The English Rugby Football Union is to earn almost twice as much as the IRFU from the CVC Investment in Six Nations Rugby that finally closed yesterday, despite the Six Unions holding an equal share in the equity of the tournament.
The deal is worth £365 Million and buys the Private Equity fund a 14.28 per cent stake in Six Nations Rugby and its future revenues.
The ‘dividend’ coming to Irish Rugby will be in the region of €56 million at current exchange rates, £48 million in the transaction currency. The English Union will get £95 million (€109 million) as a result of its bigger current audience share for the broadcast of matches. France will earn £90 million (€103 million), Wales £51 million (€56 million), Scotland £42 million (€46 million), and Italy £36 million (€41 million).
It will be a very important windfall in the current straitened financial times in which the IRFU is operating.
CVC invested in PRO14 Rugby and the English Premiership in the past year with the PRO 14 investment providing another financial boost for Irish Rugby of €30 million in May.
PRO14 Rugby Confirms €140 Million Investment
That investment was for twice as big a stake in PRO14 Rugby and the lower level announced yesterday is being held up as a hint that CVC will not necessarily be pushing for the Six Nations to go behind a paywall.
In a fractured media landscape, it is no longer a binary decision between free to air and paywall, but that remains the main narrative.
English politicians are renewing a campaign to make the tournament matches part of the ‘protected’ list that ensures free to air coverage but that has been resisted by the Unions in the past and it has never featured on either the British or the Irish list.
The amount of the deal is higher than had been feared nine months ago when in the depths of lockdown, which is a good thing for the sport and regardless of the merit of private equity investment, circumstances around the financial position of the sport made it inevitable.
The main question now is what it will mean for the sport’s flagship event in the northern hemisphere.
The TV broadcast deals are up for renewal at the end of this season’s tournament later this month.
Virgin Media are in possession here in Ireland having beaten RTÉ to the right’s for the Men’s tournament and with their recent loss of the Champions’ League, they will have more money to invest, if the price is right.
In the wings though lie Sky, Amazon and perhaps even a tournament owned direct to consumer offering.
It is unlikely the latter will be a viable proposition this time round but international trends in the US suggest that it will be in the future.
The next negotiation will also include the Autumn internationals which RTÉ held last time around.
Six Nations Rugby and the Unions have been highlighting CVC’s experience in commercial dealmaking as stretching well beyond broadcast rights and making positive noises about how the Women’s Six Nations will be a potential major winner.
The Sports Economy – Sport Finance and Private Equity
The reality is though that media rights are the main course. If Sky or Amazon want to turn their attention to creating an exclusive bid, it would mean a substantial increase in short term revenue.
Advocates will point to the long term winner that the English premier league has been behind a paywall for the best part of 30 years.
They will also look at the fact that the Heineken Cup has always been played behind a paywall and that the image and support of the Irish provinces has soared in that period of the professional game.
The counter-argument will be that the base of absolutely committed Rugby fans is not as deep as in other sports and that while the better off fans will be able to pay and pay enough to support the sport, that it will take it away from the mass audience.
It is a complex puzzle to pick through in advance, with the proof really only being confirmed after it has happened.
Would it still dominate the print, other broadcast and online media if it was on a limited media platform? Who can say with certainty?
This is the biggest ever private investment in sport impacting Ireland’s sporting ecosystem. It is a story with many nuances and we will be covering it in detail over the coming weeks and months as the detail of the full deal becomes more apparent.
Sport for Business Partners
