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Premiership up for sale
Bod (IP Logged)
05 September, 2018 08:11
From The Times today.

The Premiership is in talks over whether to agree a game-changing, historic deal for rugby by selling controlling ownership of the league to a private equity firm for about £275 million.

The deal is regarded by insiders as potentially the biggest step-change in club rugby since the game went professional 23 years ago, and is being compared to when football’s Premier League was formed in 1992.

The executive committee of Premier Rugby Ltd (PRL) has been in negotiations for about a year with CVC Capital Partners, the private equity company based in Luxembourg which made about £8 billion from its decade-long ownership of Formula One.

PRL is owned by 13 member clubs: the 12 sides in the Premiership and London Irish. The 13 club owners will have a special meeting on Tuesday when the executive committee will present the deal with CVC.

It is unlikely that a deal will be agreed and signed immediately but the meeting could give the green light for the completion of the deal. Club sources indicated yesterday that their valuation of the Premiership is higher than CVC’s offer. It is understood that, if the CVC deal is not approved, PRL has other equivalent investment to consider from outside of private equity
The RFU cannot stop the deal and thus prevent a new, outside influence from becoming one of the key stakeholders in English rugby. The RFU can veto new owners of the individual clubs, although it has no right of veto to ownership of its league.

The concern for English rugby is whether CVC will flex its muscle regarding its key assets. There is already a contest between club and country for control and ownership of the England players. If the deal with CVC were to go through, it would only be in the following years that any disagreement over how much time the players would be released for British & Irish Lions tours, for instance, or extra England camps, would be apparent.

It is understood that CVC would want to be a quiet partner within the game. However, it will be ruthless on commercial rights. It should be expected that it would drive a harder bargain with the RFU over the cost of player release for international windows.

The clubs have struggled in recent seasons to make the business of rugby work; collectively they lose about £30 million a year, on average £2.3 million each. It is hard to see many of them rejecting a windfall that would deliver about £17 million overnight to every club. The clubs could wipe out almost all of their debt. They see the deal as an opportunity to invest by building new stands and facilities.

Recent tranches of income received by the clubs, mainly from the sales of television rights, have gone largely to the players, which served to inflate player wages. However, there is an understanding among the PRL owners that the CVC money would not go the same way; the deal will not instigate another sharp rise of the salary cap.

The majority of the clubs are understood to be in favour of the deal. The significant opponent is believed to be Bath, who are controlled by the most influential of the owners, Bruce Craig.

CVC, it is understood, regards the Premiership to have been severely undercommercialised in the past decade. CVC’s model with F1 was based largely on selling TV rights globally. This is a pool in which PRL has only dipped its toes. CVC shares a strong relationship with Sky, the broadcaster of F1, who is likely to return to the negotiating table for TV rights of club rugby.

There will be concern, too, for CVC’s exit strategy. It will only be interested in leaving with a large return on its investment, as it did with F1 in January last year. Another potential problem for the clubs is that when CVC sells on its 51 per cent controlling stake, they could find themselves under any ownership. The Times understands that the fine-tuning of the terms for exit from the deal have yet to be completed, though first rights may go to the 13 clubs.

The deal could provide a significant windfall for English rugby, but there is huge potential for an escalation of the antipathy between clubs and the RFU.

Sports’ domestic TV rights:

Premiership Rugby (BT Sport) - £45 million per year
Premier League football (Sky, BT Sport, Amazon) - £1.5 billion per year
English cricket including internationals (Sky, BBC) - £220 million per year
Super League rugby league (Sky) - £40 million per year
NFL American football US TV rights - £5.5billion per year



http://1.bp.blogspot.com/_dOg4Ljp3kh8/Sf89bRrqecI/AAAAAAAAAJY/eJCF1kt4b0E/s200/DON%27T-SHOOT-THE-MESSENGER1.jpg

 
Re: Premiership up for sale
Gray_Lensman (IP Logged)
05 September, 2018 08:27
And is this the answer to why Bristol Sport rebranded Bristol as 'Bristol BEARS'?

