GERRY THORNLEYlooks at the issues surrounding the battle for the future of the Heineken Cup and how the French stance may hold the key
AT ITS core, the English/Heineken Cup rugby has emerged as a secondary, if key battleground behind Premier League football.
This is being fought out between BSkyB, hitherto the dominant force in pay-per-view football and rugby, and BT Vision, the new players in the market. In the last three months, BT has vowed to spend the best part of £1 billion (€1.34 billion) on football and rugby in outbidding Sky. The biter, ie Sky, has been bit and the mostly hard-pressed English clubs, desperate for, and dazzled by, cash, see themselves as the beneficiaries.
So it is that the various stakeholders of the ERC come together next Tuesday, for what is likely to be the first of many meetings and a potentially lengthy, acrimonious and perhaps legally costly process toward agreeing a new accord. It is being played out to the backdrop of Premiership Rugby’s vexed £152 million (€188 million), four-year deal with BT Vision which also included English clubs’ games in any European competition from 2014 onwards, announced last Wednesday.
The legality of this deal had been questioned by the ERC and late yesterday afternoon their stance appeared to be given significant support by the English RFU. In an otherwise conciliatory statement, it said that: “the RFU has not given consent to Premiership Rugby to grant European Broadcasting Rights.”
Having said they would investigate the legality of the BT deal on Thursday, it is inconceivable that the RFU would have made such a public assertion without strong legal advice.
To recap, both the English and French clubs, under the guises of Premiership Rugby and the LNR (Ligue Nationale de Rugby) served notice to the ERC on June 1st so that the ERC accord, which concludes in 2014, has to be replaced by a new accord.
Both want a restructuring of the Heineken Cup from 24 to 20 participants, exclusively at the expense of the Celtic/Italian axis, and hence a revised qualification format based upon the top six in each of the three major leagues, Rabo Pro12, Top 14 and Premiership, along with the Heineken and Amlin Cup winners.
Whereupon, on Wednesday, Premiership Rugby dropped its BT bombshell.
Critically, this also included the announcement that “BT will also have exclusive live broadcast rights to matches played by Aviva Premiership Rugby clubs in any future European competitions from 2014-15 for three years”.
They did not reveal how much of the deal hinged upon the rights to those English clubs in any future European competition, or give any inclination as to the breakdown. In announcing the BT deal, the Premiership Rugby CEO Mark McCafferty again voiced the threat of a breakaway Anglo-French competition.
The ERC responded by announcing their new four-year deal with Sky to continue its coverage of the Heineken and Amlin Cups.
Likewise, they did not reveal how much the new deal with Sky was worth, although sources confirm it did not constitute an increase on the existing deal which expires at the end of this season and is thought to be somewhere in the region of €15-20 million per year.
The ERC also claimed the proposed Premiership Rugby/BT deal was “in breach both of IRB regulations and of a mandate from the ERC Board itself”, and that their Sky deal had been unanimously agreed at their board meeting of June 6th, at which Premiership Rugby were party to that decision in the form of Peter Wheeler, their representative.
Premiership Rugby countered that they had specific consent to control the broadcast rights of its clubs following an agreement with the RFU, dated October 16th 2007, since disputed by the RFU, and questioned the legality of the ERC/Sky deal given it went beyond the current accord.
Maintaining that Premiership Rugby were not permitted to sell the rights to a cross-border competition such as the Heineken Cup, the ERC believe they have precedent in agreeing other commercial deals beyond accord deadlines, and that Premiership Rugby were legally bound by corporate governance after assent was given at the board meeting of June 6th.
As ever, there is an English power play within Europe’s latest power play, and the RFU’s mood would not have been helped by the provocative comments attributed to the BT Vision chief executive Marc Watson which, even by the standards of high corporate office, were breathtakingly arrogant.
“We are looking to set up, or at least help set up, a dazzling new European tournament with a fantastic new format, with, we hope, all the best clubs.”
The chairman of Saracens, Nigel Wray, weighed in by re-asserting the unfairness of the way ERC revenue and Heineken Cup places are distributed across all six participating countries. “The English and French clubs contribute by miles the biggest part of the revenue and we don’t get our just reward,” said Wray whose club, Saracens, were the Premiership’s sole representatives in the quarter-finals last season. They attracted a crowd of 11,047 for their 22-3 defeat to Clermont, which was the lowest of any match in the knock-out stages for the last six seasons.
Increasingly too, McCafferty and the English clubs look isolated. The vice-president of the LNR, Patrick Wolff, commented: “It is inappropriate to give news about TV rights in Europe. I was disappointed. It is not appropriate that this is to be put on the agenda. We do not know for sure if ERC or the clubs or another organisation owns these rights.
“Of course I understand that this is the usual pressure exerted before negotiations but I was sorry to see financial issues being discussed before we talk about how the competition needs to be improved. We don’t want to start all this by having lawyers there arguing about TV rights. We must talk first about the sport.”
That said, Wolff wants more details from McCafferty and co next Tuesday in Dublin, “mainly what part of the contract is dedicated to the Heineken Cup and what types of TV rights have been sold. Without this information, which we haven’t been given, it is difficult to have an accurate opinion.”
Wolff re-asserted French desire for a pan-European tournament, adding: “We are not considering our own TV deal at the moment. We are not following the wind – whether it is a Celtic or English wind. We won’t follow things blindly, we consider the whole and want the stakeholders to stick together.”
