Private equity in rugby is back on the agenda, with the long-rumoured CVC Capital Partners and Six Nations deal now said to be imminent.
Meanwhile, US buyout firm Silver Lake is keen to add a stake in the All Blacks to a portfolio that also includes Manchester City.
All this will make some in sport uneasy, due to private equity’s reputation for focusing on obtaining a return on investment.
But it represents the next stage of rugby’s growth. The game needs impetus to become more commercially savvy, focused and less fragmented.
The money private equity can pump in is a breath of fresh air for clubs, competition organisers and unions suffocated by the pandemic.
Are CVC vultures circling for undervalued assets? I understand that argument but firmly believe their involvement will be good in the short and long term.
English club rugby has been run by something of an old boys’ network: wealthy individuals who have funded great achievements at, say, Saracens and Exeter.
But these one-man-bands are inherently fragile. And that leaves clubs – focal points for towns and cities who will play a vital role in galvanising communities post-pandemic – vulnerable.
Private equity money can help to professionalise the game further, making clubs better run and, hopefully, profitable.
Fragmentation and new markets
One of CVC’s most pressing tasks will be to address the fragmentation of rugby.
Currently, broadcasters must deal with separate bodies when buying the rights to the Premiership, Pro14, Champions Cup, Six Nations and World Cup.
That makes it very difficult for any TV company to ‘own’ rugby. I’d rather see it all wrapped up in one place with a big number on it, and I think private equity will too.
I also expect them to push the game into new territories. Rugby barely registers in the US and China, the two biggest markets.
Silver Lake will have similar plans for the All Blacks, I expect, if they do invest.
It’s easy to see why they want a piece of one of the most iconic and powerful brands in sport and beyond.
New Zealand rugby chiefs, meanwhile, have been financially crippled by the lack of games, so need help.
They own their domestic market and are already big in Europe, but North America has so much untapped potential for the All Blacks.
We’ve seen huge crowds flock to Soldier Field to see them, and the US is starting to get its act together with Major League Rugby, which can only help appetite.
Americans love success and they don’t come much more successful, or cool, than the All Blacks.
As a purist, is that great? Perhaps not, but I don’t think they’d abandon the Championship, and more money flowing in is good for the grass roots game.
Why rugby must come together
In the past, private equity might have looked to strip costs, maximise profits and then sell before its asset fell apart.
But I think those days have gone and they believe in creating long-term value now. CVC stuck around for 11 years in Formula 1, during which time its stake roughly trebled in value.
I’m a great believer that desperation shouldn’t drive innovation, and you could argue that’s what is happening now.
But if private equity rips the heart out of rugby and everyone walks away feeling badly treated it won’t make sense for anyone.
All parties need to have skin in the game and I think that’s the creation of long-term value. Private equity is smart enough to recognise that.
Rugby is at an important point. People have not been able to play or attend it regularly for the best part of a year.
With the concussion issue likely to put many people off, there’s a danger the game is abandoned.
Collaboration is needed to bring a different proposition to the market. Private equity, clubs and unions must all pull together for the future of the game.