CVC cash must go towards sustainability, not players' wages - Andy Goode
The cash injection from the proposed sale of a minority stake in Premiership Rugby to private equity firm CVC must go towards making clubs sustainable and not into players’ pockets.
As exclusively revealed by RugbyPass this week that Premiership clubs are likely to agree a deal to sell around a 25 per cent stake to private equity firm CVC for somewhere in the region of £240m and they are expected to be considering the offer at the next board meeting of owners, which takes place on 11 December.
It was only a couple of months ago that they were being offered a similar sum (around £275m) for 51%, so a good deal has been negotiated in a relatively short space of time and Mark McCafferty and co would appear to have done a good job.
The original offer never made any sense because at no point should the Premiership ever be subservient to a majority shareholder from the outside but to relinquish half the amount of equity for a similarly significant amount of money would seem to represent good business on the face of it.
The success of any deal hinges on how the money is spent for me though. Some of it will undoubtedly go on clearing debts because 11 of the 12 Premiership clubs posted a loss in their latest financial accounts, with Exeter the only exception, but where the rest goes is key.
It should be used to improve the infrastructure of the clubs and be put towards planning for the long term. If it goes into the pockets of the players, then we’ll be back at this point with everyone losing money again before you know it.
As an ex-player, I can tell you that players and agents will be looking at this news and thinking they should be getting paid more as a result and I’m all for players getting paid as much as possible but if all this money goes towards that, it will just bankrupt the game in the end.
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Players’ wages have gone through the roof over the last five years but they’ve reached the point now where if they go up much more, we are likely to see clubs go bust.
The danger is that it’s very similar to when the game turned professional in the late 1990’s and clubs spent beyond their means. The money ran out and clubs like Richmond and London Scottish ended up going into administration.
I’m not saying that is going to happen with this injection of cash but it could do if financial mismanagement is allowed to occur and the warning is there from the not too distant past.
There are already rumours of Kieran Read now coming to the Premiership instead of the Top 14 on a salary of £1 million. I don’t think he’s worth that anyway but it’s the kind of short-sighted move that would represent a bad use of the money in my opinion.
If a club makes that investment in someone like Read, they won’t get that much of an increase in the number of fans coming through the gates of their stadium or watching them.
Some clubs will look at splashing the cash on a marquee player or two in order to hopefully boost their chances of achieving short-term success in the Premiership or Europe but that isn’t a legitimate business plan for the long term.
Clearly, all the clubs are going to get a windfall if this deal is ratified but for me there should be some sort of strategic plan behind how that money gets used.
I’m a big believer that you’ve got to balance the books and make clubs viable businesses in order for the product to grow and that just isn’t happening at the moment.
If you’re losing £5 million or £6 million per year as some clubs are, then you’re up the creek without a paddle if your benefactor decides they’re no longer interested so working towards a greater level of sustainability has to be the number one goal.
The whole reason for bringing CVC on board is to grow the product. Premiership Rugby claims it has experienced 80 per cent growth in the past five years and has stated that it wants to accelerate that growth even more.
There’s no way that growth has been in the form of bums on seats but it has grown commercially and television revenue has increased dramatically. That’s obviously an area CVC will be looking at closely with the BT Sport deal due to run until 2021.
They’ll also be able to have an impact on the sponsorship side of things because both Premiership Rugby and the Six Nations didn’t find it particularly easy when it came to securing a new title sponsor in the past year or so.
Businesses don’t just want to have their name associated with a competition any more, they want to see the value that’s coming back to them and that’s where CVC will come into its own.
I’m very surprised that the RFU haven’t tried to get involved in these negotiations because if they were ever going to wrestle back control of the English game, this would have been the time.
If this deal goes ahead, they can have no complaints about access to players but a £40 million overspend on the East Stand at Twickenham and an overall operating loss of £31 million for 2017-18 probably didn’t put them in the ideal position to make a move.
If a private equity firm gets involved in something, it’s doing so to increase the value of it for itself. They will be looking to take money out but they’ll have a plan and leave no stone unturned in their quest to make the business more valuable. That can only be a good thing for Premiership Rugby.
If they’re paying somewhere in the region of £240 million for a quarter of Premiership Rugby, that means the business is being valued at almost a billion pounds already and I’m sure they’ll want to see that double at least while they’re involved.
