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Rugby Union Chiefs are consulting to rebuild Rugby, the UK’s highest level men’s game, arresting economic issues for clubs that fought, and attracting fresh investments.
According to people with first-hand knowledge of the plan, the Rugby Prime Minister, co-owned by the club and the CVC Capital Partners of the private equity company, is discussing the team itself and the governing body of the Rugby Football Union to change competition governance and business models.
Among the options considered were franchise-based systems in the spirit of modern sports competitions, such as the Indian Premier League, which revolutionized cricket by trading big money media and attracting investors.
Under this proposal, new city-based teams can apply to participate in the Premiership, provided they meet certain criteria such as financial strength, business planning and geographic location.
The goal is to grow the game and recover from the losses and other financial problems that have plagued the club for years. Three premier teams, London Irish, Worcester and wasp, collapsed in 2022-23, reducing the competition from 13 to 10.
Proposals subject to negotiation and regulatory approval are not guaranteed to advance. The Premiership and RFU declined to comment.
Seven of the 10 Premiership Clubs could be classified as “insolvent balance sheets” in 2022-23, relying on owners to raise funds, according to accounting firm Leonard Curtis.
CVC agreed to invest £200 million in a 27% stake in Premier Rugby, the company that runs Premier in 2018, but the coronavirus pandemic hit and the team used the money to survive instead of investing in the game.
Additionally, the UK’s cultural, media and sports sectors lended around £124 million to the premier team during the pandemic.
The proposal for a franchise system is designed to eliminate the economic uncertainty that arises in traditional European models of promotion and demolition.
In the franchise model, clubs effectively guarantee a league spot and will not be demoted due to poor performance.
The hope is that a more financially stable club will attract investors, sponsors and fans, and encourage long-term investments in infrastructure and talent development.
Demotion can block potential investors, especially investors from the US.
However, the removal of promotions and relegation can be controversial, especially amongst tier championship clubs. Nevertheless, those familiar with the issue said these clubs will also be considered in the revamped league.
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The Six Nations will not be demoted in the annual tournament between England, Wales, Scotland, Italy, Ireland and France.
Other sports have used franchise systems such as the IPL of Cricket, and in 2022 two new teams have now become 10 square leagues. Formula 1 in motor racing, Cadillac will be added as the constructor for 2026, bringing the grid up to 11 teams.
In 2021, the England and Wales Cricket Committee launched 100, a competition from eight city-based franchises. These were the subject of the bidding war earlier this year, attracting attention from Silicon Valley chiefs, Indian billionaires and private investment companies.