 
Re: Premiership up for sale
Channel2 (IP Logged)
05 September, 2018 08:31
Quote:
Gray_Lensman
And is this the answer to why Bristol Sport rebranded Bristol as 'Bristol BEARS'?

Next season it will be Bristol Ferrari's.

 
Re: Premiership up for sale
Bristapo (IP Logged)
05 September, 2018 09:17
No it's not. It's one of many considerations /offers with no decision made at all. The Premiership clubs think it's not enough.

 
Re: Premiership up for sale
Olly (IP Logged)
05 September, 2018 10:15
The fact being they only want to take it over so they can make money out of it. Clubs will look at the immediate cash windfall. But if the Premiership was run the same way they would not only get the immediate windfall they would get the profits this company would have made as well. We also have to protect the championship and the grass routes. I'm not convinced it's a good thing.



Bristol, like the glass is Blue, Bristol Blue.

 
Re: Premiership up for sale
French Hoops (IP Logged)
05 September, 2018 10:25
I think Gray is largely right. Lansdown was quite clear at the time: Rugby is set to grow in new areas - Asia, North America - where the use of such monickers is entirely common. He wants the 'Bears' to become a global rugby brand. And frankly i'm all for that IF the club remains run in a commercially sensible way, AND the tradition of everything that is 'us' stays.

 
Re: Premiership up for sale
Rinkadink (IP Logged)
05 September, 2018 11:08
Did not see this coming. What's surprising is how comparatively little the sport gets in TV rights.

Would hate prem rugby to go back on Sky though, and not just because of Barnes! (:

 
Re: Premiership up for sale
hooter (IP Logged)
05 September, 2018 11:35
If they were to put rugby ( league as well maybe)on a dedicated rugby channel the I would cancel all subscription to bt and sky and be willing to pay more than I currently pay for bt.

 
Re: Premiership up for sale
Rich. (IP Logged)
05 September, 2018 11:48
Quote:
French Hoops
I think Gray is largely right. Lansdown was quite clear at the time: Rugby is set to grow in new areas - Asia, North America - where the use of such monickers is entirely common. He wants the 'Bears' to become a global rugby brand. And frankly i'm all for that IF the club remains run in a commercially sensible way, AND the tradition of everything that is 'us' stays.

OK, but I don't see what that has to do with this potential buy-out of Premier Rugby?

 
Re: Premiership up for sale
French Hoops (IP Logged)
05 September, 2018 13:09
The only reason a PE or Venture capital company would buy Prem rugby is if they thought - which they clearly do - that the sport of club rugby in England was under-commercialised. One of the elements of that, besides 'only' getting 45mil per year from BT Sport, is that Premier Rugby makes next to no money selling the rights to other markets.

They will then push a lot on getting English club rugby into 'new' markets, by having it shown on cable telly in the States, China, Malaysia, etc, etc. And Lansdown, seeing this as inevitable, was I am sure inspired to look at an American-style rebranding - ie adding the Bears - because audiences in those countries respond well to that kind of naming device.

In other words, rebranding to the Bears is getting ahead of a likely curve, which you might call the internationalisation of English rugby. He wants ours to be a leading 'brand' as that happens - so that the next time you wander the streets of Shanghai, there's kids in Bears tops....

 
Re: Premiership up for sale
AlexInSouthville (IP Logged)
06 September, 2018 07:36
Quote:
Bod
Recent tranches of income received by the clubs, mainly from the sales of television rights, have gone largely to the players, which served to inflate player wages.

This has been the biggest issue IMO - inflation in player wages has far outweighed increases in revenue. The sooner the salary cap is tweaked to consider wages as a percentage of turnover, the better.

