SCOTTISH RUGBY is on the precipice of receiving a £35 million windfall through the sale of a minority stake in the Guinness PRO14 league to private equity firm CVC, it has been reported. Discussions have been ongoing for several months and a request has now been filed to the Irish Competition and Consumer Protection Commission for Merger and Acquisition clearance.
It is understood that PRO14 have agreed a deal in principle to sell a 27% stake of the league in exchange for £120m. As owners of the competition, the Irish, Scottish and Welsh Rugby Unions will each receive £35m, with sides from South Africa and Italy also expected to receive a cash bonus.
It will be a similar deal as is already in place with the English Premiership after CVC bought a 27 percent stake in that competition for £200m in December of last year. With the private equity firm entering “an exclusive period of negotiation” with Six Nations to buy what is believed to be 15 percent stake for £300m (although some reports put that figure at £500m), it is clear that the landscape of the European game is about to be revolutionised.
A statement from Celtic Rugby DAC, which runs the PRO14, said –
“Celtic Rugby DAC and its shareholders can confirm a request has been filed to the Irish Competition and Consumer Protection Commission for Merger and Acquisition clearance by CVC Capital Partners.
“The request has been made in relation to a potential transaction involving Celtic Rugby DAC and CVC Capital Partners.
“Both parties are involved in advanced discussions and until those talks have been finalised there will be no further comment.”
Meanwhile, WRU Chairman Gareth Davies told that organisation’s AGM in Cardiff that a deal with CVC would be a positive move for the Celtic rugby nations –
“It is an interesting departure and development,” he said. “It is commonly known that the Pro14 has been in discussion with CVC and it looks like that could be moving forward.
“There are still i’s to be dotted and t’s to be crossed but that is moving on. That will be an influx of money into Ireland. Scotland and Wales and that is well received.
“Discussions are ongoing and hopefully there will be some extra funds in our coffers. It will come into the Union first of all and we are in discussions with the (Welsh) regions and they will benefit as with others.
“Looking at the Pro14, it is an easier entity to offer a share. In England they have gone directly to the clubs because they are the ones negotiating.
“The rugby element will still be controlled by the Unions and professional team.
“Rugby is not always good at working together because there are lots of areas of self-interest.
“It probably needs an external partner to knock heads and to more commercialise what is regarded as an underexploited sport.”
The SRU revealed on Friday that a review into its governance and management structures by former Scotland international and millionaire oilman Sir Bill Gammell, and his sidekick Norman Murray, had been agreed in principle by the organisation’s Board and Council. Details are to be sent to clubs in early December. The stated aim of this is to prepare the governing body for this sort of influx of cash.
Under the terms of the deal, CVC would take over the commercialisation of the league, particularly in the areas of sponsorship and broadcasting, targeting a wider international audience and looking to break into new markets with team franchises in America or Canada.
It is understood that much of the negotiations in recent months have centred on the larger PRO14 clubs such as Leinster and Munster preserving the freedom to maintain and develop their own commercial activities within any future participation agreements.
The amount of cash being talked about is eye-watering but a deal with CVC is not an automatic golden ticket to a carefree future. CVC has a patchy record when it comes to developing sport. It paid £1.6b to buy Formula One in 2006 and more than trebled its money by the time it sold it on in 2017, but their management of the business has been criticised. Bob Fernley, former principal of the Force India F1 team, accused CVC of “raping the sport”.
“All their actions have been taken to extract as much money from the sport as possible and put as little in as possible,” he said in 2016.