Sunday 4 December 2016

Sinead Kissane: Private investors could be the cure in battle to keep up with rugby big boys

Published 28/11/2015 | 02:30

Jamie Heaslip and Jonathan Sexton
Jamie Heaslip and Jonathan Sexton
Munster Rugby CEO Garrett Fitzgerald

Someone order me a Bloody Mary fast. All this talk of a “World Cup hangover” has left me in need of the cure.

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There was little sign of a hangover after the 2007 Rugby World Cup when Munster won the Heineken Cup in 2008. There was little sign of a hangover after the 2011 tournament when Leinster beat Ulster in an all-Irish Heineken Cup final in 2012. Four years on and we will be doing well if one province makes it as far as the quarter-finals.

There is a cocktail of reasons for the uncertainty and pessimism, especially at Leinster. New coaches are finding their feet, players are struggling to find their form and, yes, there is the dip after a draining Rugby World Cup.  Also Europe really is a different playing field with the loaded French and English clubs.

So what is the cure? I don’t want a Bloody Mary quick-fix solution. And this column isn’t solely a knee-jerk reaction to Leinster’s European season being as good as over before a Christmas cracker has been pulled.

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We need to talk about the prospect of tinkering with the provincial model in order to find an alternative way of pulling in cash. We need to talk about the viability and possibility of private investment playing a part in the provinces in the future which could be a way of creating extra finance and keepin’ up with the Sarries.

The kind of private investment I’m talking about is not the no-strings-attached private investment that, for example, Leinster received from businessman David Shubotham for the development of their base in UCD. Or the kind of benefactor backing the likes of Johnny Sexton and Jamie Heaslip have received with their central contracts topped up with commercial agreements. 

I’m talking about the role of the private investor in terms of the ownership model which is used by New Zealand where teams are partly privatised. Yesterday it was announced that the 2015 Super Rugby Champions the Highlanders have joined the four other New Zealand Super Rugby teams in taking on a degree of private ownership. Local provincial unions and South Island private investors have been granted a license to operate the Highlanders until 2020 with investors set to inject “substantial new capital”.

A quick refresher: The five New Zealand franchises were owned by New Zealand Rugby Union (NZRU) and were run by boards representing the provincial unions. Reviews in 2011 into the financial sustainability and structure of the franchises recommended a move towards limited privatisation to attract new investment. 

The NZRU retain “ownership of the brands associated with each team”, continue to fund player and coach contracts from centralised revenue and pay all travel and accommodation costs. The Super Rugby licensee’s responsibilities include management of the team on and off the field, marketing and promotion.

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The New Zealand model isn’t without its issues – not least that it failed to hold onto players like Charles Piutau. But also when it comes to friction between the rugby and the business arms, like the dispute at the Blues back in June over the future of their head coach John Kirwan.

Bolton Equities have a 40pc stake in the franchise and wanted Kirwan to stay. Rugby Holdings (representing the local rugby unions) have a 60pc share and wanted Kirwan out. The governance of the Blues is split 50-50. It got messy before Kirwan eventually stepped down.

While I would never like to see a single owner in charge of an Irish province, there is scope to look at how a variation of the New Zealand model could fit here. The current provincial set-up has been successful, but can it compete with the French and English clubs in the long-term future when it comes to attracting big-name players and, most importantly, keeping our own stars at home?

“From a Munster point of view, I think our top players and all our players are really paid on as high a level as their competitors in Europe and elsewhere,” said Munster’s chief executive Garrett Fitzgerald this week.

“We have to keep doing what we are doing better, produce better players ourselves and keeping adding that one or two top class non-Irish eligible players. We also have plans for additional spend on the high performance and academy structures and I believe if we can continue in that regard we can continue to compete at European level”.

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Last year I spoke with Leinster Rugby chief executive Mick Dawson about the New Zealand model and he said it’s one they had discussed with the IRFU. He added that Leinster would have an “open mind” about this format “if they found a suitable business partner… the way rugby is moving, we can’t get left behind”.

Those words last year have a prophetic whiff to them this season.

The idea of changing the ownership structure of the provinces in the long-term future is not on the IRFU’s agenda.

“The reality is that the provinces are struggling to find new sources of revenue and the provincial CEOs and the IRFU are working to identify new revenue streams,” a source close to the IRFU said this week.

“The IRFU has previously confirmed an interest in exploring new opportunities, including private money but this would be on a philanthropic basis only, to help finance the game.”

In August it was announced that the IRFU would give the four provinces an extra €3.2m a year to try and compete with the French. The Union had reported a surplus of €8.7m.

“It obviously allows us to put more money into the provinces who are all struggling to some extent in terms of financial pressures that are coming to bear because of the money in France,” IRFU chief executive Philip Browne said at the time. “We’re trying to make them financially viable and sustainable but at the same time we’ve got to try and put competitive teams on the park”.

Three months on and the provinces in Europe’s top club competition have been nowhere near as competitive as we’ve been used to. So is the IRFU doing enough?

The reported blocking of Australia captain Stephen Moore’s move to the province would undoubtedly have left a sour taste in Munster.

Irish rugby needs the provinces to be as successful as they can be. Bringing in private investors may not be to everyone’s liking. But for long-term sustainability and competitiveness, they could be part of the cure.

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