 
Re: Premiership up for sale
Gray_Lensman (IP Logged)
06 September, 2018 08:14
Turnover on what though? Wasps show the highest turnover, but that includes revenue from the Arena (hotel,casino, conferencing etc). They seem to get about half from rugby and I think the turnover is based on the group. So do you strip out non-rugby activity or if you include it does that mean we would use BS turnover? I agree that linking player salary to commercial performance makes a lot of sense but it also means that clubs that are less commercially successful are automatically disadvantaged. If you use, say, London Welsh as an example they would have spent even less than they actually did and done even worse (although they possibly wouldn't have gone bust). But I can't imagine Ealing have any income other than the owner's loans that would enable them to recruit at a level even as high as ND1. It is a tricky problem.

Of course the way F1 made money was by selling the rights to a race to the highest bidder, ending up with races in locations with less than savoury reputations and a high percentage of all the income going to CVC. Not quite sure how that translates to Premiership rugby but Brighton Bears anyone?

 
Re: Premiership up for sale
TimothyQ (IP Logged)
06 September, 2018 09:11
They won’t sell the independence of the professional game unless they get top $$$ or they have no other choice. They’re right to consider all avenues, but this is a very dangerous idea and is not in the interests of the 13 clubs.

If there are opportunities to expand into overseas markets, PLR should be able to find and exploit these opportunities themselves. If they’re not able to do so, then I suggest a change of management is a better option than a change of ownership.

Hopefully Bruce Craig digs his heels and prevents this short termism from harming our game.

 
Re: Premiership up for sale
BigO (IP Logged)
11 September, 2018 10:52
Big meeting today to discuss this offer, apparently.

Decent article on how it might play out:

[www.theguardian.com]

Rarely has professional rugby union scanned the horizon with such mixed emotions. In several parts of the world there is a sense of a sport which, financially, requires some fresh impetus to fulfil its potential. That is certainly the mood with England’s leading club owners as they meet on Tuesday to discuss the £275m bid from a private equity firm to purchase a major stake in the Premiership.

This initial offer is set to be rejected but it is just the first example of how times are changing. There will be other plans on the table soon enough, some of them outlandish, others merely contentious. Take European club rugby, for example. The Guardian understands there is a desire in certain influential quarters to reduce the number of competing sides in the Champions Cup from 20 to 16. Only the top five sides each year from the respective three European-based leagues, plus the winners of the previous season’s Challenge Cup, would earn entry. The idea is to make the competition more cut-throat and, theoretically, attractive by ensuring more big matches rather than as opposed to flooding European weekends with wall-to-wall, occasionally mediocre fixtures.

It is just the start. Another suggestion is for a Ryder Cup-style weekend showdown in mid-June between the best club or provincial teams in Europe and their southern hemisphere counterparts. Imagine the five leading New Zealand Super Rugby provinces coming over to play the top five clubs in England. On the same weekend the three top Australian sides might play in Ireland while the five best South African sides are split between Wales and Scotland. The 13 fixtures would be spread from Friday to Sunday, all of them counting for one point apiece. The first hemisphere to register seven wins would officially be declared the stronger.

Would it capture the public imagination? With international tours now pushed further back in the calendar, the clubs can clearly scent a possible gap in the market. The problem, of course, is that the same players cannot play every week or they will be dropping like muscle-bound flies. The clubs reckon they have an answer to that as well: the squads of the future (some are already doing so) will contain over 60 players to enable them to field competitive teams in the newly recast and expanded Premiership Shield (formerly the A League).

The next step will be to stage these second team games in parallel with the Premiership, thus giving every club a home game – and extra bar income - every weekend. The clubs also want to look again at the issue of promotion or relegation, preferably in a way that does not leave them open to accusations of wrecking the chances of an ambitious club like Exeter or Worcester – or Ealing Trailfinders or Cornish Pirates – ever joining the established elite.

