AN opinion column in The Rugby Paper on 28 January 2024, stated “RFU needs to justify its CVC Payments” and “The CVC deal is so detrimental to RFU finances that many analysts have been left flabbergasted”.
Critically, the piece relied on a series of incorrect facts and figures to substantiate highly negative and misleading reporting of the deal claiming it to be a “staggering financial blunder”. This was wrong. We accept the facts justify a more positive view of the deal.
The article claimed “The RFU has sold some of its most valuable rights for a minimal gain of £15m, or £3m a year.” This is not true over the five-year period between 2021 and the 2025/26 season the “gain” referenced is £72.4m.
The article also asserted as fact that “The RFU is handing back almost £16m to CVC per year. Over the five-year term this amounts to CVC receiving almost £80m from the RFU’s revenue.”
This is not true, the portion of RFU broadcast income acquired is built up to 14.3% incrementally over five years between 2021 and the 2025/26 season. This is equivalent to less than 20% of the £90.8m received under the agreement over the same period, meaning the RFU is receiving significantly more revenue than it would have without the deal.
In 2021, the Six Nations Unions announced the agreement , which involved the consolidation of their broadcast rights and sale of a 14.3% (1/7) stake in future broadcast revenues to commercial partner CVC. This shareholding was to be built up over the five years between 2021 and the 2025/26 season.
In return for their eventual 1/7th stake, CVC committed to pay up to £365m, with a guaranteed minimum of £305m, payable in annual instalments to the Six Nations Unions between 2021 and the 2025/26 season.
Contrary to the article’s claims, following the completion of these payments in the 2025/26 season, the Six Nations Unions will have sold a small minority stake in only their future broadcast revenues, with the vast majority (6/7ths) remaining with the Six Nations Unions. All other union sponsorship remains with individual unions.
CVC is an experienced investor, with investments in more than 125 companies worldwide and with a proven track record of investing in sporting competitions over 20 years, such as Formula One, Moto GP, Premiership Rugby, the United Rugby Championship, La Liga and Ligue de Football Professionnel, the IPL and with the Women’s Tennis Association.
The principal benefits of the CVC agreement were the co-ordination of broadcast rights with the intention of increasing the overall value, and to bring on board a commercial partner to focus on commercial growth and help drive long-term success to outstrip the value of the 14.3% consideration.
The Six Nations Unions and CVC have been working together since 2021 to increase the annual profits of the Six Nations commercial company by developing the commercial potential of the business. The Unions retain full control of sporting and regulatory matters.
A key pillar of the deal was the alignment of the broadcast rights of the Six Nations tournament with those of the Autumn Internationals, and while CVC will eventually take a 1/7th stake, each Union will be better off over the long term than if the Unions had not entered the agreement, through better distribution of the broadcast and sponsorship rights, as well as potential cost savings from working together.
Prior to this co-ordination, each union sold their Autumn International broadcast rights separately, meaning broadcasts were spread across different channels, with unaligned kick-off times, reducing value for all unions. Optimised broadcast rights for all competitions will be achieved through collaboration between unions and competitions and leagues, not by operating separately as was the case previously.
The RFU share of the guaranteed element is £90.8m, with no restrictions placed on the use of the funds. Today, with the value of Six Nations rights having remained steady, the RFU is receiving significantly more broadcast revenue than it would have made without the CVC deal.
In 2021, the pandemic had a significant impact on the unions ability to generate revenue. Had the deal not taken place that year, the RFU would have carried forward its pre-existing debt and continued to incur significant costs on loans. It would have resulted in a negative P&L reserve position at the end of the current four-year cycle. This would have meant reducing rugby investment to bring P&L reserves back in line.
We are happy to correct the record.
