Rugby continues to burst boundaries

Seventeen years after the inception of the Heineken Cup, revenues generated by the tournament are still on an upward spiral, writes RICHARD GILLIS

THE HEINEKEN CUP is one of the success stories of rugby’s professional era, the missing link between the RBS Six Nations and the domestic club leagues. Seventeen years after its inception, fan and media interest in the tournament remains high: turnover for last season hit the €50 million mark for the first time, a doubling in four years. To this can be added other positive commercial news: Dove, the Unilever brand, last year signed up as a partner and the major TV deals were renewed with a bump in rights fees.

All this would suggest Derek McGrath would be able to relax in the spring sunshine, as the traffic crawls by beneath his St Stephen’s Green office. It’s a position from where the 51-year-old Dublin born chief executive of ERC – himself a former Irish international player – has become a highly influential figure in the international business of rugby.

However, life isn’t like that. Poke around a little beneath the surface of the pan-European governing body and the growing pains of the professional game are all too apparent.

It’s all there: club v country, the race to make money following professionalism, the Olympic opportunity, the implications of the Bloodgate scandal on the perceived values of rugby, and finally, the nascent ambition of some English and French club owners which threatens the status quo.

If the rumours are to be believed, European club rugby stands on the verge of a revolution. It is said that secret meetings have been held involving a number of club owners where proposals for a world club championship were discussed. Details are sketchy, but the prospect is of the best eight club teams from Northern and Southern Hemispheres coming together on a regular basis.

Champions of the Aviva Premiership, RaboPro12 and French Top 14 leagues, plus the Heineken Cup winners, would be invited to play the cream of New Zealand, South Africa and Australia, and the Super 15 champions.

“The conflict shows the game is evolving,” says McGrath, “and that there is money to be made and new territories to be reached.”

It’s a nice answer. But there’s another, more concrete reason for his apparent confidence: spring is good time for McGrath to talk about money.

The quarter-finals stage of the competition shows the Heineken Cup at its best – eight of Europe’s leading club sides playing in what the organisers are trumpeting as the most lucrative games in the club rugby calendar.

Across Dublin, the home town team Leinster expects to make a killing due to a switch in venue, from their usual home at the RDS in Donnybrook to the Aviva Stadium at Lansdowne Road.

The hike in capacity means Brian O’Driscoll’s team qualifies for an ERC incentive: instead of splitting the net profit from the ticket receipts 50/50 with the away club, the Irish province is entitled to a 65/35 ratio because of the increased capacity at Lansdowne Road (52,000) compared to the RDS (18,500). Cardiff will receive a ticket allocation of about 12,500 for the game but were thought to be taking up only a quarter of that allowance.

Meanwhile, on the other side of the country, Munster and Ulster play at Thomond Park, Limerick on Easter Sunday, an all-Ireland clash that assures the IRFU of at least one semi-finalist, a fact that should help the union generate at least €1.3 million based on an ERC meritocracy payment. Leinster’s 2011 victory swelled the IRFU coffers by around €2.5 million over and above budget (for two quarter-finalists last season, plus a semi-finalist and winning finalist).

“Leinster will take their game to the Aviva Stadium, which will be a great day out for their sponsors and earn them a chunk of meritocracy payments,” says McGrath.

“It’s a game they haven’t budgeted for, it’s not included in the season tickets, so the cheque is a welcome addition.”

Of the €50 million turnover, McGrath says around 85 per cent is redistributed as per the shareholding of ERC. Then there’s a 15 per cent merit payment depending on performance.

“The decision is representative of the business model of each country. Take Ireland for example: the money goes straight to the union, the IRFU, because they have full ownership of the teams and the players. In France, the FFA agreed the money goes directly to the league, which is then divided to the clubs. In England the money goes to Premiership Rugby which divides it 12 ways to the clubs.

“One of the challenges we have is that we are providing a sum of money,” says McGrath, “that when its distributed stakes up very well, both in terms of quantity compared to what they are getting over the nine weekends of the event. Also, the rate of increase in value also stacks up well when compared to other countries.”

The new money flowing into rugby has allowed the game’s administrators to build for the future, new grounds, new commercial deals and greater funds for grass roots participation.

However, it also brings another question. Are the values of the game, so cherished by fans, in danger of being eroded as the first generation of professional players come through the ranks? Put another way, Is professional rugby turning into football?

“As the game expands, we are seeing different people coming to our matches from different sports, with different expectations,” says McGrath. “The game is changing, there’s no doubt about that. And we must communicate how rugby is different from football, in terms of what we cherish and the values of the game. This can be construed as an arrogant position. but its a differentiator commercially.”