The Six Nations cannot afford to remain on free-to-air television forever. Photo: David Rogers/Getty Images
That's not true. It is common knowledge how much money CVC Capital Partners earned during its 10 years of managing Formula 1. It is safe to say that it was in the billions. So when Nick Clarry, the private equity firm's head of sports, tells Telegraph Sport that investment in rugby union will be successful «no matter how long it takes», the words carry significant weight.
In the first part of our special report, we looked at the significant challenges CVC has faced since it announced it was buying a stake in Premiership Rugby just over five years ago. Now we look at what's next, the vision for rugby and what it will mean for the sport.
«I wish their elbows were a little sharper»
Lots of low hanging fruit already found. handles marketing, sponsorships and digital media. However, the juiciest apple remains the broadcast contracts. When Clarry talked about rugby being «underrated» that was at the forefront of his thoughts.
For example, the Enders Analysis report shows that Premiership Rugby is one of the most profitable rights packages in terms of the number of viewers it attracts, compared to the cost of those rights, which is around £110 million over three years. The United Rugby Championship and Six Nations rights package is being viewed in a similar light.
This may be good for an individual broadcaster such as TNT Sports, but it is obviously detrimental to clubs and unions and also reduces the number of fans who will need multiple subscriptions if they want to watch rugby in different leagues. The leagues have not helped themselves in this regard by undermining each other in negotiations with broadcasters.
TNT Sports currently holds the rights. show club rugby. Photo: David Rogers/Getty Images
Under the CVC, rugby will no longer be divided and conquered. Instead, commercial operations will be consolidated under one roof, much in the same way the Coca-Cola Company operates Coca-Cola, Sprite and Fanta.
“Since the pandemic, it has become clear that rugby can unlock the true potential of the game on a larger scale by working together differently,” Clarry said. “For example: Six Nations worked closely with Sanzaar and World Rugby to agree the format of a fantastic new Nations Cup; and Six Nations, PRL, URC and EPCR are increasingly collaborating on commercial opportunities to help grow the game for the benefit of players, fans and grassroots rugby. This will allow unions and clubs participating in these competitions to benefit from scale and aggregation rather than fragmentation, providing more resources and capital to invest back into the game at all levels.»
The long-term goal is to to combine the rights to the Premier League, United Rugby Championship and possibly the Champions Cup, Six Nations and the new Nations Championship into a single package. One broadcaster will become the home of rugby for a huge bonus. The rest will be left with nothing.
This will not be an easy process. The broadcast contracts for the Premiership Rugby League and the Autumn Series are due to be renewed this year. The United Rugby Championship and the Six Nations will follow in 2025. As a former chief executive of the Welsh Rugby Union and current chairman of Premiership Rugby, Martin Phillips can attest to how slowly the wheels of progress in rugby turn. In 2018, he was part of the working group that developed the concept of the Nations Cup, which has not yet come into force. Another project to pool TV rights for the Fall Series between unions took four years to get approval from various boards.
It would be a mistake, however, to assume that CVC can simply push through whatever changes it wants. “As CVC is involved in various rugby properties, it is a force trying to create coherence and a shared vision – do we all agree that this would be a good idea, even if it takes 3-5 years?” Phillips said. “They can't force us to do anything. The decision remains with the rugby boards.
“CVCs are coordinators. If anything, I wish their elbows were a little sharper. You would think that they come in and become very aggressive and dominant, but that is not the case. If they were like that, rugby would be circling the carriages and going nowhere. To get things done, they have to exert more influence than they would normally like, and this can be quite frustrating for them. I think we are quite difficult to work with.»
The end of free broadcasting?
If a broadcaster is to be the home of rugby, it won't be the BBC or ITV, who have openly admitted they can't do it. afford to extend his current £115m-a-year contract to show the Six Nations, which expires next year. CVC recognizes the importance of the current coverage of the Six Nations and the importance of free-to-air broadcasting in promoting rugby to the general public. That's why the company helped Premier Rugby secure a free-to-air deal for highlights and live matches with ITV.
Even if part of the Six Nations was lost to pay-per-view television, it is likely that at least half of the matches remained on terrestrial television. It could be a similar deal to the one reached in 2012, when the BBC and Sky shared the rights to Formula 1, although the races ended up being broadcast exclusively via satellite. It's a fragile tightrope they have to walk, a senior Six Nations executive told Telegraph Sport.
“Our job is to promote and protect rugby union,” the source said. “We have to find a balance between income and reach, promotion and visibility. This is a challenge for all sports. What we're trying to do is maintain our reach and find a way to generate more revenue, which will then be invested back into the game to ensure that we continue to be relevant across the country and in all six countries, and for future generations. Without this funding, this work becomes virtually unattainable, and we never want to see a scenario in which this happens.»
Six nations on the BBC has a much wider reach. Photo: BBC
The prospect of losing any part of the Six Nations to Free-to-air television is an emotive topic that typically prompts MPs to speak in Parliament, but unless it is added to the list of Crown Jewels events to be shown on terrestrial television, then there will be little to prevent market forces from determining the direction of movement.
