Memorandum submitted by Buchler Phillips
1. THE DEVELOPMENT
To consider the problems associated with the
professional game, it is essential to examine the nature of the
sport at grass-root level.
Rugby Union still remains a largely "elitist"
sport, mainly emanating from and sustained by the public school
system. Its inaccessibility to most state educated children is
a major drawback. Rugby is a difficult game to play either singularly
or within a small group as opposed to soccer, which impairs its
attraction to children in their formative years. Similarly the
traditional and physical image of rugby dissuades many children
from taking up the game. As rugby lacks "street credibility",
it remains traditionally a game that is taken up by children of
former players or those at public schools.
Rugby intrinsically suffers from its complicated
playing set-up and rules preventing those with a passing interest
from following or taking up the game. This and the lack of available
playing facilities as compared with soccer largely prevents the
game becoming more widespread.
There also exists a strong tradition of camaraderie
and elitism amongst rugby players, which has led to a definite
stereotypical public image of the typical rugby player. This image
has been reinforced in part by the general lack of exposure of
Rugby Union to the masses. Moreover, recent public relations disasters
involving high profile players such as Lawrence Dallaglio and
Will Carling have only served to reinforce a negative image of
the sport. Finally, the narrow field of vision for this minority
sport immediately sets it at a disadvantage.
2. EARLY DEVELOPMENT
Professional clubs have typically been formed
from member amateur clubs who are, traditionally, more focused
on the playing side of the club rather than the provision of entertainment
in comfortable surroundings for paying spectators. As a result,
the majority of clubs rely on very localised support with limited
branding. Most rugby grounds themselves only have modest catering
facilities and a limited leisure business focus and remain on
the whole incomparable with their footballing equivalents in terms
of comfort and facilities offered.
Many rugby clubs tend to cater for supporters
with an in-depth knowledge of the game thereby limiting the attraction
to others who tend to feel like outsiders. In short, the complexities
of the sport mean that at a spectator level it is relatively inaccessible
to non-rugby playing children and adults. More importantly, rugby
remains traditionally a Saturday sport and consequently suffers
from the competition offered by higher profile Saturday events
and sports. As a result rugby suffers from limited media exposure
which further reduces public exposure.
3. WHY HAS
In our view the failure of professionalism is
due to many reasons. Primarily there has been a failure to appreciate
that professionalism needs to focus on improving the quality of
the surroundings for spectators in the first instance before making
the sport more exciting at club level. Rugby Union administrators
in seeking to replicate the success of soccer, have failed to
challenge the growth of Rugby League which was a more logical
target. Just as importantly, the confused message sent to the
general public of the overriding importance of international matches,
controlled by the RFU, compared to league fixtures has devalued
the standing of club games.
The continual internal squabbling within the
clubs and rugby associations has produced a confused and fragmented
fixture list, which in turn has affected consistency of matches
leading to wavering support levels. Most sport followers like
a regular weekend fixture list, a consistency that rugby has failed
to provide. The constant loss of many key players to international
matches has added to the diminished value of the home product;
a problem that has affected the Cricket County Championship for
many years. The rising number of international matches throughout
the season has also detracted from the importance of the domestic
league and cup competitions.
In addition the season begins in late September
when the weather is already beginning to deteriorate acting as
a further deterrent to attracting new spectators who are most
likely to attend matches in pleasant weather.
Most importantly, the sport is concentrated
almost solely to the affluent South East and Shires with too little
grass-root support in the North of England, as a result there
is little interest in the sport outside of these areas. Similarly,
there is little exposure of international rugby outside Twickenham,
where the corporate focus and inaccessibility of Twickenham diminishes
the level of general interest amongst a public who have little
or no prospect of attending a match there.
This under utilisation of Twickenham as the
national stadium for rugby seriously hinders the growth of Ruby
Union's popularity. The value of a visit to Twickenham must not
be underestimated as a means of winning over rugby converts. Finally,
the inconsistent form of the Home Nations coupled with the vast
superiority of the Southern Hemisphere game impairs the ability
to expand the appeal of Rugby Union.