Right now, clubs are making losses and if we carry on doing what we’re doing in English rugby, there has to be a question mark over whether these 12 Premiership clubs will still be around in 10 years’ time. A £240m investment will certainly help but the devil will be in the detail and certain strings need to be attached to ensure the deal is a success.
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Comments on RugbyPass
Thanks Nick The loss of players to OS, injury and retirement is certainly not helping the Crusaders. Ditto the coach. IMO Penny is there to hold the fort and cop the flak until new players and a new coach come through,…and that's understood and accepted by Penny and the Crusaders hierarchy. I think though that what is happening with the Crusaders is an indicator of what is happening with the other NZ SRP teams…..and the other SRP teams for that matter. Not enough money. The money has come via the SR competition and it’s not there anymore. It's in France, Japan and England. Unless or until something is done to make SR more SELLABLE to the NZ/Australia Rugby market AND the world rugby market the $s to keep both the very best players and the next rung down won't be there. They will play away from NZ more and more. I think though that NZ will continue to produce the players and the coaches of sufficient strength for NZ to have the capacity to stay at the top. Whether they do stay at the top as an international team will depend upon whether the money flowing to SRP is somehow restored, or NZ teams play in the Japan comp, or NZ opts to pick from anywhere. As a follower of many sports I’d have to say that the organisation and promotion of Super Rugby has been for the last 20 years closest to the worst I’ve ever seen. This hasn't necessarily been caused by NZ, but it’s happened. Perhaps it can be fixed, perhaps not. The Crusaders are I think a symptom of this, not the cause
7 Go to commentsNo way. If you are trying to picture New Zealand rugby with an All Blacks mindset, there have been two factors instrumental to the decline of NZ rugby to date. Those are the horror that the Blues have become and, probably more so, the fixture that the Crusaders became. I don’t think it was healthy to have one team so dominant for so long, both for lack of proper representation of players from outside that environment and on the over reliance on players from within it. If you are another international side, like Ireland for example, sure. You can copy paste something succinct from one level to the next and experience a huge increase in standards, but ultimately you will not be maximizing it, which is what you need to perform to the level the ABs do. Added to that is the apathy that develops in the whole game as a result of one sides dominance. NZ, Super, and Championship rugby should all experience a boom as a result of things balancing out. That said, there is a lot of bad news happening in NZ rugby recently, and I’m not sure the game can be handled well enough here to postpone the always-there feeling of inevitable decline of rugby.
7 Go to commentsNo SA supporter miss Super Rugby - a product that is experiencing significant head wind in ANZ - the competition from rival codes are intense, match attendance figures are at a historical low and the negativity of commentators such as Kirwan and Wilson have accelerated the downward spiral in NZ. After the next RWC in 2027 sponsors will follow Qantas and start leaving in droves.
2 Go to commentsLike others, I am not seeing the connection between this edition of the Crusaders and the All Blacks future prospects under Razor. I think the analysis of the Crusaders attack recently is helpful because Razor and his coaching team used to be able to slot new guys in to their systems and see them succeed. Several of Razor’s coaches are still there so it would be surprising if the current attack and set piece has been overhauled to a great extent - but based on that analysis, it may have been. Whether it is too many new guys due to injuries or retirement or a failure of current Crusaders systems is the main question to be answered imo. It doesn’t seem relevant for the ABs.
7 Go to commentsharry potter is set in stone. he creates stability and finishes well. exactly what schmidt likes. he’s the ben smith of australian rugby. i think it could quite easily be potter toole and kellaway for the foreseeable future.
5 Go to commentsThis is short sighted from Clayton if you ask me, smacks of too much preseason planning and no adaptability. What if DMac is out for a must win match, are they still only going to bring their best first five and playmaker on late in the game? Trusting the game to someone who wasn’t even part of planning (they would have had Trask pinned in as Jacomb preseason). Perhaps if the Crusaders were better they would not have done this, but either way imo you take this opportunity to play a guy you might need starting in a final rather than having their 12th game getting comfortable coming off the bench.
