Free to air doesn't add up
Irish rugby will lose money if Government weakens its hand in TV negotiations, says Brendan Fanning
Saturday in the ground we now call Aviva Stadium will be the third leg of the great Leinster/Munster showdowns, those contests where the outsiders are as interested as the locals.
In 2006, there was a packed Lansdowne Road for their European semi-final; in 2009, they drew a world record for a club game when they met at the same stage in Croke Park; and this week there will be a record attendance for a Magners League match when they give the Aviva its first truly big game.
It will be one of those occasions when Irish rugby wipes everything else in the country off the agenda. And it will be a source of huge pride to the rugby community that they have two world-recognised teams playing in a world-class stadium. Best of all perhaps is that the building and financing of the stadium have been truly impressive operations.
Shifting the premium seats has been illustrative of rugby's power in the land. When they were sold initially -- before Ireland Inc started slipping down the pan -- it was on the basis that buyers could reverse out of the deal and get their money back. When the recession hit, more than 400 of them did just that, and asked for their cash to be returned. No questions were asked. Since then those circa 400 have been resold. Currently there is a fresh waiting list of nearly 200, all of them looking for at least two tickets each.
The cost of making all the sums add up has been to take away the comfort blanket under which IRFU council delegates would snuggle at the annual meeting. They are down to their last €1m in cash reserves.
Typically when the figures would be returned each year at the agm there would be a deep sense of satisfaction -- the team might not be big hitters on the field but the treasure chest would outweigh anything in committee rooms around the world. It was as if the union was in business to make money and not to win silverware, but in any case the conservatism has gone some way to underpinning the current expansion. You could argue that we could have expanded much sooner had we been winning things, but at least it's happening. What will concern the old guard much more is what happens next.
The tail end of last season and into the summer was dominated by an earthquake whose epicentre was Adelaide Road, where communications minister Eamon Ryan hangs his hat of a working day. He gets to decide what is and isn't on the preserved list of sporting events that must be screened free to air, and as such he can define the lives of sporting organisations for whom tv revenue is oxygen.
No, this topic hasn't gone away. In fact, it's currently on the table of economic consultants hired by Minister Ryan. Later next month, for a fee of €73,787 (inc vat) they will lob their report onto his desk. What he does with it then has everyone in Lansdowne Road transfixed.
They are petrified that he will park both the Heineken Cup and Six Nations in the free-to-air zone, scuppering the market. As the market itself has already placed the Six Nations in that car park until 2013, the initial point of contact is the Heineken Cup. And if that happens, Sky will reverse with their money.
Sky got involved with ERC in the first place to drive up their subscriptions in Wales and Ireland. By 2003, they already had the Zurich Premiership and England's autumn Tests, plus their Tri Nations package, to satisfy the English market. So they looked to expand, and it was the first time the Irish -- driven by the success of Munster and Leinster -- were able to say that their presence at the table was actually attracting commercial interest.
Sky's interest was an endorsement of the way Irish rugby was being run. We had used the Heineken Cup as a platform to grow the game here, whereupon the competition's broadcasters decided that it fitted snugly in their stable. Essentially, European rugby in Ireland was a property they wanted to buy.
The Sky model is built on exclusivity: if you want to watch the big game live then the only place you can do that is through them. This means having all the pieces fitted in the jigsaw. They won't wear a smaller territory like Ireland deviating from the deal. Once they have everyone on board they can develop the product to a point where no one else can touch it for quality. And that way they sell more dishes.
Yes, you may reach for the sick bag when mind-numbing games are being presented in high drama, but you can't argue with the scale of the coverage, which is first class. They have more cameras and more angles and they give you more opportunity to see more games than anyone else. And their contribution to the Heineken Cup has been immense.
In order for them to make all this happen they had to lose RTE. No problem. At the time, in 2006, RTE had a handy number and everyone seemed happy. They had access to one live game in Ireland every week, so whether it was Munster or Leinster they were there, with Irish voices putting the lid on an Irish product. If any of our provinces got to the knock-out stages they were still able to feed off that too. And regardless of whether or not an Irish team was in the final, RTE could chow down on that one as well.
The national broadcaster sometimes gets dumped on because in the commercial world they bat well down the order, but that is a function of who they are: a public service operator with a wide remit and not a lot of cash to throw at the big sporting events it would love to capture. So Sky swatted them like a fly. They multiplied by a factor of 10 what RTE were paying for their seat at the table. And so €200k from RTE became €2m from Sky and Derek McGrath over at ERC said thanks very much we'll be having some of that.
The escape hatch for McGrath was that while Sky had exclusive rights to live European rugby in Ireland, RTE could show deferred, extended highlights. It meant that the rump of the community who are typically outside the Sky club -- farmers, old folks, stuck-for-a-few-bob folks -- could tune in later that night. ERC were ticking the box, albeit in pencil, that demanded audience reach. RTE were miffed but they understood the mechanics of it, and made the best of their lot.
The situation changed when Eamon Ryan, having started a consultation process in autumn 2009, announced last May that ERC and Six Nations tournaments were pictures that might be better admired through a free window. As it stands, ERC's Heineken Cup is something you have to pay for, while the Six Nations deal with the free-to-air stations runs until 2013. He was putting it out there that preserving both on the free list was something worthy of public consultation. Had he suggested mandatory body piercings for the union committee he couldn't have spread more panic.
