of PRL, and Martyn Phillips, the chairman, want to secure a mandate from the board so they can make strategic decisions in the best interests of the league.
That would emulate the governance models used successfully to drive up the value of the NFL and the AFL, the governing body of Australian Rules football, which this month landed a staggering seven-year television deal for its 18 clubs worth £2.64 billion.
Not all club owners are convinced by the commissioner-style model but PRL’s mission is to attract the nine million people who watch England in the Six Nations but do not engage in the Premiership. By definition, that requires broader thinking and a more centralised approach.
“Then you can make decisions for the long-term benefit of the league, which in hindsight we have struggled to do,” one club owner said.
“We need to double our TV money; we need to double or triple our sponsorship money. Somebody independent should be given the authority to come up with a new way of doing it.”
The magic number?
The salary-cap debate is indicative of the fork in the road at which PRL finds itself. The cap is due to return to £6.4 million in 2024-25 unless more than ten clubs vote to keep it down.
Those clubs in a more perilous financial position want it to remain at its present level, or drop even further and for it to only move up in line with revenues. It will go back up because there are enough clubs who take the opposite view: that if the league is to be a commercial success, with the star names on the field, it cannot move at the speed of the slowest.
“All that happens is that you take it down to the lowest common denominator and that, in the longer term, is not a feasible option,” one senior club figure said.
“You have clubs with a turnover of around £10 million — £4 million of that is central revenue and they are probably paying more than £6 million on players. It just does not make sense. It is like going to a casino and you want to play on a table with a minimum bet of £5,000 but you only have £100 in your pocket. It doesn’t work. At a certain point you just can’t play. You can’t continue with three or four clubs that shouldn’t be there.”
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If Worcester survive, the Premiership is likely to comprise 14 teams in 2023-24, with Ealing Trailfinders favourites for promotion. Rob Baxter, the Exeter Chiefs director of rugby, and Pat Lam, his counterpart at Bristol Bears, have expressed a view that a ten-club league would be optimal. A 12-team league could also work, depending on the structure of the European competitions.
“It feels odd that we’ve allowed a system to develop where it has become quite difficult [for clubs] to have England players,” Baxter said. “You have to expect them to be away for more than half of your Premiership games. It feels difficult to be a real supporter of the England team.”
There has been an idea floated about the league expanding into two divisions of eight teams with a 70-30 revenue split, which may help those less commercially successful clubs find a natural level while remaining fully professional.
The most radical option would be for PRL to secure the required funding from an investment bank, buy the clubs and turn the whole league into a centrally run franchise competition, underpinned by a collective bargaining agreement. There is a theory, too, that CVC is biding its time with a plan to do just that.
Even if the franchise idea never comes close to reality, PRL has been looking to the United States for inspiration. The NFL has a commissioner and it has a revenue-share arrangement that places all ticketing, merchandise and sponsorship money into one pot. The NFL franchises have agreed to sacrifice home games to play international regular-season fixtures in England, Germany and Mexico.
“The foresight of those owners in the NFL was unbelievable. The big-market teams said they would share their revenue equally, which means Green Bay can compete with the New York Giants — and look at what has happened to their revenues,” Martin Anayi, chief executive of the United Rugby Championship (URC), said.
“Collaboration was really, really important. Getting something that works across all those markets took unanimous buy-in.”
At present, PRL has 13 clubs operating independently, trying to market themselves, push ticket sales and sell merchandise within their existing markets. If professional club rugby is to become more commercially successful, if it is to appeal to those floating nine million rugby fans, then it will require a more unified strategy.
If that NFL system were transposed on to Premiership Rugby, the league would take regular-season games into new territories to grow its appeal outside the catchment area of each club.
There are vast swathes of the South East, through Essex, Kent, Sussex and Hampshire, where rugby is huge but there is no top-flight club, so games in Brighton? A double-header at Elland Road in Leeds? Moving the final from Twickenham is already under consideration.
The URC shares a London office with PRL and Six Nations Rugby, three CVC properties under one roof, and collaboration is high on their agenda. Could they move the Bristol versus Bath derby to the Principality Stadium in Cardiff and stage it as part of a double-header with a URC game? It is not beyond the realms of possibility.
“We share an office because we pretty much do the same things but not in the same markets. So isn’t that the best business case to grow as much as we can collaboratively? Until we really do that, I don’t think rugby as a game is optimised,” Anayi said.
This kind of thinking at PRL will be accelerated by the imminent arrival of a new chief marketing officer, Rob Calder, who was one of the brains behind the Hundred, the new cricket competition that upset traditionalists but has engaged a younger generation and boosted the women’s sport.
His actual job title will be chief growth officer, which demonstrates quite clearly the league’s intention to use this financial crisis as an opportunity for evolution — if not revolution.
A bit of wishful thinking here as the HQ's of both the URC, and Six Nations Rugby are based in Dublin. "Sharing" an office in London, really means having use of PRL offices when needed, rather than having the expense of renting for them selves in London. And, just as PRL wouldn't like a London based club in the URC, the URC would not look kindly on PRL matches taking place in their bailiwick, so to speak.The URC shares a London office with PRL and Six Nations Rugby, three CVC properties under one roof, and collaboration is high on their agenda. Could they move the Bristol versus Bath derby to the Principality Stadium in Cardiff and stage it as part of a double-header with a URC game? It is not beyond the realms of possibility.
The presence of CVC money in both leagues is interesting, and an NFL type system maybe their ultimate aim. Which would mean, so far as PRL clubs are concerned, and probably also the Welsh, being told where to go (ie 1, possibly 2 clubs per large urban area; and nobne within say 50 - 100 km of each other).
