Bad news, rugby fans. CVC Capital Partners has bought into Six Nations Rugby Ltd, the company that runs the Six Nations championship. This is an Irish-based firm that is co-owned by the various national rugby federations involved. It was set up in 2002 in order to promote and organise the championship and to manage the centralised commercial rights. It is, in effect, a partnership between the Rugby Football Union (RFU), the Fédération Française de Rugby (FFR), the Irish Rugby Football Union (IRFU), the Federazione Italiana Rugby (FIR), the Scottish Rugby Union (SRU) and the Welsh Rugby Union (WRU).
The deal is for £365 million, to be paid over five years, which means that it works out at about £10 million a year for each national body. This has bought CVC 14.3 percent of the business, which means that it has a one-seventh share of the business, equal to the six clubs. What this means in terms of commercial control remains to be seen, but it is clear that the private equity group will be in a position to push for commercial change. And rugby needs to be careful to avoid the problems that F1 had to go through.
At the moment the rugby world seems to think this is a good idea. If one follows the story of CVC Capital Partners in Formula 1, it was a similar story at the beginning. It was not long before they began squeezing every penny they could get out of the sport, putting coverage behind pay-walls and loading the business with debt by borrowing against future earnings. It may not be quite as easy in rugby because of the need to keep the other six partners happy, but money talks loudest and the kind of numbers being discussed will turn heads in the rugby world.
The clubs are hopefully aware that they are dealing with people who don’t actually give a toss about sport and will not waste much energy trying to grow and develop it. It is naive to think that they will do anything other than helping themselves. If this happens to grow the sport as well then it will be fortunate, but the sport is not their primary aim: money is all that matters.
CVC Capital Partners is efficient – but did not seem to care what state it left F1 in, as long as there was a buyer at the end. They paid $2.1 billion for control of the F1 group and took multiples of that out, but the sport gained little in return.
Perhaps rugby thinks it is a risk worth taking in order to join other big international sports, but it is a risk that few involved in F1 would consider worth taking. One thing is clear in F1 circles: Liberty Media has a much more enlightened way of doing business.
Perhaps CVC Capital Partners has picked up some tips – but it isn’t very likely. Leopards don’t changed their spots. Vultures are vultures.