IRFU’s Philip Browne hails €400m-plus deal with ‘seventh partner’ CVC

IRFU chief executive Philip Browne maintains "nothing has changed" with regard to impending negotiations for the television rights to the Six Nations after confirmation that the tournament organisers had sold a 14.3 per cent stake to the private equity firm CVC Capital Partners.

The five-year agreement with Six Nations Rugby Ltd, subject to regulatory approval and estimated to be worth around €426 million, sees CVC increase its investment in rugby union after previous deals with the Premiership and the Guinness Pro 14.

The current broadcasting deal for the tournament, with rights in Ireland held by Virgin Media and by the BBC and ITV in the UK, expires after the conclusion of the 2021 Guinness Six Nations. The broadcasting rights for a new deal are already out to tender, but this time will include the autumn internationals for all six countries as part of a TV package en bloc.

Due to its more remunerative autumn deals with Sky Sports, the RFU will receive the biggest share of CVC’s investment, almost €111 million, which reflects their deals for autumn matches in the more lucrative UK market, and is closely followed by the French Federation. The IRFU will receive around €56 million over five years, slightly less than the WRU (€59.5 million) and above the SRU (€52.5 million), in what Browne calls “a fair formula”.

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Although it is widely expected that this new partnership with CVC will herald some Six Nations games no longer enjoying live broadcasting on terrestrial television, but instead moving to pay-per-view, Browne maintained it was not necessarily a fait accompli.

“The first thing is that CVC don’t have a controlling interest in the Six Nations, they have a minority interest,” Browne told The Irish Times on Thursday. “They are effectively a seventh partner to add to the six we had. The commercial rights will be determined by a majority decision in control of the unions, and equally all the rugby decisions are in the control of the unions.

“All I can say is go back over the last 20 years, and more, the Six Nations have been selling the TV rights as a collective and nothing has changed. We are a participation sport so we have to find a balance between reach and exposure versus revenue, and if the balance tips over in favour of one side or the other of that particular fence, you’ll end up doing damage.

“If you go completely for exposure and reach, at the expense of revenue, you potentially don’t have the resources to develop the game. Equally, if you go the other way and the game isn’t seen, how can you attract people to play the game?

“It’s about finding the appropriate balance and to be fair, over the last 20-odd years, and more, I think the Six Nations has found that balance pretty well and it has always been on free-to-air television.

“At the end of the day it depends on how the broadcasters respond to the invitations to tender for the television rights. The unions are more than conscious that we have to have an appropriate balance. I don’t think that anything has changed.”

In the heel of the hunt, the likelihood is that if some Six Nations games will go to pay-per-view for the first time ever, this would be with extended highlights or deferred free-to-air coverage of those matches and with each country having a limitation of say, two or three, of their Six Nations fixtures on subscription TV.

“We need to be visible, and everybody accepts that,” said Browne.

In tandem with all the relevant governments not protecting Six Nations games as ‘crown jewels’, this stance by the unions ensures, as Browne puts it, “if nothing else to keep the terrestrial television stations honest”.

The likelihood is that the Six Nations will be in a position to confirm details of a new broadcasting deal “by the end of the summer” according to Browne.

Negotiations with CVC have been taking place for 18 months, but Browne maintained that as far back as two and a half to three years ago the Six Nations had begun exploring how the six unions and federations could be more closely aligned while changing their business model.

“This isn’t about low hanging fruit. This is about how to build capacity and value. Broadcasting is only one element of the value chain. There’s a whole range of other areas where CVC will bring their experience to bear.

“If you look at the viewership of the Six Nations it’s of a certain age group. What we have to is change the way the Six Nations exploits its commercial rights and one of those things is to try to exploit the whole digital space. For people under 35, that’s where it’s at and that’s where there’s real scope to change the way in which the Six Nations business model operates, and CVC are a catalyst for doing that.”

Browne also said that comparisons with Formula One, where TV audiences shrank when CVC were partners, are not strictly valid as rugby is a participation sport as opposed to a commercial venture.

“It’s a different model and you can be sure all those questions were asked of CVC. We were well advised and there are smart people working on our side in all of this. Nobody is going in blind and having said that the people we have been dealing with in CVC have been absolutely aligned with what we’re trying to do.”

The initial annual cash injection for the IRFU arising from the CVC deal will, after costs, be around €7 million. Having incurred losses of around €36 million in the 2019-20 season, and in the anticipation of similar projected losses this year, Browne put this €7 million windfall in perspective.

“It isn’t going to be a game changer in terms of the Covid crisis. That’s about six weeks of keeping the four provinces and the IRFU going, but anything that helps is going to be welcome.

“But in the longer term perspective I think it’s going to be great. One assumes that we’re going to get out of this Covid crisis by this time next year, which means that over the following four years we know that we’ll be getting some monies coming which we can then decide how we’re going to invest in the game and infrastructure.

“Bearing in mind that we will be handing over 14 per cent of our Six Nations income as a collective to CVC, some of the monies coming in is effectively future income up front now.”

The annual share-out from the CVC purchase will also increase.

“Some of the latter tranches, depending on the commercial performance, will be larger. It isn’t a straight line.”

As an aside, Browne described the successful round of agreed new deals with the vast bulk of the 90 or so players who were out of contract next summer as “an excellent process”, adding: “It’s probably as good a contracting process as we’ve had in years.”

Taken in tandem with CVC’s investment in the Pro 14 and Premiership and the Top 14 recently striking a new four-year deal with Canal+ worth an annual €113.6 million, representing a 17 per cent increase on the current contract, this also shows that despite the current crisis, rugby remains a prized commercial asset. CVC’s purchase of 14.3 per cent at almost €426 million puts the value of the Six Nations at almost €3 billion.

Furthermore, when one thinks of go-your-own-way brinkmanship in the past, notably when the RFU threatened to conduct their own pay-per-view deals for Six Nations games or break off with the southern hemisphere, this deal also demonstrates that, like never before, the six are bound at the hip.

Unity is strength and all that.