English Premiership Rugby Clubs are waking up this morning to a tasty Christmas bonus with each of them, and London Irish sharing in a cash bonanza having agreed to the sale of a 27 per cent stake in the League.
Each of them will gain around £13 Million as a result of the deal but are being urged to spend on infrastructure and development rather than on players and fuelling wage inflation.
Each of the clubs are privately owned however so the encouragement may fall on deaf ears.
Looking at the smaller than expected crowds at matches in the heineken Cup over the past two weeks, at most venues not involving our own provinces, there will be an urge to bring in some star appeal in order to get the fan base activated.
The new shareholders CVC Capital know a thing or two about sport having turned a significant multi Billion profit on Formula One.
Their focus will be on maximising commercial revenues from sponsorship, licensing and broadcast deals, potenmtially strengthening them as a competitor of PRO14 Rugby but also of the sport at international level.
English clubs have been loss making over recent years and heavily reliant on the €30 million partnership with English Rugby on making players available.
Wage inflation has risine by 44 per cent on recent years and the clubs collectively lost a tens of millions.
There is a salary cap of €7 Million in place for the next couple of years which will help to keep costs under control but the danger is that without the players you cannot have success and without success there are plenty of alternative sporting options for fans and sponsors to turn to.
“Around 18 months ago the Board endorsed a strategy to take club rugby to a new level,” said Premiership Rugby’s Chief Executive Mark McCafferty, who confirmed the investment deal was agreed unanimously by the Clubs.
“Since Premiership Rugby was formed in 1997, our owners have invested more than £400 million to build up the clubs and the competition which today sees the Gallagher Premiership broadcast in over 200 countries around the world. It was the perfect time for us to identify the right partner to help accelerate our next phase of growth.
“We are delighted to have partnered with CVC, a company which has a very impressive track record of helping to grow sports businesses such as Premiership Rugby. Further developing the global appeal and following for the Gallagher Premiership through investment in the product and fan experience is one of the main priorities for the partnership.”
Premiership Rugby has seen rapid growth over the last decade with commercial income rising by more than 80% in the past five years.
Ian Ritchie, the chairman of Premiership Rugby added: “We have agreed that the proceeds from CVC Fund VII’s investment will be re-invested to drive continued growth in the sport, for the benefit of the fans, Clubs and players.
“The structure of the deal ensures that there is strong alignment of interest between CVC and the Premiership Rugby Clubs. CVC support our vision of growing the sport and we are looking forward to working closely with them to take Premiership Rugby to the next level.”
It will be interesting to watch the impact that the investment and the new shareholders have on the game in our nearest neighbours.