The IRFU went into crisis mode in jig time. They mobilised players to say their piece. At half-time one day in the RDS a slightly bemused crowd were addressed by Frankie Sheahan and Reg Corrigan. Wondering if the lads were going to break into song, instead the punters were given a chilling message about the future as threatened by Eamon Ryan.
That was nothing compared to the press conference where a top table of Philip Browne (IRFU), Derek McGrath (ERC), and John Feehan (Six Nations) gave the minister a good shoeing. "Does he want that on his head that he personally brought down Irish rugby on the back of a hunch?" Browne said.
Politicians are happy enough to take a kicking from their colleagues on the floor of Leinster House but they are unused to, and not enamoured of, a phalanx of sports people doing it to them outside the chamber. There was some negative pr attaching to the vehemence of the rugby community's reaction, for it made no bones about subtext: plain and simple they were telling Ryan he hadn't a rashers what was involved and that he didn't understand the danger of his meddling. That message hasn't changed.
Seemingly, Eamon Ryan was rattled by it all. "The minister and the department were taken aback by the degree of animosity that unfolded after the draft list was made public," a department source said on Friday.
Whatever pr damage the IRFU suffered from their full metal jacket approach was mitigated by a comprehensive performance in June before an Oireachtas Joint Committee on Sport. It may well be unique for such a committee to unanimously endorse a presentation made to it. Philip Browne left the deputies in no doubt that the Ryan Line was wrapping itself around the throat of Irish rugby.
And everyone was asking why? Did the minister have his bike nicked from outside a pub he had been forced into in order to watch Leinster in the Heineken Cup? Was this a little-known part of the Programme for Government? Had he widespread support from his colleagues, one of whom went on Morning Ireland and suggested that if rugby made sense on terrestrial tv in France then why not Ireland?
It was performances like that one which fuelled the idea in the IRFU that they were dealing with wholesale ignorance of sporting politics. Specifically an ignorance of Ireland's status in the Six Nations. The Heineken Cup may be the focus of attention now but the Six Nations is the cash cow which, at €11m, provides more than twice the Heineken Cup dividend. That's the bigger picture.
In rugby, there is constant pressure from English and French clubs seeking more cash. They look at Ireland and see a body who leave every meeting with their pockets full, having fetched up with one arm as long as the other. The togetherness of the Six Nations commercial operation is, at best, fragile.
Its starting point is that each member comes to the table with a free hand. If Ireland were to list the Heineken Cup and Six Nations as free to air, then that balance is destroyed. You would expect the BBC, for example, to pull up a chair and say that, with the backside just fallen out of the market, they are prepared to match RTE's pittance with a few extra bob. A few extra bob that would be a fraction of what would be asked of them if Sky were also in the hunt.
And how would the Six Nations committee react if Philip Browne arrived with the news that in Ireland the Government had declared the tournament free to air? They'd clap him on the back and tell him that the rules had changed. Of course the Six Nations would continue, but each country would then be free to do their own deal in their own territory. So everyone would have access to the 15 games, but could sell them only in their own territory.
There is a misconception out there that if it went to a situation where everyone paddled their own canoe, Ireland would do handsomely when the big boats from France and England floated up the Liffey. Eh, no. Everyone would get to sell the games to broadcasters in their territory. So there would be a bidding war between the tv channels in the UK where currently the package draws around €45m. So the Scots and the Welsh would immediately do a deal with England. France, meanwhile, could take their pick from a highly competitive tv market which this season will pump over €20m into the Six Nations. Italy could fold their tent and flog it for whatever they could get.
And Ireland? Well, currently the contribution from the territory of Ireland for access to ERC and Six Nations tournaments is €5m. Yet we take €17m from the kitty because we are all equal partners who come clean to the table. Alter that status and we would get to sell the rights in Ireland for something approximating to that whopping €5m it generates now. And you could kiss goodbye to the €12m in the difference. This is what keeps Philip Browne awake at night.
In the last week that figure of €12m was called into question yet again. It makes absolute sense to query the figure for the IRFU have never adequately got their point across on this. How can Philip Browne be painting doomsday landscapes when just a few years ago the ERC picture included Sky and RTE and all was well?
Because life after Sky got exclusivity is financially sounder than it was beforehand. And because the prospect of fiddling with the Six Nations tv deal is unthinkable. It didn't help that the latest grenade launched at rugby's case came last week from two academics -- both with connections to RTE -- appearing before the Oireachtas Committee on Communications, Energy and Natural Resources. Dr Farrel Corcoran, a former RTE chairman, and Paul Rouse, who has contributed to Prime Time, seemingly wrote to the committee off their own bat and asked to present their opinions. The optics were awful, and did RTE no favours.
As it is, the national broadcaster has its hands full negotiating with ERC over the shape and colour of their Heineken Cup coverage which kicks off next month. The deal on their deferred highlights ran out last season. We await news of the deal on Ireland's future, and its brand spanking new stadium. So if on Saturday you see union blazers unsure whether they should be basking in the spectacle of Leinster and Munster breaking more records, or worrying about the storm clouds overhead, you'll understand why. The backdrop to a stunning occasion is bleak.