4. THE FACILITIES
The vast majority of rugby clubs play in sub
standard stadia which continue to retain an amateur feel to them.
The stadia are on the whole generally too small with inadequate
seating facilities, which does nothing to encourage spectators
to feel they are attending a "special event". The present
broadcasting facilities at rugby clubs also remain largely inadequate
and unprofessional. The relatively poor facilities will always
be an impediment to attracting a wider range of sponsorship and
corporate entertaining, which are essential sources of revenue.
However, the clubs themselves have insufficient
finances to bring their stadia up to modern standards which would
help to attract new customers. In many cases there remain insufficient
cost benefit incentives to build new modern rugby stadia at club
level. On the whole, those clubs that have experimented in sharing
grounds with local professional football clubs have found that
it is either largely unworkable or that the stadium itself has
been too large, thereby destroying any atmosphere generated by
a smaller rugby ground. One cannot underestimate the value of
creating a lively atmosphere at a stadium as a means of attracting
and retaining new customers.
In our view Rugby Union has yet to embrace the
thorough marketing concept of a leisure based business underpinned
by a rugby club, a concept successfully embraced by a number of
more forward thinking soccer and Rugby League clubs. As a consequence,
the majority of rugby clubs retain a "member club" feel
to them, further increasing the perceived isolationist atmosphere
of rugby clubs to potential new customers.
Many of the present problems faced by professional
rugby clubs are caused or at least increased bythe present administration
of the game. There remains within rugby a general lack of professionalmanagement
and the sport is still largely represented by paid and unpaid
volunteers dating back to the days of amateurism.
Most rugby clubs' management have a relatively
low key knowledge of their potential customer base and consequently
give out confused messages as to whether they are catering for
members or supporters. Internally, what little marketing and branding
of clubs that has been undertaken by rugby administrators is still
in an embroyonic stage and is strictly localised. This again restricts
the potential for enhanced branding of club products and the corporate
sponsorship which falls on the back of it.
Externally, there remains a significant confusion
and fall out between the various regulatory bodies. The continual
arguments between the RFU, ERP, EFDR and ESDR, which have led
in the past to expulsion from international competition and an
uncertain home fixture calendar on the eve of the playing season,
has sent out a hugely negative message about Rugby Union. Finally
we believe that there is a lack of clarity between the amateur
and professional sides within a rugby club with overriding authority
resting with the professional side of the club.
We believe that the financial difficulties of
rugby clubs have their roots in a number of failings. With one
or two exceptions, attendances at rugby games have failed to reach
expected levels and interest from satellite and terrestrial television
was originally overestimated. Similarly, levels of corporate sponsorship
have fallen below expectations for the professional game, due
on the whole to corporate facilities at grounds falling way below
acceptable standards for most high profile corporates. At present,
even with downward pressure on players' wages, no club is able
to generate an operating profit.
The irregular pattern of the rugby season and
in particular league matches has caused serious cash flow problems
for most clubs. Matches are frequently being diluted through the
mergers of clubs that have been sanctioned by regulatory authorities.
The present plans to shrink the number of participating clubs
in Division One from 12 to 10 are clearly fuelled by a desire
to distribute a larger share of television revenue amongst the
remaining clubs. Whilst this will undoubtedly enable clubs to
reduce the size of their playing squads, the danger is that fewer
competitive matches will severely damage the revenue and fixture
regularity of those First Division clubs not competing in Europe.
The introduction of the European Cup should produce increased
revenue for the eight competing clubs, but will only serve to
polarise the differential between the elite and the residual (majority)
of professional rugby clubs.
It is our view that the integrity of a club's
league status has been seriously damaged by the recent mergers
and takeover bids between divisions which destroys the competitive
edge of professional rugby on a league system. Serious consideration
should now be given to abandoning full time professional Rugby
Union in the English Second Division. Unless radical steps are
taken, the continued decline and financial failure of professional
clubs will continue unabated.
