Free-to-air plan puts IRFU deal in danger
Published 03/10/2010 | 05:00
T HE IRFU is bracing itself for the worst. It appears that Communications Minister Eamon Ryan is determined that the Six Nations and the Heineken Cup will be added to the list of sporting events which must be broadcast on free-to-air television. Claims by supporters of the minister's plan that the IRFU has overstated its potential losses appear to be wide of the mark.
A report on the economic impact of the plan is due with the minister in the coming weeks and a decision is likely to be made before the end of the year. Senior figures in rugby, though, fear its introduction is inevitable, that their argument about the potential loss of revenue has not won favour.
When the IRFU's chief executive Philip Browne appeared before a Dáil committee last June, he put an estimate of between ten and €12 million. Another Dáil committee was recently told that this estimated loss was "entirely unproven".
Last week, on these pages, it was shown that this is far from the case. The IRFU are partners in Six Nations Rugby Ltd and European Rugby Cup Ltd. All monies generated in those two competitions are divided equally among the partners, irrespective of where it is generated. This is great news for Ireland -- not such good news for England and France.
The IRFU's contribution to the Six Nations pot for its media rights is currently €3m. The dividend, however, is €11m. Ireland's contribution to the Heineken Cup and Amlin Challenge Cup pot is €2m yet the pay-out is €5m. In other words, the IRFU is capable of generating just €5m a year from tv rights yet it receives €16m thanks to the pooling system.
It took two and a half years of negotiations to get the two largest unions to agree to a system which effectively gives an equal slice of the pie (at the moment that pie is €74m a year) to a country which only puts four per cent of it into the pot. (England, Scotland and Wales currently receive €44m annually from the BBC, while the French union gets €25m. All that money goes into the pot.)
All that is required to break up this deal is for one of the smaller unions, like the IRFU, to come to the table for the next round of negotiations with one hand tied behind its back. Immediately, France and England can -- and almost certainly will -- walk away, free to do their own new deals and become, consequently, significantly richer. In its last accounts, the IRFU showed that almost one quarter of its earnings of €57m came from tv rights. There is no way that figure could be sustained if the market was not open to all-comers.
But it doesn't end there. As things stand, all Six Nations games up to 2013 will be broadcast on RTE, and the station also has the rights to show full Heineken Cup games, albeit deferred, or highlights. And it's not as if there is a paucity of rugby on the channel, as it also shares rights to Magners League games with its sister station TG4. Last night's clash between Leinster and Munster at the Aviva Stadium will have drawn a huge audience to the state broadcaster.
Six Nations chiefs have publicly stated their preference for its games to remain on free-to-air television, but say that if the minister follows through on his plan it will hinder their ability to get full value for their games in a true competitive market. RTE has successfully secured three consecutive deals to show Six Nations games, covering the period 2002 to 2013, so is there any reason to think the station is not capable of continuing this trend? The purchasing of media rights is not solely about the highest bid -- a key element of any tender is always the bidder's proven track record, something which will stand to RTE.
However, should, say, the Six Nations be added to the list of sporting events which already includes the likes of the All-Ireland football and hurling finals, the Olympics, and the World Cup, an unintended consequence could be that fewer, not more, games might be available free to air. If the current deal among the six unions is ended, the IRFU can only control the tv rights to its home games. Ireland plays three homes games in the Six Nations one year, and two the next.
The away games would be under the primary control of the home union and there would be no obligation on it to do a deal with a free-to-air broadcaster here. They would be free to sell to Sky or ESPN, or other channels not widely available here like the French stations, Sky Italia or S4C. In that scenario, which is not at all implausible, Brian O'Driscoll (pictured) could lead his Irish team out for a championship-deciding game in Paris or Twickenham and the vast bulk of tv viewers here would be in the dark.
Supporting arguments for the Minister's proposal have also included the notion that guaranteeing games a free-to-air platform will spread the rugby gospel. Yet, even though Sky have had exclusive live rights to the Heineken Cup since 2006, the IRFU has increased its number of registered players at all levels from 98,000 five years ago to 150,000 today.
At the end of the day, the market is well capable of looking after itself. There is no need to legislate. In fact, one can go further, as Olivia Mitchell observed in that committee debate last June: "I am conscious that when a special interest group such as the IRFU comes here, it engages in special pleading. It is desirable to get both sides of an argument. The problem is that there does not seem to be another side to it."