But it is not just fans who will be hoping for a recovery in rugby’s fortunes: one private equity firm in particular, CVC Capital Partners, has much at stake.

The European buyout giant has invested more than £700m in building up a rugby portfolio. In late 2018, CVC bought a 27% stake in the English professional rugby union competition, Premiership Rugby, for £230m.

A year later, the investment firm paid £120m for a similarly sized stake in Pro14 Rugby, an annual tournament featuring teams from Ireland, Scotland, Wales, Italy and South Africa, which has since been rebranded as Pro14.

CVC then bought a 14.3% stake in the Six Nations, the annual international men’s rugby union competition between the teams of England, France, Ireland, Italy, Scotland and Wales, for £365m in 2021. The deal also included the women’s and under-20s tournaments as well as an autumn international series.

The buyout group is hoping to score a return by growing the commercial side of rugby, through broadcasting deals and international expansion, just as it has done across other major sports such as tennis, football, Formula One and cricket.

Yet in spite of CVC’s investments of more than £700m, as well as a £135m bailout from the government during Covid, English rugby, in particular at the domestic league level, is still struggling with high player wages, fixture clashes and audience engagement.

The financial health of the shareholder clubs has been a “major factor affecting the league”, noted Nick Clarry, the managing partner leading CVC’s push into sports, in a Companies House report.

“Premiership clubs have benefited from loans provided by DCMS and Sport England through the Sports Survival Package, and whilst this support has been a key factor in no clubs going under during the main phase of the pandemic, those loans will remain on the clubs’ balance sheets for many years to come.”

The question now facing rugby’s institutions – and Clarry’s team at CVC – is how to revive the crisis-hit sport.

One of the most important issues will be the negotiations for new broadcasting deals.

Growing the value of media rights is a core reason for CVC’s wider investment into sports, and high-stakes talks are already underway over a future TV deal for Premiership Rugby.

“With CVC, you can see the play for sure, but there’s a risk in the strategy. Broadcasting in particular is what drives most of professional sport revenue, but there’s a risk there that the growth potential is not as high in rugby union as it is in other sports,” says Dan Plumley, a senior lecturer in sport finance at Sheffield Hallam University.

BT has just one season left on a three-year deal worth £110m, and with three clubs having fallen into administration, striking a new-and-improved TV deal for the embattled league will be no easy feat.

The league has also sought to reach fans directly, launching its own streaming platform. Following a tie-up with private equity giant SilverLake, New Zealand Rugby also launched a streaming platform last year that offers match highlights and documentaries to fans worldwide.

The Top 14 league, France’s equivalent of the Premiership, signed a four-year deal in 2021 worth roughly £390m, underlining how far the UK league has to go to catch up with its competitor across the Channel.

The Six Nations also has a four-year TV rights renewal with BBC and ITV that is set to run out in 2025.

Public interest

Securing a lucrative TV deal won’t just be down to negotiation skills: it relies on growing the popularity of the sport.

“The central problem for English rugby is that no one has created franchise value,” says one banker who has advised several PE firms on sports deals.

They added: “What makes any sport successful? It comes down to eyeballs. The difficulty is that you can throw money at a problem, but you cannot make people interested who are not interested in rugby. People are interested internationally, but people are not that interested in the domestic game. That is the biggest conundrum.”

Stadium attendance numbers underline the issue: most clubs in the top league, the Premiership, bring in between 5,000-15,000 fans per match: often a fraction of the number that football clubs in the top two English divisions typically attract each weekend.

Some industry figures argue that rugby needs more content like Drive to Survive – the hit behind-the-scenes Netflix series that has boosted the popularity of Formula One racing. A fly-on-the-wall documentary about Harlequins, directed by Bath and England prop Beno Obano, was released on Amazon last year and Netflix is set to launch a documentary covering the 2023 Six Nations.

Foreign expansion is another possible route for growth: during the 2021-2022 season, Premiership Rugby was shown in 139 different territories across Europe, Africa, the Americas and Asia, Clarry noted in his Companies House report. Rugby has seen growing demand in America, which will host both the 2031 Men’s Rugby World Cup and the 2033 Women’s Rugby World Cup.

Salary caps

Yet even where rugby’s stakeholders have been able to grow the fan base and boost revenues, rising wages have upset the industry’s finances.

Clubs have seen wage bills of £9m per year, but an average of just £4m brought in per club from match ticket sales, according to research from Sky News. A marquee system designed to attract the best talent has also allowed for the salaries of two players to sit outside the cap. It was criticised in 2020 in a damning report written by Lord Myners, who deemed it, “inflationary, over-complex and unnecessary”.

“The CVC angle is interesting because we know in retrospect that the danger is that a lot of their money went to clubs and it was straight back out again in salaries,” says Plumley.

He adds: “The biggest issue with rugby union has been the salary cap. You’ve got a mechanism designed to control costs, but it doesn’t play out that way. There have always been calls to raise the salary cap, but that puts pressure on the financial sustainability of the clubs.”

The salary cap was reduced post-Covid to £5m in an effort to improve the game’s financial health, but the cap is set to rise again from £5m to £6.4m for the 2024/25 season. In the meantime, a number of high-profile players have moved from England to France where salaries are often higher.

Serious health problems

Some insiders say that rugby’s biggest problem is not a commercial one but a medical one.

A head injury crisis has gripped the game, with nearly 200 players suing the Welsh Rugby Union, Rugby Football Union and World Rugby for head injuries they claim they sustained during their careers.

Steve Thompson, who won the Rugby World Cup with England in 2003, is among ex players to have spoken publicly about his early onset dementia — thought to be linked to his playing career.

It is hoped that new concussion guidelines released by the government will ease parents’ concerns about the issue, but in the US, similar fears have prompted some parents to keep their children away from playing American football: a 2018 poll just days before the Super Bowl, the sport's showpiece final, found that 48% of Americans would encourage a child who wanted to play American football to try something because of concerns about concussions.

One sports M&A adviser says: “If you dry up the pipeline of kids playing, you’ll start to see the impact of that in 10 to 15 years. You won’t have as many players, but you also might not have as many fans, because kids won’t have grown up playing the game, so they won’t have that gateway into being a fan.”

A key negotiation also currently taking place is the Professional Game Agreement, which governs the relationship between the Premiership and the national governing body, the Rugby Football Union.

A new PGA is set to come into force in 2024, and there is hope that a renewed contract among English rugby’s key power brokers can help solve some of the disputes that have long plagued the game.

Issues including league structures and central funding are coming under the microscope. Fixture clashes between club and country have also long been a hot topic. For CVC, which has a stake in both the international games of the Six Nations and the domestic Premiership, fixing a proper schedule is likely to be a key priority.

The slimmed-down Premiership with only 10 teams might soothe these problems, some insiders argue, because the league will be able to avoid clashes with international games more easily.

Whether these governance reforms, on top of broadcasting deals, head injury claims, and salary cap changes, can bring about an improvement in rugby’s fortunes remains to be seen: but with so many issues afoot, the coming year looks to be a crucial one for CVC’s investment into the sport.

This article was published by Private Equity News, part of Dow Jones

To contact the author of this story with feedback or news, email Sebastian McCarthy