7. VIEWING STATISTICS
TV Sports Market magazine produces comprehensive
viewing statistics for all televised sports. During the weekend
23 May 1999, the following statistics were published in relation
to Rugby Union. These figures show how little following the "live"
game has except for key international matches.
15 May (Rugby Union, Tetley Bitter
Final) Wasps v Newcastle live. Audience 109,000 on Sky Sports
2 and 812,000 on BBC 2 (highlights).
21 May. (Rugby League) Leeds v Halifax
live. Audience 54,000 on Sky Sports 3.
23 May. (Rugby Union) Barbarians
v Leicester live. Audience 53,000 on Sky Sports 3.
3 April. (Rugby Union) Richmond v
Newcastle live. Audience 164,000 on Sky Sports 2 and 1.1 million
on BBC 2 (highlights, 4 April).
4 April. (Rugby Union) Wasps v Gloucester
live. Audience 87,000 on Sky Sports 2.
These figures compare poorly with the Five Nations
20 February. Wales v Ireland. Audience
4.4 million on BBC 1
6 March. Ireland v England. Audience
5.6 million on BBC 1
6 March. Scotland v Wales. Audience
5.9 million on BBC 1
In many ways the huge difference in viewing
figures between club and international matches on television can
be explained by tradition. In the pre-Sky days terrestrial television
gave little screen time to Rugby Union, for many years the only
coverage was BBC 2's weekly Rugby Sunday. In contrast, soccer
games had been shown live on both BBC 1 and ITV for many years
before Sky bought the Premiership television rights. Similarly,
Rugby League has long enjoyed television coverage on BBC 1's Grandstand
programme. Indeed since the advent of Sky and the demise of Saturday
afternoon sport on ITV, Rugby League has benefited from often
being the only terrestrial televised team sport on Saturday afternoons.
Rugby Union has never enjoyed widespread club coverage on television
and as a result still struggles to produce viewing figures that
are any way comparable to those enjoyed by international games.
In turn this has meant rugby has been unable to produce the kind
of Michael Owen or David Beckham style heroes that encourage children
to both follow the game and just as importantly play the game.
For many, Rugby Union on television (and in general) starts and
finishes with the Five Nations and World Cup.
It is our view that Rugby Union at a professional
level cannot emulate the financial success of soccer, and many
rugby clubs will have to recognise that in future they will need
to operate on a semi-professional basis. The sport's attraction
will continue to be underpinned by the influx of foreign stars,
thereby diminishing the attraction of professional rugby for home-grown
talent, rugby academies and broadcasting. Clubs will therefore
have to address the drastic need for more modern and suitably
sized stadia which can offer the kind of high quality facilities
that spectators expect. Profit can be achieved through the production
and delivery of a high quality exciting product where cost controls
take priority and fall in line with reasonable revenue expectations.
We believe that a severance of the administrative
links between the professional and amateur game is required to
provide clarity of vision. There needs to be a rapid improvement
in the professional management and particularly the marketing
of rugby and rugby clubs. On a playing level the sport desperately
needs to become more user friendly in order to enhance its attraction
to the general public and to underpin further investment by broadcasters.
Finally, the international game needs to become more accessible
to the general public. The predominance of corporate entertaining
and the exclusivity of Twickenham urgently needs to be addressed.
Lee Manning FCA (Buchler PhillipsFinancial
Lee Manning is a partner at Buchler Phillips,
specialising in corporate recovery and financial restructuring.
He has carried out a number of financial reviews for professional
football clubs including Millwall FC, Crystal Palace FC, Portsmouth
FC and a high profile Third Division club. He is currently joint
supervisor of the CVA of Millwall Holdings Plc and Millwall FC.
Lee Manning is also currently joint administrator
for Richmond Football Club limited, a First Division, professional
rugby club. He is also advising a local authority on funding negotiations
with a tenant club in the GM Conference League. In addition the
partners of Buchler Phillips were administrators for Moseley Rugby
Club, Court appointed receivers of Coventry Rugby Club and current
joint administrative receivers of Luton Town Football Club.