But much stricter French law and the strength of the French Federation, whose president Pierre Camus signs off any television deal involving the French team or its clubs, means the LNR could not go down the English clubs’ route.
“The Heineken Cup is a very good competition and we don’t want to kill it,” added Wolff. “We love the Heineken Cup in France. Sometimes we complain, because we are French first, then because the Celts don’t play as many games as us. But I can’t imagine that the French will allow the big games like Clermont against Leinster not to happen. We will do our best to keep these type of games.”
McCafferty’s assertion that they will share (unspecified) monies from their BT deal with the rest of Europe, and is therefore good for all, is liable to meet with short shrift. The Cardiff Blues chairman Peter Thomas said: “Premiership Rugby haven’t got the Welsh, the Irish, the Scottish or the Italians and they haven’t got the French at the moment. They have only got the English teams in it. They are making massive assumptions.”
As ever, within the volatile world of English and European game, the key issues are about power and money, as much as the format of the Heineken Cup. The two are, of course, related. In all of this it’s worth noting that eight of the dozen Premiership clubs lost money in 2010-11, the exceptions being Leicester, Northampton, Gloucester and Exeter, with the cumulative loss in the region of €19 million.
Last season, 2011-12, the ERC generated a gross turnover of €52 million, of which about €5 million can be subtracted for running costs. Each of the six participating countries divide their share differently, with the Irish share going entirely to the IRFU, which enjoyed a bumper year.
For each appearance in the knock-out rounds last season, there was a payment/bonus of €450,000 and with three quarter-finalists, two semi-finalists and two finalists, this equated to an overall meritocracy payment of €3,150,000 to the IRFU. This left €1,350,000 to the French, €900,000 to the Scots and €450,000 each to the Welsh and the English (which goes straight to their clubs).
The would leave about €40 million or thereabouts in basic distributions, of which the IRFU, along with their Welsh and Scottish counterparts, receive about 13 per cent. This equates to approximately €5.2 million each. The Italians are understood to receive marginally less, around 11-12 per cent , equating to roughly €4.4 million.
Roughly half of the basic distribution is divided between the French and English, amounting to approximately €10 million each. On the premise that might is right, as well as having 12 and 14 clubs to share, the English and French will argue for a bigger basic share.
Whatever about a larger slice of the financial cake, the French half of the Anglo-French axis undoubtedly want a change in the competition’s format, and one which ensures that the H Cup concludes earlier in the season and therefore does not clash with the expanded knock-out stages of their own Top 14.
In truth, there is a recognition amongst the Celts and Italians for concessions, although to concede to only six qualifiers from the Pro12 would seriously imperil the viability and competitiveness of both Italian and Scottish rugby at club and Test level.
It’s also worth noting that unlike the English, who didn’t take part in the first year of the competition (1995-96) and whose clubs boycotted the 1998-99 tournament, the French have been ever presents.
Ultimately, there will be much sabre-rattling throughout this dispute, which can pan out a number of ways. Most likely, perhaps, there will be a resolution which will see change in the qualification process and tournament format. Alternatively, there will be a Heineken Cup without the English, or of course, the doomsday scenario of European rugby losing its crown jewel.
Whatever happens, little will be resolved next Tuesday, and this will run, and run, and run.
IN THE FRAME: Key players in English/Heineken Cup rugby power struggle
BRITISH TELECOM VISION
A subscription digital TV service offered by the BT (British Telecom) Group in the United Kingdom which was launched in December 2006.
As of June 2012 it had about 728,000 subscribers, but last June BT acquired a share of the rights to Premier League football television coverage for the 2013/14 to 2015/16 seasons, and specifically the live rights to 38 games, including 18 of the 38 "first pick" games, for a total of £738 million. BT simultaneously announced plans to launch a Sports Channel on all platforms, including BT Vision. As established telephone and broadband providers, by developing a platform for television and a dedicated sports channel(s) BT is taking the opposite route to Sky's "triple-play". This is sports broadcasting warfare.
BSKYB SKY SPORTS
The company has dominated the pay-per-view sports market, primarily through football and rugby, for much of the last 20 years, seeing off ITB Digital and, in England, Setanta, but after ESPN muscled in on football and the Aviva Premiership deal, the emergence of BT to beat off ESPN and muscle in on Premier League football, looks like the biggest threat to its hegemony thus far. All of which heightens the ever more bewildering array of options to the actual viewer.
PREMIERSHIP RUGBY
The umbrella group for the English clubs, fronted by their bullish and voluble CEO Mark McCafferty, who with the French clubs, want a much-changed and reduced Heineken Cup, comprised of the top six from each of the three leagues. Much more vocal in threatening a breakaway Anglo-French competition, they are also losing money collectively, and gave McCafferty licence to sign off the £152 million deal with BT. However, last night the RFU backed the ERC in disputing the legality of that deal.
THE FRENCH
Like the English, the French are represented by both their Federation (FFR) and clubs (LNR) but unlike the latter, stricter French laws mean the clubs cannot do their own broadcasting deals. Even so, the extend to which they will or will not support the stance of the English clubs will be critical.
THE CELTS/ITALIANS
The three Celtic unions and the Italians provide the other eight members of the ERC Board. They understand concessions will have to be made which will possibly reduce their share, in terms of qualifiers and financially, but will not be completely bullied into submission as it runs the risk of casting Scottish and Italian rugby adrift.
