Select Edition

Northern Northern
Southern Southern
Global Global
NZ NZ

English clubs can't continue to pretend the basics of running a business don't apply to rugby

By Paul Smith
Bloodied Lewis Boyce of Harlequins and Dom Barrow of Leicester Tigers after the match during the Aviva Premiership match between Harlequins and Leicester Tigers at Twickenham Stoop. (Photo by Christopher Lee/Getty Images)

Before becoming a rugby journalist Paul Smith spent over 20 years in the logistics industry where he created and ran two successful businesses. Using this experience, he asks where now for professional rugby in England?

ADVERTISEMENT

Will Carling was a pioneer, Sir Clive moved it on a level and with the encouragement of the RPA a steady trickle of ex or soon-to-be ex-players are now forging second careers which take rugby’s traditional values – teamwork, resilience, leadership and the like – and apply them in a business context.

Leicester back-rower Guy Thompson – an intelligent and engaging man with the most inspiring of back-stories – has recently stepped into the corporate world with just such a venture, which doubtless will be a huge success.

Video Spacer

Latest News Northern Edition

Video Spacer

Latest News Northern Edition

But while business is receptive to learning from sport, professional rugby desperately needs to heed a few of the basic lessons which the commercial world long since took as gospel.

It is now 25 years since rugby union reluctantly replaced the blazer brigade with what was supposedly a cloak of professionalism, but in truth a cohesive, profitable industry with a sustainable future remains a distant dream.

The English Premiership’s 12 clubs lost a combined £50 million in their most recent trading year. The Championship is so commercially fragile that the majority of clubs are in panic mode following the withdrawal of half of their RFU funding – a sum which, incidentally, does not cover the national team’s match fees for a single international. Meanwhile National League clubs, who receive no financial support, are required to negotiate a 30-match season spanning Tynedale to Redruth while simultaneously providing the proving ground for future stars.

Even the top flight’s current precarious commercial position is far from secure. BT Sport have declined to renew their multi-million pound deal without it first going to market – on which basis the TV rights are clearly falling in value – while few signs yet suggest that Premiership Rugby’s sale of a chunk of equity to CVC has done anything other than prop up its clubs’ short-term liquidity.

ADVERTISEMENT

Meanwhile, matchday revenues are not growing at a pace which enables clubs to keep pace with wage demands from the sport’s top performers. For context, an entire six-match Championship weekend programme draws fewer people than Leicester v Northampton, while the rugby-loving public has shown little interest in new products such as the Premiership Rugby Cup or Shield.

Should anyone doubt the extent of the financial mire in which the Premiership finds itself, look no further than its response to the coronavirus crisis. Such is the financial instability faced by the clubs, each week seems to bring a new (and more desperate) plan to finish the current season and in the process cling on to TV and matchday revenues. Considerations of employee welfare, what customers actually want and simple common sense seem to have gone out of the window.

The development of most businesses happens in manageable steps, built bottom-up with costs and revenues broadly keeping pace. For example, in my former industry a haulier would only buy vehicles and trailers and employ drivers when he had work for them. This simple logic appears not to apply to our fully professional clubs, who instead establish a cost base then try – not that successfully – to find the revenues to cover it.

One of the biggest factors in this commercial disaster area has been the Premiership’s inability to find a sustainable response to foreign competition – namely the French Top 14.

ADVERTISEMENT

While English clubs rely largely on the deep pockets of their sugar Daddy owners, their rivals across the channel have a business model underpinned by a combination of huge global corporations and local councils. This means big wages exist not just in the Top 14, but also Pro D1 and Federale 1.

Fearing a player exodus to France and resulting reduction in domestic playing standards, the RFU excluded overseas-based players from the England team. Clearly international caps do not buy many Range Rovers however, which is why an England appearance now earns our top stars close to £25,000 per test match.

RFU staff on furlough
(Photo by Warren Little/Getty Images)

Putting the RFU’s other significant financial liabilities to one side, the huge revenues generated by international rugby go at least some way to balancing these costs. However, the annual salary bill of around £9 million confronting most Premiership clubs is a different story. With just under two million fans watching a Premiership match last season, an estimated average ticket price of £25 grossed £50 million – or around £4 million per club – which clearly leaves a huge shortfall to be filled by TV revenues and commercial activity.

Control of non-direct costs is another key area in building a successful business, and recent unrest around the scale and costs of Premiership Rugby’s ‘head office’ reflects this. Functional activities like finance, marketing and communications are essential to the growth of any enterprise, but in the eyes of those at the coal face only the creation of tangible value justifies the overhead levels involved.

At the centre of all this is a real paradox, since the Premiership clubs’ owners owe their wealth to their previous successful business careers. This reminds us just how difficult it is to transition between industry sectors, and that lessons learned in property development, insurance, telecoms or retail do not necessarily provide a precise overlay with professional sport.

In addition, when a hands-off senior executive takes charge he is mostly a figurehead, reliant on his loyal foot soldiers. If these troops also have no industry experience, they face a learning curve during which middle management inherited from the previous owners shape the vital ‘first hundred days’ during which the pace of change should be at its quickest.

