CVC and NZRU
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CVC Capital Partners is plotting an ambitious reshaping of global rugby, as the European buyout firm aims to become the biggest commercial player in one of the world’s most popular sports.
The Luxembourg-based group, which has previously invested in Formula One, expects to finalise a £300m deal to acquire a roughly 14 per cent stake in Six Nations, one of the sport’s flagship tournaments, within weeks, according to people familiar with the matter.
The deal, alongside a £120m stake in club competition Pro14 that is expected to be sealed by the end of the month, will take CVC’s investment in rugby to more than £600m since it first targeted the game two years ago. In 2018, it snapped up a 27 per cent holding in Premiership Rugby, the top tier of English club rugby union.
The group is in talks with World Rugby, the global governing body which runs the Rugby World Cup, and national governing bodies in New Zealand and South Africa, two of the dominant forces in rugby, according to several people familiar with them.
One plan under consideration is to bundle TV rights for rugby competitions around the world into a single package for broadcasters. CVC is also exploring streaming deals to digital players such as Amazon and the creation of an “over the top” internet subscription service for fans, people familiar with the plans said.
“There’s an understanding that CVC are an investor in the sport and a supporter of important member unions of ours,” said Brett Gosper, chief executive of World Rugby. “Therefore, it’s best that we work together with them where possible rather than be in a situation that we’re not in dialogue.”
In time, CVC also envisages the creation of a “Club World Cup”, a money-spinning tournament involving the best sides on the planet.
The group’s approach to rugby marks a radical departure from the traditional buyout model, where deals are financed in part by loading takeover targets with debt, then aiming to sell them on at a profit within three to five years.
Although CVC is financing its rugby investments through a €16.4bn fund it raised in 2017, the group is using the money to gain minority stakes in order to influence commercial decisions, according to people familiar with the matter. It aims to raise revenues in the sport over a decade, which in time, would provide returns to CVC investors.
The most advanced conversations for further investment are with South Africa Rugby, according to people familiar with the talks.
South Africa is a key shareholder in both Sanzaar, a partnership that manages Super Rugby, a competition between many of the best clubs in the southern hemisphere, and the Rugby Championship, a national contest between New Zealand, South Africa, Australia and Argentina.
Those close to the talks denied recent reports that a deal between CVC and South Africa would be a precursor of the current world champions leaving the Rugby Championship to play in the Six Nations instead.
However, they added that there were active discussions about reshaping club competitions between the hemispheres. This includes adding at least one more South African club side to the Pro14.
Former South African team captain Jean de Villiers said a deal between his country’s union and CVC would allow the country to expand the game. “South Africa has been looking for new opportunities and sometimes a change is good,” he said.
South Africa Rugby declined to comment. CVC declined to comment.
Richard Thomas, chief commercial officer at New Zealand Rugby, the body behind the All Blacks, historically the game’s top nation, said: “We are always looking at options to grow and improve rugby, and that includes talking with a range of interested parties around the globe.”
Private equity groups are increasingly seeking to invest in sport to capitalise on events that attract millions of fans worldwide.In football, Silver Lake paid $500m for a 10 per cent stake in City Football Group, the parent company of Premier League team Manchester City in November. In recent years, Elliott Management has taken control of Italy’s AC Milan and conducted a complex debt deal with French side Lille.
An investor in CVC’s funds said they were comfortable with its different funding model for rugby. Private equity firms “could carry on investing in pubs and chemicals, but if they want to get into something like [live sports] content which is a massive area, they have to work out how to do it,” the investor said.
While developing grand plans for the game, CVC has tried to improve relations with key power brokers.
Last year, World Rugby was forced to drop a £6bn deal with In front, a Swiss marketing agency, to create a new annual tournament dubbed the Nations Championship. The concept failed partly because it would have forced the countries that compete in the Six Nations to abandon their deal with CVC.World Rugby and CVC are planning to have new talks, including whether funding could be provided to resurrect the Nations Championship concept in future, according to people familiar with early discussions between the parties.
“Private equity is a reality,” said Mr Gosper. “We are where we are. [World Rugby] has to deal with reality in the most constructive way.”
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Brett, as a slimy used car salesman yourself, you will of course be aware that this group cares not one little fuck for rugby, over and above the dollars it can generate for them.
Be very careful what you wish for
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@Tim said in CVC and NZRU:
The group’s approach to rugby marks a radical departure from the traditional buyout model, where deals are financed in part by loading takeover targets with debt, then aiming to sell them on at a profit within three to five years.
Mmmm I'll beleive it when I see it. They might not strip and sell in 3/5 years, rugby is not a big earner. Maybe over a longer period.
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how different is this going to be from 1995?
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@taniwharugby said in CVC and NZRU:
how different is this going to be from 1995?
that was the exact comparison i had in my mind.
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see Golf is currently having a similar conversation with 'Premier Golf League' series/comp or whatever touted...
Has Premier Golf League reached a tipping point with players?
An informal poll of the game’s top players at the WGC-Mexico Championship suggests the Premier Golf League could be reaching a tipping point.
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@taniwharugby i thought Golf was flying these days?
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@mariner4life It is - thanks to Tiger. Which is why people want in on the action.
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Crikey, I hate judging on looks, but Brett Gosper has never come across as more than a used car salesman (someone said something similar before). If you look carefully, he's slightly shiny. Even light doesn't want to touch him.
I just struggle to understand what private equity firms are going to do to world rugby that is positive. Professionalism was (overall) positive, because a number of teams were effectively there anyway. But private equity ...maybe the crahs needs to happen soon so that this idea goes away
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@nzzp short term, probably be great, big cash injection, then as they want to maximise profits, the rugby landscape would change considerably and likely end up all but unrecognisable.
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@nzzp said in CVC and NZRU:
Crikey, I hate judging on looks, but Brett Gosper has never come across as more than a used car salesman (someone said something similar before). If you look carefully, he's slightly shiny. Even light doesn't want to touch him.
I just struggle to understand what private equity firms are going to do to world rugby that is positive. Professionalism was (overall) positive, because a number of teams were effectively there anyway. But private equity ...maybe the crahs needs to happen soon so that this idea goes away
if this virus gets serious in Europe you can expect a worldwide recession anyway, so this will all go away
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@taniwharugby said in CVC and NZRU:
@nzzp short term, probably be great, big cash injection, then as they want to maximise profits, the rugby landscape would change considerably and likely end up all but unrecognisable.
Really though, what would a dollop of cash do? The issues with rugby are not money related... Falling revenues are a symptom not a cause
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I like this part, but I doubt they'd pull the pin:
."We have put him on notice that we expect change," Impey said. "He's made the right noises, but he's now got to deliver. "If he doesn't deliver that, a whole new debate, and [it] will certainly test the relevance of World Rugby if nothing happens.
