One of the many brands I have worked with in the past is Heineken, with a particular focus on the Heineken Cup sponsorship which I managed for many years. So, naturally, I have been keenly watching the latest saga of European rugby politics unfold, but it has raised a fundamental question; how did a tournament that is so loved by players, fans, sponsors, governing bodies and broadcasters get to this point of self-destruction? And what are the implications?
First and foremost, there are some obvious serious conflicts of personalities within the various factions. The relationships between key senior personnel within the respective stakeholders has clearly got to a point where they are no long able to work with each other. The reasons for which have been well documented, but fundamentally it comes down to money and influence. However, the purpose of this blog is not to scrutinise the reasons behind the potential demise of this great tournament but more how to move forward and avoid similar situations occurring again.
Anyone closely associated with the rugby fraternity knows that these issues haven’t come out of the blue, the core fundamentals of the problems have been written on the wall for many years. So, if you are going to apportion blame, surely it’s the people at the top of the various stakeholders who didn’t acknowledge that this was eventually going to rip European rugby apart and positively and proactively do something about it. Whilst this may seem like a basic analysis using 20/20 hindsight, it is not, the problems have been clear for anyone to see for years. Premier rugby have been shouting about their gripes to anyone who would listen since long before I started managing Heineken’s sponsorship in 2005. Given that we have known that this is going to happen for a long time, and on the assumption that a resolution is reached, in order to draw a line under this unpleasant saga and wipe the slate clean it may necessitate some high profile casualties on both sides irrespective of the outcome of the latest wrangling’s.
ERC have always benchmarked themselves against UEFA. Whilst from a governance perspective they are some way off it reveals an aspiration, which is no bad thing. Rugby will never gain parity with football on a commercial level but in terms of basic governance rugby can learn a lot. Given the foundations of the current European rugby issues are based on individual club’s desire to turn a greater profit, if ever these same issues were applied to football they would be significantly amplified. However this has never happened because the football community understand that letting European competition die would have a massive and potentially catastrophic loss of revenue. So when building the new ERC, the various stakeholders need to take a long hard look at the world outside of their bubble, maybe even employ some people from outside the rugby community(!) and build a sustainable organisation that can deliver stability not solely for the term of the next accord but for decades.
Moving onto to a resolution. It would appear that the only remaining sticking point is the UK broadcast contract. Clearly there is a fundamental issue at stake; both BT Sport and Sky Sports believe that they have the rights to show the European rugby club competition next year. They will fight tooth and nail to maintain these rights, however one of these organisations will most likely have to back down because neither will want it known that due to their stubbornness pan-European club rugby competition died, it would be reputational suicide. It’s a massive game of poker, but which organisation has the most to lose? Given the current market capitalisation of each organisation, BT has far more at stake.
However, the current TV contract is a very short term issue, the longer term impact of this whole saga will have far wider reaching ramifications. There will be a winner and a loser from the TV contract dispute, whichever organisation loses out will have a bitter pill to swallow. Given that nearly every major relevant rugby stakeholder is currently involved in this sorry series of events (clubs, unions, 6 Nations, IRB) means that they will all be tarred by the fallout. Let’s remember that the real TV battlefield is the Barclay’s Premiership and UEFA Champions League rights, rugby it a bolt-on, a nice to have. If the hangover from this process means that either Sky or BT are feeling resentful or tired of rugby politics it could have a devastating impact on the sport. I suspect that neither broadcaster would currently need massive persuasion to divert budgets away from rugby in order to seal the top footballing prize, this may just be the tipping point. As a result, the next time rugby TV rights are up for sale we may see one of these broadcasters unwilling to engage in the process. Putting this eventuality into context, when BT entered the football TV rights market they made it a truly competitive environment for the first time resulting in massive inflation of rights fees. Applying the same model to rugby, if you remove one of these broadcasters from any future rights sales (be it autumn internationals, Heineken Cup or domestic leagues) it will only result in less money coming into the game.
The only other option for a resolution on the TV broadcast rights, and worst case scenario, would be a split of rights between the two broadcasters which would lead to both parties feeling disgruntled.
Give a thought as well for Heineken. A very loyal supporter of rugby for nearly 20 years, since the sport turned professional. They were the title sponsor since the tournament’s inception in 1995 and have been a long standing sponsor of the Rugby World Cup. As an organisation they have been extremely refrained and kept their own council to date, but at what point are they going to say, “enough is enough, we cannot afford for our brand to continue being dragged through the mud”? Losing a sponsor such as Heineken would not only put a dent in the sponsorship incomes of the global game but would also send a very damaging message out to any other global brand thinking about embarking on rugby sponsorship.
Whilst I’m not trying to judge the rights and wrongs of rugby governance (that’s for another time!), the simple fact is that the IRB, Unions and clubs must have a single minded and common aim of growing the game for the good of all, they have to get their act together now, not just for this quarter’s balance sheet but for decades. Without question rugby has enjoyed enormous commercial growth over the last 20 years since turning professional, but this has bred a level of arrogance amongst the power brokers that there aren’t any problems. The question that needs asking is, had the game got through this period without the political turmoil would it now be facing a far healthier future? The rugby community cannot dodge these issues any further and has to start respecting the interest its key partners, as no matter how good the product is on the pitch, it’s a competitive environment off it where fans, sponsors and broadcasters will be wooed by others who aren’t permanently trying to press the self-destruct button.
So a message to all rugby stakeholders: please, put egos and agendas to one side. If you continue to neglect fans, sponsors and broadcasters in pursuit of personal interest it could have a devastating impact. Get this wrong and the game’s reputation will be eroded ensuring that it will continue to struggle fulfilling its massive potential.