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#Post#: 5160--------------------------------------------------
Premiership Rugby to go private?
DIR By: Fearless Fred
Date: September 5, 2018, 1:12 am
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There's an article in today's Times that says that PRL are
exploring the possibility of being bought by a private equity
firm:
[Quote]
The Premiership is in talks over whether to agree a
game-changing, historic deal for rugby by selling controlling
ownership of the league to a private equity firm for about £275
million.
The deal is regarded by insiders as potentially the biggest
step-change in club rugby since the game went professional 23
years ago, and is being compared to when football’s Premier
League was formed in 1992.
The executive committee of Premier Rugby Ltd (PRL) has been in
negotiations for about a year with CVC Capital Partners, the
private equity company based in Luxembourg which made about £8
billion from its decade-long ownership of Formula One.
PRL is owned by 13 member clubs: the 12 sides in the Premiership
and London Irish. The 13 club owners will have a special meeting
on Tuesday when the executive committee will present the deal
with CVC.
It is unlikely that a deal will be agreed and signed immediately
but the meeting could give the green light for the completion of
the deal. Club sources indicated yesterday that their valuation
of the Premiership is higher than CVC’s offer. It is understood
that, if the CVC deal is not approved, PRL has other equivalent
investment to consider from outside of private equity.
The RFU cannot stop the deal and thus prevent a new, outside
influence from becoming one of the key stakeholders in English
rugby. The RFU can veto new owners of the individual clubs,
although it has no right of veto to ownership of its league.
The concern for English rugby is whether CVC will flex its
muscle regarding its key assets. There is already a contest
between club and country for control and ownership of the
England players. If the deal with CVC were to go through, it
would only be in the following years that any disagreement over
how much time the players would be released for British & Irish
Lions tours, for instance, or extra England camps, would be
apparent.
It is understood that CVC would want to be a quiet partner
within the game. However, it will be ruthless on commercial
rights. It should be expected that it would drive a harder
bargain with the RFU over the cost of player release for
international windows.
The clubs have struggled in recent seasons to make the business
of rugby work; collectively they lose about £30 million a year,
on average £2.3 million each. It is hard to see many of them
rejecting a windfall that would deliver about £17 million
overnight to every club. The clubs could wipe out almost all of
their debt. They see the deal as an opportunity to invest by
building new stands and facilities.
Recent tranches of income received by the clubs, mainly from the
sales of television rights, have gone largely to the players,
which served to inflate player wages. However, there is an
understanding among the PRL owners that the CVC money would not
go the same way; the deal will not instigate another sharp rise
of the salary cap.
The majority of the clubs are understood to be in favour of the
deal. The significant opponent is believed to be Bath, who are
controlled by the most influential of the owners, Bruce Craig.
CVC, it is understood, regards the Premiership to have been
severely undercommercialised in the past decade. CVC’s model
with F1 was based largely on selling TV rights globally. This is
a pool in which PRL has only dipped its toes. CVC shares a
strong relationship with Sky, the broadcaster of F1, who is
likely to return to the negotiating table for TV rights of club
rugby.
There will be concern, too, for CVC’s exit strategy. It will
only be interested in leaving with a large return on its
investment, as it did with F1 in January last year. Another
potential problem for the clubs is that when CVC sells on its 51
per cent controlling stake, they could find themselves under any
ownership. The Times understands that the fine-tuning of the
terms for exit from the deal have yet to be completed, though
first rights may go to the 13 clubs.
The deal could provide a significant windfall for English rugby,
but there is huge potential for an escalation of the antipathy
between clubs and the RFU.[/quote]
#Post#: 5161--------------------------------------------------
Re: Premiership Rugby to go private?
DIR By: Blucherquin
Date: September 5, 2018, 1:31 am
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Blimey
Massively enticing for the clubs and potentially great for the
sport in the medium term - while at the same time almost
guaranteeing total commercial exploitation and its potential
death when CVC cash in.
#Post#: 5165--------------------------------------------------
Re: Premiership Rugby to go private?
DIR By: PJM
Date: September 5, 2018, 3:13 am
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It does seem interesting. Of course we will then end up like
football where the clubs are dictating the international
appearances and can veto them, which perhaps as the main wage
payers is how it should always be.
#Post#: 5169--------------------------------------------------
Re: Premiership Rugby to go private?
DIR By: Boonie
Date: September 5, 2018, 4:28 am
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Commercialism is, sadly, the lifeblood of most sports these
days. In and of itself, it is not automatically bad, but the
exit strategy is the one that stands out for me.
If it costs CVC to buy, they will want a return. A £17m windfall
per club will allow huge investment, but if the price at the end
of the term is £20m or £25m per club, how many could possibly
stump that up? And if not, and PRL gets sold to someone else,
then who? Under what terms?
We all want club rugby to succeed; it's where we invest our
time, money and passion. To a greater or lesser extent, we want
National teams and Lions to thrive as well. The issue is whether
this is a short term gain with a long term hangover.
We live in interesting times...
#Post#: 5172--------------------------------------------------
Re: Premiership Rugby to go private?
DIR By: A222Quin
Date: September 5, 2018, 4:47 am
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Yeah, if this happens I'm out and will probably head off to
watch the lower leagues.
#Post#: 5175--------------------------------------------------
Re: Premiership Rugby to go private?
DIR By: Camquin
Date: September 5, 2018, 5:26 am
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CVC are not a charity, they are buying the commercial rights for
a purpose - presumably because they think they can get more out
of the TV than Premiership Rugby does now.
But that increase goes to CVC not to the clubs.
How much per year will the clubs get after the initial £17m?
Anything? Nothing?
#Post#: 5179--------------------------------------------------
Re: Premiership Rugby to go private?
DIR By: deadlyfrom5yardsout
Date: September 5, 2018, 6:09 am
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Its worked pretty well in Formula 1 but then I guess you have
wealthy manufacturers subbing the teams a little.
#Post#: 5187--------------------------------------------------
Re: Premiership Rugby to go private?
DIR By: BedfordshireBoy
Date: September 5, 2018, 7:01 am
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Far from convinced that this is good thing for the game in the
longer term.
#Post#: 5191--------------------------------------------------
Re: Premiership Rugby to go private?
DIR By: Grins
Date: September 5, 2018, 7:14 am
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--- Quote from: Camquin link ---
>
> CVC are not a charity, they are buying the commercial rights
for a purpose - presumably because they think they can get more
out of the TV than Premiership Rugby does now.
> But that increase goes to CVC not to the clubs.
>
> How much per year will the clubs get after the initial £17m?
> Anything? Nothing?
>
--- End Quote ---
CVC would buy 51% of the shares via a new share issue. The
clubs would share in any dividends paid out of Premiership
rugby. Whether there are any would depend on how the deal is
structured in terms of the debt and equity structure.
CVC will look for value by improving the commerical performance
of PRL and also likely by trying to get a better deal with the
RFU. This is a small deal for CVC (certainly their main fund)
so they must think they can generate large returns out of it.
There is, of course, the ego boost to the deal partners that
comes from owning this type of asset.
#Post#: 5192--------------------------------------------------
Re: Premiership Rugby to go private?
DIR By: Rocker
Date: September 5, 2018, 7:17 am
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I think this would be a big mistake. The clubs I'm afraid are
losing money because tehir business model isn't working. This
won't help the underlying issue, it is merley a tempoirary
sticking plaster to cover current cashflow issues. It will be to
the detriment of the clubs in the longterm imho.
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