Can CVC Capital Partners’ £230m investment into Premiership Rugby save loss-making English clubs?
It may not quite have got over the line at this week’s board meeting but CVC Capital Partners’ prospective acquisition of a minority stake in Premiership Rugby now seems to be a question of when, not if – and then, what will it mean for a domestic game ailing financially?
The most significant immediate change that CVC’s purchase of a 35 per cent stake for £230m would bring about is the passing of control of Premiership Rugby’s commercial operations to the buyout company which until 2016 owned a controlling stake in Formula One.
Under the terms of the proposal that Premiership chiefs expect to be rubber-stamped before the end of the year, this will affect England’s top-flight clubs in two ways. Each will receive a windfall of around £18m, but CVC will retain 35 per cent of annual central revenues.
In the short term, this gives Premiership clubs a means of stemming their alarming losses. The 12 teams lost a combined £28.5m in 2016-17 despite collective revenues growing by £12m, with only one club – Exeter Chiefs – posting a profit. Figures for last season are expected to be even worse.
Over the long term, by taking on commercial operations CVC has both the incentive and the means to grow the overall pot. If they succeed, the clubs stand to benefit too – as long as the pot grows by more than the 35 per cent that Luxembourg-based CVC would get to pocket.
Premiership clubs have recognised the need to do something. Two decades of professionalism have not made them any better off and accepting private investment is a way of funding the growth of the game while minimising the cost to the hard-up teams themselves.
In doing so they are following a trend in global sports. A $3bn revamp of the Davis Cup slated for next season is also the product of private finance, in this case from investment group Kosmos, which is fronted by footballer Gerard Pique and backed by tech tycoon Larry Ellison and e-commerce mogul Hiroshi Mikitani, two of the world’s richest men.
Even football bodies, awash with cash, have flirted with private money. Fifa’s proposed Club World Cup overhaul would be a joint venture with a consortium rumoured to be backed by Saudi money, while the Football Association showed itself to be open to selling Wembley Stadium.
There is a sense that rugby union is ripe for a reset. A partnership with CVC would allow Premiership Rugby to beef up its business acumen without ceding control and it is these public-private ventures that industry figures feel represent the optimal balance.
The conditions feel right, then, although whether CVC’s investment proves the making of English rugby is another of those questions still to be resolved.