IRB needs to call this bluff
Northern hemisphere rugby is at risk unless top dogs show some bite, says Neil Francis
Most of you will never have heard of Continental Illinois Bank. It failed in the 1980s and the Federal Deposit Insurance Corporation had to make a strategic intervention in conjunction with the Federal Revenue Bank to save the bank – back then rated seventh in the USA. Quite simply the bank was "too big to fail" because of the interconnections and critical function it had with all the other majors – the fallout or the failure would have had such adverse and catastrophic consequences that regulatory bodies had no choice.
The Heineken Cup has been the backbone of the professional game since 1995. If it had not been in existence for those 18 years, the professional game in the northern hemisphere would have faltered and fallen away. The critical function of the competition is such that if it stopped at the end of this season, it would signal the end of the pro game at all levels. The competition is simply too big to fail.
Sad to relate but there are some people who are prepared to gamble with the Heineken Cup's very existence just to have more money to cover the deficit of the English game, which is an unworkable model as it consistently shows.
The performance of the 12 English clubs in this year's Premiership tells a story (see panel). For the last reporting period the Premiership clubs lost a combined total of £16.2m (€19m) down from £21m (€24.7m) the previous year. Retained losses on their balance sheets from the previous 18 years of professional rugby wouldn't be in our national debt's league, but they would make for very unpleasant reading.
It is hard to interpret just how accurate those accounts are because it is hard to know how the £4m annual subvention from the RFU – which goes to all of the 12 Premiership clubs – is treated in the accounts. Nor is it easy to ascertain how much money the sugar daddies have to stump up on a regular basis just to keep their clubs going.
That kind of financial haemorrhaging is unsustainable and the turkeys who threw their money into these clubs have used their umbrella group to try to scrabble extra income from wherever they can get it. And to hell with the consequences and the greater good of the game elsewhere. Little wonder that Nigel Wray, whose club Saracens lost £5.6m last year, is one of the most vocal in the English press.
One of the things that annoyed me most about the recent posturing was that Premiership Rugby's (PRL) Mark McCafferty and the unspeakable Quentin Smith launched their campaign on the day before the ERC met last Wednesday. If I ever get anal polyps, I will know what to call them.
Unquestionably it is amateurish and quite tiresome, but most of our national dailies ran with the story which was covered by English journalists Gavin Mairs and Chris Hewlett, or worse, carried no byline at all. No one is calling for those sports editors to observe their patriotic duty, pointing out that there was no objectivity or even a piece to counter the propaganda. A free run for the English journos telling the Irish people that the Heineken Cup was dead and inviting us to join an Anglo-French competition.
Funny that the two English stakeholders turned up at the meeting on Wednesday. I know Peter Wheeler – he is a good fella – he represents PRL on the board. But there is something I don't understand. The ERC is a €50m turnover company – why would a board member of that company be trying to shut that company down while trying to establish a rival organisation? Doesn't make sense to me.
I don't think the French are quite as interested in this as the English. The Ligue Nationale de Rugby (the French equivalent of PRL) have a window of opportunity between now and December to withdraw from their current TV deal with Canal+. Be-in Sports – a Qatari TV sports entity – has entered the market and has signalled that it will bid twice the €27m rights fees. If that happens the French won't give a damn about what the divvy is in the Heineken Cup – discussions are in train as we speak.
Currently, the divvy of circa €44m goes along the following lines: England gets €11m, France €12m, Ireland €6.6m, Wales €5m, Scotland €5m and Italy €4.5m
Of that, 85 per cent is on a pre-ordained and agreed basis and 15 per cent on merit, i.e. if a country's teams get to the play-offs or all the way to the final. England and France got €23m of the pot. The Rabo sides got €21m between four of them. How much more do England and France want? An extra €7m to €10m? Hardly seems worthwhile scrapping for something in the region of €3m to €5m.
The Anglo-French want the split to be a third each for them and a third between all four Rabo sides You can see why the Rabo sides are holding firm. A compromise will come, but at what cost?
In negotiations like this, if you blink you are dead. The Rabo sides have to stand together. This might not be a charitable thing to say but I would keep an eye on the Welsh – what do they say about keeping your friends close and your enemies closer?
If there is one nation open to a deal, Wales is the one that could be most tempted – even by the English. What would Ireland have to give up? Currently, our three competitive sides are ranked first (Leinster), sixth (Munster) and seventh (Ulster). It is inconceivable that one of those sides won't be included in a new Heineken Cup. Northampton are the only English side ranked in the top 10. How do you reconcile the fact that they should get six clubs in if they have only one in the top 10?
Do I think Scottish and Italian sides are good enough to have two teams in the competition? No, I don't. Do I think it is important to have them there? Yes, I do. Do we need to compromise? No, we don't, not when the future of the Six Nations is at stake.
This whole episode is a great bluff by PRL – they have nothing. They have no television rights. They cannot, under regulation 13.2 of the IRB broadcasting rights, negotiate or enter into any broadcasting rights without the express permission of their union. All parties would also end up in court if they tried to renege on the TV deal with Sky – a deal that both English shareholders signed this year.
The English and French businessmen have no interest in the Six Nations – they see their clubs as commercial enterprises, they don't care about the game above or below and they, particularly the English, need extra money to stem their huge losses. And they don't care how they go about achieving this or the lasting damage they will undoubtedly do.
If the unions of the Six Nations allow these people to dictate to them it means they have effectively ceded control of a power to them. It will affirm the death of the Six Nations and they hope (wrongly) the advent of the rise of the club. These idiots will control the game in Europe. Whatever you think about the blazers . . . The RFU could nip this in the bud by refusing PRL the right to go with their own television deal (BT). The RFU are in a tricky position because they are currently negotiating with PRL for the release of their English players for the 2015 World Cup – that could get very tricky.
Who would you turn to here to act as a facilitator or consiglieri? The IRB of course. This body has sat back and watched, voyeur-like, as the unseemly scrap escalates. They have the power and the money to stop it right now before it gets out of hand.
The IRB picked up a handy €105m from the World Cup in New Zealand. They must be acutely aware that the Six Nations Championship is on the wane – the IRFU can't sell their tickets.
If England and France break away, it means the Heineken is dead and club rugby will fall off a cliff. As a consequence, international rugby in Italy, Scotland, Wales and Ireland will fall off a cliff because they can't sustain the payroll of the players without these competitions. The Six Nations dies.
The IRB sends me daily emails about rugby in the Cook Islands, investment in the game there, women's rugby, sevens rugby etc. They might look a little closer to home and splash the cash to compensate Italy, Scotland etc for the monies which they will be bullied out of. A compromise would be tempered by some stringent directives by the IRB.
The IRB could, for instance, forbid any of their referees to officiate in any Anglo-French league. No refs equals no matches. They might possibly forbid any international player from playing in an Anglo-French league. They control the international fixture lists.
The IRB need to intervene. Premiership Rugby might actually get away with their bluff and if they do the game is gone.
A couple of phone calls behind the scenes. €3m or €4m each for the greedy English and French meant for development in the Cook Islands?
Frankly, nobody gives a continental. The game in the northern hemisphere could go down the pan – engage before it is too late.
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