Premiership Proposals: A Necessary Evil?

Strategic Insights -

The highest level of English professional rugby is on the verge of a significant shake-up, with the Premiership plans to eliminate existing restrictions on large-scale investment by implementing a new franchise format. The proposal includes an expanded 12-team league, abolishing relegation, but maintaining promotion to support expansion to 14 teams, revising promotion criteria to include factors such as fan base, financial stability, and regional value, and centralizing commercial operations. This development is met with skepticism by some, who argue that the advantages of the richest clubs will be locked in, contradicting the UK's tradition of supporting clubs with whom individuals have a locational or emotional connection.

Key Takeaways:

  • The Premiership plans to eliminate existing restrictions on large-scale investment by implementing a new franchise format, which includes an expanded 12-team league and abolishing relegation.
  • The proposal aims to centralize commercial operations, including broadcast and merchandise rights and kit deals, under the control of an NFL-like commissioner.
  • The potential rebranding of the league is also on the table, with a focus on appealing to a wider audience.
  • The current Premiership format has led to financial instability, with at least five clubs going bankrupt over the past three decades, and a total owner debt of around £1 billion.
  • The difficulty for clubs is that player welfare and safety rules, together with the eight substitution laws, means that squad sizes cannot be cut, and no player will accept deep salary cuts.
  • Crowds are not growing fast enough to finance the league's current spending, and broadcasting rights have hit their natural ceiling and will not substantially increase any time soon.
  • CVC Capital Partners, the private equity group that owns 27% of the Premiership, is backing the initiative, but every club owner has also backed the plan.
  • The Rugby Football Union Council is preparing to threaten the stability of the game if the proposal does not stick to traditional structures.

Statistics:

  • Over the past three decades, at least five clubs have gone bankrupt in the Premiership.
  • The total owner debt in the Premiership is around £1 billion.
  • Crowds are not growing fast enough to finance the league's current spending, and broadcasting rights have hit their natural ceiling and will not substantially increase any time soon.
  • Only one club, Exeter, have come through the lower leagues and stayed in the Premiership over the past 30 years.
  • The top five most successful American sports thrive without relegation.
  • CVC Capital Partners owns 27% of the Premiership.

Sources:

  • The Telegraph Sport
  • Bill Sweeney, Chief Executive of the Rugby Football Union (RFU)
  • CVC Capital Partners
  • Exeter Rugby Club