Via Financial Times

A proposed £300m deal by CVC Capital Partners to invest in the Six Nations, Europe’s leading rugby union tournament, has been delayed as the sport reels from a financial crisis resulting from the coronavirus pandemic.

The Luxembourg-based buyout group has plans to become the biggest commercial player in one of the world’s favourite sports, lining up a series of investments to reshape the global game.

In 2018, CVC acquired a 27 per cent holding in Premiership Rugby, the top tier of English club rugby union for £200m. A deal to take a £120m stake in Pro14, an annual club tournament between sides in Ireland, Italy, Scotland, Wales and South Africa, has received clearance from competition watchdogs and is expected to complete in the next few weeks, according to people with direct knowledge of the deliberations.

But CVC’s biggest proposed deal — a £300m transaction for a roughly 14 per cent stake in the Six Nations, one of the rugby’s flagship tournaments, expected to have been signed a month ago — has been held up.

The unions involved — England, Scotland, Wales, Ireland, France and Italy — are reluctant to press forward with fixtures postponed and a lack of clarity about the financial hit they face from the resulting lack of income from broadcasting and ticketing.

The Six Nations said: “We have not agreed to either take a break nor to push through a completed agreement. The conversations are simply ongoing and obviously take into account the new environment created by the current pandemic.” CVC declined to comment. 

People briefed on the conversations said they believed the deal could still be completed this year, with CVC executives committed to an investment thesis around incresing the value of broadcasting and sponsorship contracts in rugby. It is not clear whether the deal’s terms will be the same as initially proposed, the people said. 

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“Everyone’s just saying let’s draw breath, make sure whatever we’re doing we’re getting it right,” said a person with knowledge of the talks.

The buyout group has made ambitious plans to invest more than £600m in the game, initiating talks with other important organisations, including South Africa and New Zealand, two of the biggest southern hemisphere rugby nations, as well as with World Rugby, the international governing body.

But in CVC’s only completed deal in the sport with Premiership Rugby, there are crisis talks to secure the financial health of English top tier clubs. 

Most of the teams are lossmaking, meaning the roughly £15m each side received from the league’s deal with CVC has become vital to ensure they have not gone bust during the pandemic, according to people with knowledge of the league’s finances. The money had previously been earmarked for infrastructure and marketing spending. 

CVC has held back from taking a roughly £10m share of distributions that it is entitled to from the Premiership.

Clubs have also moved quickly to implement cost-cutting measures, including agreeing pay cuts with players and furloughing staff through the UK government’s scheme to supplement wages.

Talks are being held to restart the season at the earliest opportunity, with plans to begin games behind closed doors soon after the UK government loosens its lockdown rules, even if that means clubs sacrificing ticketing income. 

The competition made revenues of £75.5m in the year ending June 30 2019, mainly from a television rights deal in the UK with BT Sport, which is due to run until next year and a sponsorship contract with US insurance company Gallagher.

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Premiership Rugby chief executive Darren Childs said this month that “we must recognise that when the pandemic is finally at an end, there will still be the economic challenge [for rugby clubs] for many years to come”.