While there is recognition of the reach of free-to-air broadcasting (Enders Analysis viewership research shows the Six Nations was second only to the Wimbledon final and the Women's World Cup in terms of number of matches), there is also recognition within the Six Nations. it cannot afford to be tied to the mast of terrestrial television indefinitely.
Every year, the popularity of linear television is declining by five percent, which is even more pronounced among younger generations. For the Six Nations to remain relevant, it must significantly expand its reach beyond existing platforms.
“We're looking at this in the future, looking at how people consume sports content, live sports content,” a Six Nations source said. “It's different from how it was before. That's one of the key things we need to push forward, the ability to put the fan at the heart of the proposition, something rugby hasn't done fantastically since it entered the professional era. We need to keep pushing the boundaries to ensure rugby remains relevant for future generations and for the fans who look at it and think, this isn't for me.»
The Big Bet on Broadcasting
In the world of sports broadcasting, football is king. Sky and TNT (formerly BT) built their empires on showing Premier League and Champions League football respectively. All other sports fall under the secondary sports market, but some are more valuable than others. Sky is paying around £200m a year for its Formula 1 rights, extending its exclusive contract until 2029. Part of what makes Formula 1 so valuable is that it has a separate audience separate from football, so if you lose those rights, you lose those subscribers. .
CVC's proposition is that such a market also exists for rugby fans and the broadcaster would be willing to pay a significant premium for exclusivity over an extended period. According to Francois Godard, a media analyst at Enders Analysis, this will create a symbiotic relationship between the broadcaster and the sport, much in the same way that Sky Sports helped take the Premier League to its current stratospheric heights. “You need broadcasters to invest in sports,” Godard said. “If you have a three-year contract, it’s like a three-year lease on an apartment. Are you going to spend money on an apartment? No. If you have a 12-year contract, you'll take much better care of it.”
If the strategy is good, Godard doubts which broadcaster would be willing to open its checkbook and become the home of rugby. Warner Bros Discovery, the parent company of TNT which currently holds the rights to the Premier League and Champions Cup, is under significant financial pressure worldwide, while Sky Sports has more or less shut down its rugby operations except for match coverage.» Lyons.» /p>
Meanwhile, potential new DAZN players missed out on the recent Premier League rights auction, which Godard says is bad news for rugby. «I don't think it's very positive for rugby because the more competition there is between sports channels, the more demand there is for minor sports because you want to increase your schedule,» Godard said. «There won't be much competition between TNT and Sky Sports now, they complement each other, they have joint deals, they have cross-distribution deals.»
CVC remains confident that if supply is sufficient strong, then the broadcaster, be it TNT, Sky or a potential player, will be willing to stump.
“We are now moving on to better things”
The devastating impact of the pandemic on rugby's economy and its fallout, which contributed to the demise of Worcester Warriors, Wasps and London Irish, has delayed the CVC's plans for at least two years. Even now, the fruits of many of the initiatives underway today, such as the Netflix documentary Six Nations Full Contact, which premiered in London on Monday night, will not be immediately visible. “I would call it a leading lag,” Phillips said. “We will see what we are doing today only in 2-3 years. Most people want instant gratification, but this is not possible due to the length of contracts. I am confident that what we do today will bring medium- and long-term benefits. I wish it could happen right now, but it won't. This is just reality.”
Perhaps the greatest achievement of the CVC is that there is now a real sense that rugby's stakeholders are finally moving in the same direction. Even if organizations such as the Rugby Premier League, the United Rugby Championship and the Rugby Football Union are not on the same page, they are now at least in adjacent chapters.
“Reply to fragmentation — cooperation,” is one of them. This was reported by a high-ranking source. “Build trust. Build relationships. Create a sense of togetherness.» Another put it more bluntly: “Cooperate or die.”
The Premier League remains in a precarious financial position, particularly with the repayment of Covid recovery loans. The painful path to a 10-team league was privately celebrated by many as the optimal long-term solution. However, the loss of another club would be a disaster that could collapse the entire league like a house of cards.
Clarry, however, is optimistic that rugby has finally changed direction. As former RFU chief executive Francis Baron said in the first part of our report, it is always worth remembering that private equity firms are in the business of making profits — which is hardly a bad thing in a capitalist society — but there is a point of pride in CVC's investment in rugby. This was the starting point of a huge expansion of CVC's sports empire, as it acquired stakes in La Liga and the UN League, the Spanish and French football leagues, as well as the Women's Tennis Association and the Gujarat Titans, an IPL franchise.
Rugby was theirs entry point into this empire, and having weathered the storms of the last five years, Clarrie is determined to see the project through to completion.
«We don't regret our investment in rugby because we're getting to the good part now that the efforts of everyone involved in the game have created positive momentum — and it's about achieving good results,» Clarry said. “But the job has been tougher than we expected when we started in 2019, due to Covid, Worcester and Wasps, fragmentation, cost of living crisis etc. Why does CVC really love rugby and have no regrets? Firstly, we will succeed by working together, no matter how long it takes, and we are going to grow the game and the audience to provide higher revenues to reinvest in the sport at all levels. Secondly, everyone in rugby now understands the challenges and wants to reach their full potential, and we are all fully aligned with the goals. Thirdly, rugby's transformation has been one of the catalysts for other sports around the world to realize the opportunities available to them through commercial partnership deals with partners such as CVC.»
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