Premiership clubs likely to agree £200m sale of stake to former F1 owners CVC

https://www.theguardian.com/sport/2018/nov/27/premiership-clubs-likely-to-agree-200m-deal-sell-stake-cvc-rugby-union

It’s gone a bit quiet on the GP front (no doubt due to international excitement) so thought I’d post this.

Is this good news? Does it mean any major changes? Does it make ring fencing more/less likely? Will they want to grow/shrink the league?

As you can see, I only have questions!

On the face of it more money sounds good.

What it hinges on is what they do after the £20 million runs out - if CVC can keep the money running after that then it might work. CVC think that the TV deal is undervalued so they can get more money for it. If they can do that in the current climate they'll do well, anyone think that they can get some more out of BT or Sky ?

I think they’ll have to tinker with the format to extract more value IL.

I am intrigued as to what CVC think they can achieve. With RFU making noises about overpaying for player release (they did and sadly this inflated salaries for the stars) and the sports TV rights market seeming to have entered a slump it will not be easy to raise extra cash.

With F1 they introduced need markets so perhaps the Premiership will introduce overseas franchises and move to a conference system - which sounds like copying our celtic cousins.

Having seen the success of the Pro14 I wonder if they would look to go to 16 teams.  The 12 current, LI and then the 3 most fitting proposals.

From a CVC you only buy a share of something for one of two reasons
1. The annual return is a good rate - can't see this happening. Does the PRL make any money.  5% return would be 10m which I can't see them getting.
2. The price you pay is less than the amount you can sell it for in the future.  Can't see the return being great as selling their share wouldn't have massive interest.  I could understand a team as you can market that but how many people fall in love with a league.

Also interested to see what happens with the money the clubs get. Investing in infrastructure or non rugby investments can be hit and miss. If clubs just wipe their debt they haven't fixed their loss problems and will be in the same place in 10 years time

Hi Brendan,
Your question on why CVC think that they'll make money from this is a good one. Since they won't have a majority share they will be constantly relying on the PRL to agree with their suggestions which I think limits any major changes that they may wish to make to the league to make it more appealing. Maybe they can market it better and bring in more sponsorship and make money that way? Or market it internationally? The French league makes far more money in general, mainly from their canal plus deal so perhaps they do see this potential in tv deals and think that they can get more money from sky/ other. As for the success of the pro 14 I think this is little in terms of profit next to the success of the top 14. Given how many good teams are in the pro14 for comparatively little money i think that it is the league that needs the most promotion.

I came across a comment in a newspaper article on this from someone who follows formula 1 who said that cvc just exploited the sport and left it in a worse place. I know nothing about formula 1 so can't vouch for this.

With the salary cap in place for another couple of years the clubs will either be using money to pay off their debt or on investment of some kind such as their stadia.

Hopefully Leicester will use the money to:

1) Improve the training facilities
2) Progress the proposed hotel development which would improve things for supporters and generate income
3) Progress the plans to develop a multi story car park behind the Crumbie

LondonTiger wrote:Hopefully Leicester will use the money to:

1) Improve the training facilities
2) Progress the proposed hotel development which would improve things for supporters and generate income
3) Progress the plans to develop a multi story car park behind the Crumbie

Building business that are cash/profit generating which can add to the community is definitely the way forward.

LondonTiger wrote:Hopefully Leicester will use the money to:

1) Improve the training facilities
2) Progress the proposed hotel development which would improve things for supporters and generate income
3) Progress the plans to develop a multi story car park behind the Crumbie

Looking at rebuilding the Crumbie must be on the agenda at some point too. Given that would likely reduce capacity it may be difficult to gain funding, hence a good time to look at it?

A new training base has been 'on the cards' for a long time though...

One of the things holding back the Car Park development was the Crumbie stand, and the inability to have a terrace on a new stand. I understood that the two would happen together - in fact at one time was it not also going to facilitate rotating the pitch?

LondonTiger wrote:One of the things holding back the Car Park development was the Crumbie stand, and the inability to have a terrace on a new stand. I understood that the two would happen together - in fact at one time was it not also going to facilitate rotating the pitch?

I thought rotating the pitch was just rumoured prior to the pitch being expanded. Prior to Mauger coming in previous talks of expanding it had ended quickly with, there's no room. Then when the board wanted a different brand of rugby, Mauger wanted a bigger pitch for it room was somehow found. I could be wrong there though.

https://www.leicestermercury.co.uk/news/business/leicester-tigers-put-hold-plans-842073

That article from just over a year ago is little more than page filler. The '14 million' quoted in the below paragraph is an interesting note now though:

“And it would be good to redevelop the south stand – with standing at the front, seats in the middle and pitch-facing lounges at the back – but right now we don’t have the £14 million necessary to do that."