The new, all-singing, all-dancing Aviva Premiership kicks off in Northampton tomorrow night when the Saints host Gloucester at Franklin’s Gardens.
Northampton are one of the Premiership’s ‘Big Four’, rugby union’s very own cartel of clubs which include Saracens, Leicester Tigers and Harlequins. This quartet have filled the league’s play-off places in each of the last four seasons except one when Gloucester gate-crashed the party in 2010-11.
Over the coming weekend, four of the half dozen Premiership fixtures will be screened live by BT Sport, the broadcaster trumping Sky and ESPN to acquire domestic television rights by paying Premiership Rugby 50 per cent more for them (£38 million a year) as part of a four-year deal.
Rugby union’s commercial and broadcast appeal may not yet match that of football (no sport does), but with a World Cup on the horizon, there seems little doubt that the game’s profile is set to enjoy a welcome boost.
In many respects, therefore, the new domestic season is an aperitif, a taster, with considerably bigger things to come. Despite the overwhelming concentration of next autumn’s World Cup fixtures in the south, rugby and the Premiership in particular can expect to benefit from associated spin-offs and raised interest in the game.
Yet domestic rugby continues to suffer from regular bouts of intrigue once evident only in a medieval court. It’s as though some club owners are continually jostling to secure the most advantageous position possible for the time when what is as yet an unidentified tidal wave of money finally washes over the game.
At that point, many believe they will see an enormous return on what, to date, has been a considerable investment. However, to put Premiership Rugby’s commercial appeal into context, the £38 million it receives from BT Sport is £23 million less than Cardiff City received for finishing bottom of football’s Premier League last May. There is some way to go, but next year’s World Cup will undoubtedly confer significant financial benefits upon the game.
In the meantime, there is unease amongst club owners, several of whom are concerned that some clubs are living beyond their means, waiting for that wave of cash to materialise. The nation’s most successful club, Northampton, won the Aviva Premiership and Amlin Challenge Cup trophies last term. Off the field, Northampton Saints plc was equally successful, declaring a pre-tax profit of £356,329 on turnover of £14.897 million. The record financial results were underpinned by an 11 per cent increase in turnover, with commercial and rugby-related income, such as ticket and merchandise sales, both rising significantly when compared with 2013.
Saints’ chief executive Allan Robson, who has seen his club turn a profit for fourteen consecutive seasons, said: “Sport is about aspirations and everyone is chasing the golden egg of finals and silverware. But I’m not comfortable to hear of clubs losing £3 million or £6 million because it’s not sustainable.
“It’s a dangerous situation whereby clubs can live beyond their means for a period where they’ve got a group of wealthy backers. It’s not against the rules and I have no problem with sugar daddies, but does it do clubs any good? Exeter Chiefs chief executive Tony Rowe said: “We run Sandy Park as a business, which means we run at a profit. If we can’t run at a profit then we shouldn’t be in business. It does feel a bit unfair that other people can buy players and run sporting businesses as a tax loss.”
Earlier this year, accounts submitted by Blue Sky Leisure Ltd, the company that owns Harlequins, showed an encouraging 12 per cent rise in turnover, to £14.7 million, while pre-taxes losses were pared a little, to £1.98 million. However, closer examination shows that while sales rose by £1.52 million, almost all of that money was spent as losses before tax were shaved by just £74,000.
The company’s previous year’s statutory accounts, ie those for 2012, included the statement: “Our objective is to achieve financial independence and profitability in two years.”
This objective seems a long way off and may not be achieved until that elusive tidal wave of money sweeps the domestic game up in a sea of fifty pound notes. In the meantime, September is also a time when clubs must finalise their budgets for the coming year, with particular attention paid to the Premiership’s salary cap. While Premiership Rugby emphasises the importance of financial regulations which, it maintains, are important to “controlling costs and long-term financial sustainability”, off-the-record allegations that at least one top-flight rugby club may circumvent the salary cap regulations are not difficult to unearth.
Salary cap levels are described as being “proportionate and aligned to the growth of the business. [They are] linked directly to the annual net central distributions to the clubs from Premiership Rugby.”
This season’s salary cap is £4.76 million, a level which excludes the salary of one player whose (usually significant) remuneration permits clubs to recruit and retain world class talent. Later this month, each club must provide the Premiership’s salary cap manager with details of their expenditure over the most recent salary cap year, together with forecasted salary outgoings during the current year. Each document must be approved by a club’s board of directors and signed off by the chairman, chief executive and finance director. Between September and November, each set of figures are independently audited in accordance with the league’s salary cap regulations.
In order to clamp down on payments made outside of the salary cap, the league also keeps copies of all player contracts, details of image rights and payments made to agents. It also has the ability to regularly interview players and operates a “whistle-blowing policy” which provides individuals with the opportunity to report any wrong-doing on a confidential basis.
Premiership Rugby should be commended for trying to impose financial discipline upon top-flight clubs as it performs a much more effective job than either UEFA or the FA. However, even with next year’s World Cup on the horizon, there’s little sign that rugby is scheduled to benefit from the dramatic injection of broadcaster-led funding many owners crave. Such a conclusion would suggest that realistically, most Premiership clubs face the medium-term prospect of mounting annual losses.