Under pressure from USA Rugby’s members to show better financial results, 3-year-old Rugby International Marketing has tried to sell its over-the-top streaming channel amid a top-to-bottom strategic review and major executive changes.
RIM, an agency created in 2015 in the image of Soccer United Marketing to supercharge the American rugby business, has sought buyers or new investors for TheRugbyChannel.TV in recent weeks, sources said. The channel has about 11,000 subscribers but is not profitable, and its growth has been hampered by competitors FloSports and NBC Sports’ move into rugby.
On March 21, USA Rugby named two new members to the RIM board, Mark Lambourne and Jon Bobbett, replacing Pete Seccia and former Chairman Chad Keck, who resigned from RIM on March 7 and just narrowly survived a recall vote at the USA Rugby board.
That same day, RIM CEO David Sternberg quit. He will be replaced by new board chair Pam Kosanke on an interim basis. (USA Rugby controls three seats on the RIM board, with minority investors CSM Sport & Entertainment and the British Rugby Football Union taking the other two.)
The board is now engaged in a comprehensive review of RIM’s strategy and operations.
“I think this is more about us resetting a course than it is some sort of massive blowup, or some sort of dire straits issues,” Kosanke said.
But in February, the USA Rugby Congress came to a different conclusion. The Congress, a group that serves as a liaison between members and the USA Rugby board, said it “has grave concerns about the operations of RIM and its future viability,” according to a published statement.
Its minutes further read: “While RIM has not used any USA Rugby funds to operate its business, its business practices are endangering the payments owed to USA Rugby. In addition, RIM’s failure to maximize their business model makes their long-term viability tenuous.”
Under its original terms, RIM pays an annual licensing fee to USA Rugby in exchange for its commercial rights. Those fees were $1 million in 2016, $1.25 million in 2017 and are scheduled to be $1.8 million in 2018.
RIM hasn’t missed those payments yet and expects to continue to make them, Kosanke said. However, the business plan also called for RIM to be distributing additional income to its shareholders by 2018, and that has not yet happened.
The Rugby Channel is at the center of USA Rugby membership’s concerns. It’s spent $4.2 million and is not profitable. The Congress demanded the Rugby Channel’s “cash burn” stop by March 31 — meaning a sale, shut down or a new influx of outside investment.
“We’re evaluating the media landscape and our place within it, and what the opportunities are,” Kosanke said, declining to elaborate.
RIM also sells sponsorship rights to the U.S. national teams, operates one-off events and is commercializing the 2018 World Cup Sevens in San Francisco (see related story). The company has raised $7.5 million from CSM and other minority investors since its launch. USA Rugby’s contributing capital came in the form of its commercial rights. USA Rugby owns 75.6 percent of RIM, which it valued at $4.9 million in its 2016 IRS filing.
When asked if the ongoing review could end with the dissolution of RIM, Kosanke said: “I don’t know the answer to that yet. I think the capacity of RIM to me is something the organization needs.”
