Monthly Archives: January 2014

Dogma or Financial Common Sense?

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The present stand off in Welsh rugby seems to be about what freedoms and rights four individual, privately owned, businesses have under the regulations of the IRB and the WRU. There is an enormous legal battle involved therein which is beyond the wit of most men, certainly me. My hope is that this dispute does reach the courts because we need rugby to modernise across Europe, in line with the law of our Continent and in line with modern business practices.

We have the owner of Toulon looking to challenge the rights of the IRB (especially Regulation 9 about player release for international windows and more) in the European Courts, so a challenge within the Courts of England and Wales as to whether Unions can block their clubs from playing wherever they like will be an interesting addition to that challenge.

However, we must hope that both parties in Wales have the same goal and that goal must be to have four strong professional teams who are able to compete on a cross border basis, aiming to compete with the much financially stronger French. If both sides have that goal then the difference is clearly on how to achieve it.

The Regions clearly want to choose the competitions they play in and to negotiate their own broadcast contracts. The reason for this is entirely obvious: clubs in France and England have this ability already and are significantly more successful in bringing in revenue than are the Celtic Unions. The figures prove this: the Pro12’s TV revenue for next season is (potentially, based on participation) about £9.5m a year across 10 teams. The French contract is approximately £60m across 14 teams, the English contract is approximately £27m across 12 teams.

Therefore, it is quite obvious as to why RRW want a piece of the English pie and not the Celtic pie. It is also reported that should there be an Anglo-Welsh league next season then that would be worth £4m a year to the RRW teams.

On top of that, we have on the table an offer for a Rugby Champions Cup which is to be broadcast by BT Sport and to be run by the participating clubs. This, according to RRW, is worth £1m more per year per team than the offer for a continuation of the Union controlled ERC tournament.

So, it is all about the money. And why not? This is professional sport, after all. The recent investigation into Welsh rugby by PWC indicated that the RRW teams must find ways to increase their income and this is exactly what they have done.

Now doesn’t this seem all well and good? Why would a Union have an issue with its member clubs acting this way as it is exactly how the French and English clubs act?

Well, the answer seems to be control. It seems as though the WRU is reluctant to allow the clubs to act that way as, under the Agreement they work to at the moment, all of the above work (competition choice and broadcast contract negotiation) is undertaken by the WRU. The easy dig at that belief is to note that the Unions have performed pretty poorly at both of those tasks as the Pro12 is neither popular with supporters nor financially attractive to broadcasters.

So is it just dogma that is preventing the Union allowing RRW to choose its own competitions and negotiate its own TV deals? Well, there are a few straw men arguments that go alongside this which must be considered. The first is that allowing RRW to act in this way will somehow undermine the amateur game in Wales or cause it financial difficulties. This is an argument that I find utterly alien as I don’t see how the amateur clubs are affected by whether the Ospreys play Leinster or Leicester. I’ve never seen a written coherent prose for this argument but it is often raised. The financial side of the concern is simply addressed by the WRU issuing a “tax” of a small percentage on any competition income generated by RRW.

The next straw man argument is that, by wishing to negotiate their own deals, RRW want to control the entire game in Wales. This is a particularly crazy argument as RRW teams have a difficult enough task running their own business so quite why they’d want to make that more difficult by being a controlling influence over the amateur game is beyond me. There is the thought that the RRW teams will want to be more involved in the pyramid of talent production but surely the only dissenting voices to that idea will be those at risk of losing their position of local influence.

The biggest straw man argument is that allowing RRW this freedom will negatively affect the Six Nations. This is a particularly large pile of nonsense. The simple truth is that the French have the purchasing power to attract whichever players they want, with the English getting the next best. This is already in place, it is happening and it will happen for years to come as both the English and French leagues have broadcast contracts in place for years to continue this trend.

Therefore, the best players from Ireland and Scotland will leave their countries regardless of whether RRW negotiate their own deals or not. The biggest risk to the Six Nations is the Toulon challenge of the IRB Regulation 9, not whether the Ospreys can raise their salary cap from £3.5m a year to £5m.

The only real argument to this issue is that the WRU signed up to a Pro12 contract which has a three year rolling notice term that is yet to be announced. There could be a significant charge to the WRU for not fulfilling its obligations to enter its best teams into the competition. However, the WRU is no position to do this because, if the RRW teams go rogue, it will need to enter its own teams which will clearly be inferior. So the other Unions (mostly the IRFU and SRU, as the Italians may leave the league anyway) choose to sue then the WRU seems powerless to prevent it. Alternatively, the WRU could back an AW league on the proviso that RRW teams play out the three remaining years of that Pro12 contract in return.

The benefit of this could be that the Welsh Premiership is freed of the clubs which own the regions, allowing that tier to be truly independent and competitive, whilst the RRW teams have a guaranteed “A” competition in the Pro12 so that talent is given game time.

Wales has already exported too much talent. There are already too many Welsh qualified players playing outside of Wales. If RRW ploughing their own furrow can both bring most of those players back whilst keeping most of our better players (noting that the French will always have the pick) then this is only a good thing for Welsh rugby.

So unless the WRU can negotiate contracts of the value that RRW are already being offered, their resistance to RRW acting this way can only be because of dogma, because of fear for the loss of their influence, because of the loss of £10m+ from the company turnover. There can be no other sensible defence.

For me, all parties benefit if RRW goes its own way. The WRU will be able to renegotiate an Agreement for player release rather than lose that ability altogether, more money will come into the game for the WRU to spend on its amateur arm and it will spend less time administering its professional arm. It’s only dogma and personality preventing this.

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