Private equity income-ing...

CVC is set to increase its interest in rugby after agreeing a deal to acquire a 28% share of PRO14 for around $155m, as reported by Sport Business.

The deal builds on their previous investments into the sport, which includes a 27% holding in Premiership Rugby. According to the FT, the group is also in talks with World Rugby and the governing bodies of New Zealand and South Africa. 

CVC’s investments into sport are radically different from the traditional buyout model, where deals are financed in part by loading takeover targets with debt, then aiming to sell them on at a profit within ‘x’ years (e.g. the Glazers). 

Private equity firms aim to build long term value in the sport by making the product commercially viable in the long run by addressing; 

  • Broadcast. CVC are considering ‘bundling’ the TV rights for all their rugby competitions into a single package. They’re also exploring streaming deals, or the creation of an OTT subscription service for fans (similar to proposed ‘Premflix’). 

  • Wages. Though less a problem for rugby, there is an understanding that if private equity were to invest in football, it would want the ratio of revenues spent on player wages dramatically reduced. 

  • Globalisation. CVC envisages a “Club World Cup” - a money-spinning tournament involving the best sides on the planet. PRO14 is already on the right track, as one of the first cross-border leagues in world sport. Similarly, talk of a European Super League refuses to go away. 

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