Home Gallagher Premiership Potential Gallagher Premiership Takeover bid could be Disastrous for RFU

Potential Gallagher Premiership Takeover bid could be Disastrous for RFU

Andy Daniel outlines the Possible Connotations of CVC's Takeover Bid of Premiership Rugby Limited.

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It has been reported today in The Times today that CVC, the previous owners of F1, are weighing up a takeover bid to take control of Premiership Rugby (PRL) in England.

The private equity firm have made an initial offer of £275m to obtain a controlling share of 51% of PRL.

On the face of this, should the Premiership Clubs accept the deal which is highly unlikely at this price, it is great news for the cash strapped league. Every club in the Premiership, except for Exeter Chiefs ran at a loss of an average £2m last season and should the deal be accepted they, along with other member club London Irish would be in line for a £17m windfall which would be most welcome for them.

CVC’s vision is to make the Premiership a global force through sponsorship and investment. During their ownership of F1 CVC profited the business to the tune of £8bn using this business model.

The valuation of PRL that the equity firm has presented of £550m will be questioned and according to sources it seems that Bruce Craig, the Bath Rugby owner has been very vocal in his opinion that this is short of the true valuation of the league.

Should this takeover happen then it could be very bad news for the RFU.

They are powerless to stop any potential takeover. They can veto specific owners taking over clubs but the whole league is out of their control. This is due to the clubs not being affiliated with the RFU around player contracts. New Zealand and Australia for instance have a central contract system meaning the players are registered to the union itself as well as their respective franchises.

The atmosphere between the clubs and country is fairly fractious at the moment as it is with injuries always the top of the agenda and the way that Eddie Jones is seemingly training the players too hard but availability of players has always been a contentious issue.

CVC will see these players as assets first and foremost. Assets that will help drive their commercial value so to see box office players like Manu Tuilagi, Anthony Watson and Jonathan Joseph on the side lines for lengthy periods then that will not sit well. What would be worse is if these players were injured on England duty which seems to be quite the case at present.

At the last count it was 15 players that had suffered significant injury damage at England training and one that was forced into early retirement. Funnily enough it was Mr. Craig yet again that wasn’t happy with this situation but rightfully so. Four of those players belonged to Bath.

One option for England Rugby’s governing body is to match the bid and invest themselves. They have the money but whether the clubs would be so keen is a different story.

CVC have promised investment to the clubs and effectively wipe out every one of their debts in one foul swoop whilst also saying that they won’t meddle in the set-up of the league but will concentrate purely on the commercial aspects.

The salary cap will not be increased either so the clubs would have a chance to start a clean slate financially.

Their relationship with Sky is also very close which would potentially start a large bidding war with BT Sport for viewing rights very soon after any potential takeover.

The owners of the 13-member clubs of PRL will be presented with the bid on Tuesday so we should know more then. It is unlikely the deal will be done that day but we will have the first indications of whether the deal will eventually go through and what those connotations will be.

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