Private equity and World Rugby battle for control of the sport

Private equity and World Rugby battle for control of the sport

The power brokers behind international rugby union were left with a stark choice this week: who should control the financial future of their sport.

On one side is CVC Capital Partners, the Luxembourg-based private equity group, which has a history of acquiring and selling sports franchises, making hundreds of millions of pounds from past transactions in Formula One and MotoGP.

On the other is Infront, a Swiss-based marketing agency, owned by Chinese conglomerate Dalian Wanda and run by Philippe Blatter, nephew of former Fifa president Sepp Blatter.

CVC paid £225m last December for a 27 per cent stake in Premiership Rugby, the top tier of English club rugby union. It has now made a £500m bid to acquire a 30 per cent holding in the Six Nations Championship, the annual tournament played between England, Scotland, Wales, Ireland, France and Italy. The moves are designed to transform CVC into one of the most powerful players in the game.

But World Rugby, the sport’s international governing body, laid out an alternative plan on Thursday: a 12-year, £5bn deal with Infront to create a new annual global tournament dubbed the Nations Championship. This would see the Six Nations regularly play the world’s other leading sides, including New Zealand, Australia, South Africa and Argentina.

CVC held talks about investing in World Rugby’s proposed tournament, according to people with knowledge of the discussions. Ultimately, the governing body was unwilling to sell an equity stake, fearing this would amount to losing control of the sport.

“It’s hard to see how you can reconcile our rights deal with a Six Nations equity deal,” said Brett Gosper, chief executive of World Rugby.

Under World Rugby’s plan, Infront would guarantee a payment of £5bn to the countries involved in the new global tournament — an estimated £1.5bn more than they currently earn — in return for the competition’s commercial and broadcast rights.

The offers mean the Six Nations, which features some of the richest unions on the planet, must decide between two competing ideas: retain their current structure but hand over commercial control to CVC, or accept World Rugby’s broader vision for the international game.

“This is a seminal moment for Six Nations, the world’s pre-eminent annual rugby tournament,” said Nick Clarry, head of sports and media at CVC. “The six unions have to decide whether to give up control to World Rugby and Infront, and if this is the best way to build their sport and create long-term sustainable value.”

CVC believes it can deliver a brighter future by bringing to rugby the “investment discipline” it has applied to companies it has owned in sectors including travel, healthcare and telecoms, people familiar with its strategy said.

It wants to develop the club game in England, the Six Nations and beyond. CVC is also holding talks with other competitions, including the Pro 14 — an annual club tournament between sides in Ireland, Italy, Scotland, Wales and South Africa — as it seeks more rugby investments, said a person familiar with the talks.

With its Premiership Rugby deal, CVC intends to explore new ways to bundle TV rights, such as selling streaming deals to digital players such as Amazon, while securing more airtime for club matches that traditionally have not made it to the screen.

CVC has pledged to leave all decisions on sporting matters to the English clubs and league executives. Instead, it will lead the selling of broadcast and sponsorship deals, streamlining the commercial decision-making in an infamously fragmented game.

CVC wants to bring this same business model to the Six Nations. For the past year, the top northern hemisphere countries have held talks on a strategy known as “Project Light” — a plan to sell collectively broadcast and commercial rights to the current Six Nations tournament. It is this concept that CVC wants to invest in, according to a person close to the talks, although other sports marketing groups have also expressed interest in funding the plans.

If the Six Nations accepts CVC’s approach, it would scupper World Rugby’s plans for a new global tournament, which is partly intended to assist cash-strapped southern hemisphere nations and develop the game in emerging markets such as Japan.

The Six Nations remain resistant to some of World Rugby proposals, including a promotion and relegation system that could, over time, see the countries fall outside the main Nations Championship competition.

A person close to World Rugby’s leadership said it would not proceed unless the Six Nations accepted promotion and relegation, as the prospects for the game’s international growth would be stifled.

World Rugby outlined its Nations Championship proposals this week to leading rugby nations, competitions and players groups.

“The game is now at a crossroads,” said an executive at one of the Six Nations unions. “[There will be] no trundling along . . . It will take one of at least two roads.”

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