1 Go to commentsThanks Brett.. At last a positive article on the potential of Wallaby candidates, great to read. Schmidt’s record as an international rugby coach speaks for itself, I’m somewhat confident he will turn the Wallaby’s fortunes around …. on the field. It will be up to others to steady the ship off the paddock. But is there a flaw in my optimism? We have known all along that Australia has the players to be very competitive with their international rivals. We know that because everyone keeps telling us. So why the poor results? A question that requires a definitive answer before the turn around can occur. Joe Schmidt signed on for 2 years, time to encompass the Lions tour of 2025. By all accounts he puts family first and that’s fair enough, but I would wager that his 2 year contract will be extended if the next 18 months or so shows the statement “Australia has the players” proves to be correct. The new coach does not have a lot of time to meld together an outfit that will be competitive in the Rugby Championship - it will be interesting to see what happens. It will be interesting to see what happens with Giteau law, the new Wallaby coach has already verbalised that he would to prefer to select from those who play their rugby in Australia. His first test in charge is in July just over 3 months away .. not a long time. I for one wish him well .. heaven knows Australia needs some positive vibes.
21 Go to commentsWhat a load of bollocks. The author has forgotten to mention the fact that the Crusaders have a huge injury toll with top world class players out. Not to mention the fact that they are obviously in a transition period. No this will not spark a slow death for NZ rugby, but it does mean there will be a new Super Rugby champion. Anyone who knows anything about NZ rugby knows that there is some serious talent here, it just isn’t all at the Crusaders.
7 Go to commentsI wouldn’t spend the time on Nawaqanitawase! No point in having him filling in a jersey when he’s committed to leave Union. Give the jersey to a young prospect who will be here in the future.
5 Go to commentsIt was a pleasure to watch those guys playing with such confidence. That trio can all be infuriating for different reasons and I can see why Jones might have decided against them. No way to justify leaving Ikitau out though. Jorgensen and him were both scheduled to return at the same time. Only one of them plays for Randwick and has a dad who is great mates with the national coach though.
53 Go to commentsBrayden Iose and Peter Lakai are very exciting Super Rugby players but are too short and too light to ever be a Test 8 vs South Africa, France, Ireland, and England, Lakai could potentially be a Test player at 7 if he is allowed to focus on 7 for Hurricanes.
7 Go to commentsPencils “Thomas du Toit” into possible 2027 Bok squad.
1 Go to commentsDon’t see why Harrison makes the bench. Jones can play at 10 if needed, and there is a good case for starting her there to begin with if testing combinations. That would leave room for Sing on the bench
1 Go to commentsWhat a load of old bull!
1 Go to commentsOf the rugby I’ve born witness to in my lifetime - 1990 to date - I recognize great players throughout those years. But I have no doubt the game and the players are on average better today. So I doubt going back further is going to prove me wrong. The technical components of the game, set pieces, scrums, kicks, kicks at goal. And in general tactics employed are far more efficient, accurate and polished. Professional athletes that have invested countless hours on being accurate. There is one nation though that may be fairly competitive in any era - and that for me is the all blacks. And New Zealand players in general. NZ produces startling athletes who have fantastic ball skills. And then the odd phenomenon like Brooke. Lomu. Mcaw. Carter. Better than comparing players and teams across eras - I’ve often had this thought - that it would be very interesting to have a version of the game that is closer to its original form. What would the game look like today if the rules were rolled back. Not rules that promote safety obviously - but rules like: - a try being worth 1 point and conversion 2 points. Hence the term “try”. Earning a try at goals. Would we see more attacking play? - no lifting in the lineouts. - rucks and break down laws in general. They looked like wrestling matches in bygone eras. I wonder what a game applying 1995 rules would look like with modern players. It may be a daft exercise, but it would make for an interesting spectacle celebrating “purer” forms of the game that roll back the rules dramatically by a few versions. Would we come to learn that some of the rules/combinations of the rules we see today have actually made the game less attractive? I’d love to see an exhibition match like that.
29 Go to commentsIrish Rugby CEO be texting Andy Farrell “Andy, i found our next Kiwi Irishman”
5 Go to commentsI certainly don’t miss drinking beers at 8am in the morning watching rugby games being played in NZ.
2 Go to commentsThis looks like a damage limitation exercise for Wales, keeping back some of their more effective players for the last 20/25 minutes to try and counter England’s fresh legs so the Red Roses don’t rack up a big score.
2 Go to commentsVery unlikely the Bulls will beat Leinster in Dublin. It would be different in Pretoria.
1 Go to commentsI think it is a dangerous path to go down to ban a player for the same period that a player they injured takes to recover. Players would be afraid to tackle anyone. I once tackled my best friend at school in a practice match and sprained his ankle. I paid for it by having to play fly-half instead of full-back for the rest of that season’s fixtures.
5 Go to comments