Premiership Club Owners To Vote On £200M Sale Of Stake To CVC
Premiership club owners are likely to vote for a proposal to give a minority stake to the private equity firm CVC in return for more than £200M ($254.8M), "two months after they turned down a takeover bid," according to Paul Rees of the London GUARDIAN. CVC, which held a majority stake in Formula 1 between '06 and '17, came back with a new offer that "would mean it ran the commercial arm of the Premiership but not the league itself." This would keep the agreement within World Rugby’s regulation governing ownership and mean the 12 clubs "enjoyed a greater proportion of profits than under the original bid." Premiership Rugby held talks with CVC in recent weeks and it is understood a firm offer will be tabled at the next board meeting, which is to be attended by the clubs’ owners, on Dec. 11. The 12 would each receive "an immediate cash injection" of around £20M ($25.5M) at a time when only Exeter is in profit. The debts of most clubs have grown in recent years, "largely because of wage inflation which has accounted for most of the growth in turnover." CVC’s money "will not go into the pockets of players because the salary cap is pegged for the next two seasons but will be used to improve infrastructure and pay off debt." Bath is "hoping to redevelop the Recreation Ground," Harlequins are planning a new stand and Leicester hopes to start a £22M ($28M) project next summer to build a hotel and a car park alongside its Welford Road Stadium. Contracts have been exchanged with a developer and the project "hinges on planning permission." A question the owners "have to weigh up is whether the cash injection would leave them worse off in the long term." They have to balance the money they would receive from CVC against the reduction from central funds each year -- the money which is generated from TV and sponsorship deals for the league. How long would it take to make up the £20M? CVC believes the tournament has "undervalued itself and that the TV market in particular has been underexplored" (GUARDIAN, 11/27).