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Merchant bank Raine Group has warned that professional rugby is not big enough for “five or six leagues” and that it is “time for someone to put the hammer down” and become the sport’s equivalent to the Premier League.
Rugby union has been going through a crisis of late, with different leagues using different structures to try and find the winning formula for growth.
In the multi-national URC it was involving South African teams, in the southern hemisphere Super Rugby it was ditching non Australasian teams, in the French Top 14 it was strengthening the second tier to create depth, and in the English Prem it has been ring-fencing and a push towards franchising.
While French teams have tended to be the big spenders, investment into the Prem by the likes of Red Bull, Sir James Dyson and AFC Bournemouth owners Black Knight has seen the English league turn heads.
Prem Rugby engaged Raine – which helped Roman Abramovich sell Chelsea and Sir Jim Ratcliffe take a stake in Manchester United – and Deloitte a year ago to manage the potential investment, and senior figures from the merchant bank have said it is time for the sport to be decisive.
Prem rugby reality
“What is going to become the English Premier League of rugby?” Jason Schretter, Raine Group partner and co-head of Europe, asked City AM.
“Is it going to be the French league, the Prem, the URC? Professional rugby is not big enough for there to be five or six leagues that all have scale so it’s time for someone to put the hammer down and say, ‘No, we’re it; we’re going to become the big guys’.
“I have spent time in rugby trying to have conversations with the Prem and RFU to talk through what the realm of the possible is. It’s complicated. They’re doing the right thing by being pragmatic. I think you’re going to hear some pretty exciting things about the Prem in the next couple of months because they’re thinking about things the right way.
“At club level, it is already happening. But at the league level, I think they have some things that they can go further with now, saying ‘we’re starting to get better, starting to get really good investors, let’s fuel the fire’.”
Thunder Down Under
The fresh investment into rugby follows institutional money pouring into just about every sport over the last decade. One of the latest is Australia and its premier Big Bash Twenty20 cricket competition.
Much like England’s Hundred, the Big Bash is exploring ways to raise capital by inviting overseas investors into the sport. It could see two Melbourne franchises merged and US and Indian capital flow into the southern hemisphere.
Raine advised on a recent $1.6bn sale of the Rajasthan Royals Indian Premier League team – one of two franchises to be flogged in recent months – and stated that the cogs are turning in the Big Bash too.
“We’re having some conversations with Cricket Australia around the Big Bash, which is not a well-kept secret at all,” Schretter added. “I also think there could be some more activity in the IPL – there’s just a lot of people trying to see how I can get involved.”
Saudi security
One investor group who may not be getting involved is the Saudi Arabian Public Investment Fund, who are pulling out of a number of sports amid a changing global economy and a wish to focus more on domestic projects.
“PIF is interesting,” Schretter concluded. “They did not retain their same level of financial commitment to LIV. When I hear some of these rumours on Newcastle – if there’s a stadium project – it’s not like PIF doesn’t have the capital to pursue that.
“The fact that they’re not doing that just suggests that they have a lot of commitments within Saudi. I think it’s the time for them just to be a bit more pragmatic.”
