LONDON (Reuters Breakingviews) - Rugby Union teams awarded a penalty near the opponent’s goal line face a dilemma. Should they kick a penalty between the H-shaped posts and earn an easy three points, or attempt to ground the ball beyond the posts for a so-called try, earning seven? That’s one way to think about the choice between a 500 million pound private equity bid from CVC for the Six Nations Championship, and a more ambitious 5 billion pound plan by governing body World Rugby for a wider global league.
England, Scotland, Ireland, Wales, France and Italy – the Six Nations – could accept CVC’s offer for their competition, which takes place in February and March. They would get over 80 million pounds each upfront in return for surrendering a 30 percent stake. Or they can be part of a new global league where a dozen top nations – including rugby royalty like South Africa and New Zealand – compete more regularly. Globalising the sport by investing in second-tier nations and enabling promotion and relegation to the top level could create a bigger cake.
The World Rugby plan works thus. Half of the 5 billion pounds guarantees the unions’ current TV and marketing rights for 12 years, and another 1 billion pounds finances efforts to develop the game. The final 1.5 billion pounds funds a 10 million pound annual increment for the 12 top-division sides, or 120 million pounds each over 12 years. Hence the real choice for the Six Nations is between the 80 million pounds from selling to CVC now, and 120 million pounds over a dozen years.
CVC may be the more conservative short-term fix, since the buyout group’s offer is probably worth more than the present value of World Rugby’s payments. Quick cash might also be enticing because the English Rugby Football Union made a loss in the year ending June 2018. Meanwhile the guarantor of World Rugby’s scheme, Swiss sports marketing group Infront, is backed by Chinese conglomerate Dalian Wanda, which hit debt problems in 2017.
Yet a global league could negotiate higher broadcast rights than if unions stay separate. CVC, which made a handsome return buying and selling Formula One, might be less interested in a comprehensive overhaul. As in rugby itself, the real risk of opting for the penalty only becomes clear after the game.
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