History also tells us that many more attempts to turn round a failing enterprise fail than succeed. Professional rugby, to date, is no different. When the owner is also a fan decision-making can be coloured by emotional attachment rather than cold logic – this situation is typical of the dynamic in many family-owned firms, and is rarely helpful.

Above all, at a strategic level it is time for professional rugby to admit it is not, and never will be, football. The difference between being an international sport and a global sport is marked – and for rugby union to become commercially viable it needs to acknowledge its position in the market and seek to build a business model which reflects this. Maybe look at cricket for a few clues?

ADVERTISEMENT

Join free

Aotearoa Rugby Podcast | Episode 6

Sam Warburton | The Big Jim Show | Full Episode

Japan Rugby League One | Sungoliath v Eagles | Full Match Replay

Japan Rugby League One | Spears v Wild Knights | Full Match Replay

Boks Office | Episode 10 | Six Nations Final Round Review

Aotearoa Rugby Podcast | How can New Zealand rugby beat this Ireland team

Beyond 80 | Episode 5

Rugby Europe Men's Championship Final | Georgia v Portugal | Full Match Replay

Trending on RugbyPass

Comments

Join free and tell us what you really think!

Sign up for free
ADVERTISEMENT

Latest Features

Comments on RugbyPass

J
Jon 7 hours ago
Jake White: Are modern rugby players actually better?

This is the problem with conservative mindsets and phycology, and homogenous sports, everybody wants to be the same, use the i-win template. Athlete wise everyone has to have muscles and work at the gym to make themselves more likely to hold on that one tackle. Do those players even wonder if they are now more likely to be tackled by that player as a result of there “work”? Really though, too many questions, Jake. Is it better Jake? Yes, because you still have that rugby of ole that you talk about. Is it at the highest International level anymore? No, but you go to your club or checkout your representative side and still engage with that ‘beautiful game’. Could you also have a bit of that at the top if coaches encouraged there team to play and incentivized players like Damian McKenzie and Ange Capuozzo? Of course we could. Sadly Rugby doesn’t, or didn’t, really know what direction to go when professionalism came. Things like the state of northern pitches didn’t help. Over the last two or three decades I feel like I’ve been fortunate to have all that Jake wants. There was International quality Super Rugby to adore, then the next level below I could watch club mates, pulling 9 to 5s, take on the countries best in representative rugby. Rugby played with flair and not too much riding on the consequences. It was beautiful. That largely still exists today, but with the world of rugby not quite getting things right, the picture is now being painted in NZ that that level of rugby is not required in the “pathway” to Super Rugby or All Black rugby. You might wonder if NZR is right and the pathway shouldn’t include the ‘amateur’, but let me tell you, even though the NPC might be made up of people still having to pull 9-5s, we know these people still have dreams to get out of that, and aren’t likely to give them. They will be lost. That will put a real strain on the concept of whether “visceral thrill, derring-do and joyful abandon” type rugby will remain under the professional level here in NZ. I think at some point that can be eroded as well. If only wanting the best athlete’s at the top level wasn’t enough to lose that, shutting off the next group, or level, or rugby players from easy access to express and showcase themselves certainly will. That all comes back around to the same question of professionalism in rugby and whether it got things right, and rugby is better now. Maybe the answer is turning into a “no”?

35 Go to comments
j
john 10 hours ago
Will the Crusaders' decline spark a slow death for New Zealand rugby?

But here in Australia we were told Penney was another gun kiwi coach, for the Tahs…….and yet again it turned out the kiwi coach was completely useless. Another con job on Australian rugby. As was Robbie Deans, as was Dave Rennie. Both coaches dumped from NZ and promoted to Australia as our saviour. And the Tahs lap them up knowing they are second rate and knowing that under pressure when their short comings are exposed in Australia as well, that they will fall in below the largest most powerful province and choose second rate Tah players to save their jobs. As they do and exactly as Joe Schmidt will do. Gauranteed. Schmidt was dumped by NZ too. That’s why he went overseas. That why kiwi coaches take jobs in Australia, to try and prove they are not as bad as NZ thought they were. Then when they get found out they try and ingratiate themselves to NZ again by dragging Australian teams down with ridiculous selections and game plans. NZ rugby’s biggest problem is that it can’t yet transition from MCaw Cheatism. They just don’t know how to try and win on your merits. It is still always a contest to see how much cheating you can get away with. Without a cheating genius like McCaw, they are struggling. This I think is why my wise old mate in NZ thinks Robertson will struggle. The Crusaders are the nursery of McCaw Cheatism. Sean Fitzpatrick was probably the father of it. Robertson doesn’t know anything else but other countries have worked it out.

40 Go to comments
A
Adrian 12 hours ago
Will the Crusaders' decline spark a slow death for New Zealand rugby?

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

40 Go to comments
TRENDING
TRENDING Diamond demands law change while accusing Tigers of illegal activity Diamond demands law change while accusing Tigers of illegal activity
Search