So how about this for a solution: promotion and relegation remains, but with a controversial twist which would see the Premiership Shield morph into the official new second tier of English league rugby. It would contain the 12 Premiership reserve sides alongside London Irish and the next best non-promoted side in the Championship which, last season, was Ealing. If London Irish or Ealing finish top of the heap they would go up; if one of the reserve sides win the league there would be no promotion that year. At the bottom there would also be a play-off to enable the champions of the next level down – maybe Yorkshire Carnegie or the Pirates? – to step up if they prove themselves strong enough to do so.

There are, clearly, conflict of interest problems here. What if Worcester’s second team and a financially beefed-up Ealing were due to meet in the final match of the season with victory set to ensure promotion to the Premiership for Ealing? And what if Worcester’s first team, coincidentally, were the bottom-placed Premiership side on the brink of dropping down from the top tier? It hardly takes a genius to predict that, if the rules permitted, the Warriors would send out their first XV instead.

There will also be many who see it as ring-fencing by stealth, a cosy way of insulating the big boys. They clearly have a point. But, pausing for a moment, imagine how things might look in 20 years. How many Championship clubs currently without their own 20,000-seat stadiums are likely to have one at their disposal in the medium-term future? Do they really want to head down the London Welsh route to potential financial ruin? Assuming there was sufficient compensation forthcoming from the Premiership clubs and/or the RFU might the new system also enable young players outside the academy structure to measure themselves directly against their supposed peers?

And what if, actually, there is no absolute right or wrong, merely a game wrestling with the stark reality that something has to change to make the club game profitable? Many of the owners will maintain that, actually, things are not that bad: even if they have lost somewhere approaching £300m on paper over the years, the valuation of their league at almost £600m – with power to add – suggests it could yet be an investment that pays off.

Like it or not, the clubs are not about to melt quietly back into the shrubbery.

 
Re: Premiership up for sale
Platwell House (IP Logged)
11 September, 2018 17:42
I heard a rumour that the RFU were going to come in with a counter offer

 
Re: Premiership up for sale
Rinkadink (IP Logged)
11 September, 2018 19:11
Quote:
Platwell House
I heard a rumour that the RFU were going to come in with a counter offer
They won't have that kind of money, surely? Valued at £800 million apparently?

Given how they run the championship I'd be more fearful of the RFU getting a significant stake in PRL than CVC!

 
Re: Premiership up for sale
Rich. (IP Logged)
11 September, 2018 19:22
Check out the Guardian article on how dreadful that same company were for forumula 1 (just take take take and all short term as long term did not help their profits).

Of course Uncle Bruce valueing it at £800M doesn't mean it is really worth that.

 
Re: Premiership up for sale
Field marshall (IP Logged)
11 September, 2018 19:40
Quote:
They won't have that kind of money, surely? Valued at £800 million apparently?
They are offering up 50%, even then $400m is likely overpricing it. The RFU should consider it, it would do wonders for the national team. I do wonder about their commercial nouse though, the whole organisation could do with a freshen up.

 
Re: Premiership up for sale
Rinkadink (IP Logged)
11 September, 2018 21:04
Quote:
Field marshall
Quote:
They won't have that kind of money, surely? Valued at £800 million apparently?
They are offering up 50%, even then $400m is likely overpricing it. The RFU should consider it, it would do wonders for the national team. I do wonder about their commercial nouse though, the whole organisation could do with a freshen up.

I want what is best for Bristol Bears as a club, England won a world cup without needing central contracts and maybe should have a look at themselves before blaming PRL or anyone else for their current poor internatinal form. Look at the state of the championship, the RFU's goal was a smaller yet fully professional competitive league. It is an outright failure of massive proportions on pretty much every front and the RFU have to shoulder their not inconsiderable share of blame. It even took them three years to find a minor sponsor for the championship, could you imagine these guys having control of the top tier and what would happen to professional rugby in this country? No thanks.

 
Re: Premiership up for sale
hooter (IP Logged)
12 September, 2018 10:52
What exactly are they selling though, all the club's are owned by different people and if 5 or 6 off them decided they don't like the deal what's to stop them setting up there own league.

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