CVC cuts Six Nations offer by half to €165m as talks continue on new deal

In another measure of the impact which the Covid-19 pandemic has had on the global game, and specifically on the value of the Six Nations, it is understood that the offer from the private equity firm CVC capital partners for a 14.5 per cent shareholding in the tournament will be significantly reduced.

At the start of March, both CVC and the Six Nations had hoped to complete a deal which would have resulted in the private equity firm buying 14.5 per cent of the Six Nations for €330 million. Negotiations were then suspended and upon their resumption The Irish Times has learned that CVC have reduced this offer by half, to €165 million.

However, the two parties are to meet again within the next two weeks as they seek to agree a revised valuation of the Six Nations. Furthermore, if an agreement is to be reached it is likely to fall in between the original and revised offers, in other words somewhere in the region of €200-220 million.

Based on a report in Midi Olympique the weekend before last, quoting the French Federation president Bernard Laporte, it had been widely believed that an agreement between the Six Nations and CVC for a 14 per cent stake in the competition was imminent.

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Laporte admitted: “We are still in negotiations because of Covid, CVC wanted to review its offer, which is logical considering the period without a match that we have just experienced. A Six Nations tournament committee is in charge of the file. They just made a counter proposal last week. A meeting is to take place in the coming days, but I am confident that within two months it will be signed.”

Laporte forecast that the deal would be worth around €75 million to the French Federation.

But even if this took into account an improved TV deal in the next round of broadcasting rights, and the greater share handed out to the FFR and RFU, it seems a rather high figure in the new climate.

Tellingly, within two days, the Six Nations issued a statement acknowledging that constructive negotiations with CVC were continuing, but added: “Negotiations of this nature are complex. They can take significant time and at this point, are still ongoing. An agreement is not to be expected imminently and it would be inaccurate to present it as a formality.”

Another stumbling block is the competition’s next broadcasting deal. In February, the Guardian reported CVC’s investment could be dependent on a major overhaul of the sale of rights, with the firm wanting an improvement on the annual €90 million currently paid by the BBC and ITV in the UK for free-to-air coverage, which expires after the 2022 Six Nations. According to the paper, the agreement may have hinged on whether CVC and the home unions could agree on a new package for one match per round being shown on pay-TV.

The six unions and federations were loath to suffer the loss of millions of views in that eventuality, although the financial consequences from the Covid-19 pandemic may well have altered their viewpoint. Desperate times call for desperate measures and there is evidently a strong desire to complete a deal with CVC.

In February the Six Nations put the TV rights up for sale and also bracketed them with the all the autumn internationals played by the six countries. Within two weeks they had received the first tender bids from broadcasting companies. Again, figures of circa €330 million had been bandied about.

Without live sport, both Sky Sports and BT Sport have been hit hard by the lockdown, as viewers cancelled their subscriptions, and with ITV drawing much of its revenue from advertising, whether such a valuation remains on the market is debatable too. For example, this coming November was to have featured marquee games such as England against New Zealand at Twickenham and Ireland against recently crowned world champions South Africa.

Those games, along with the rest of the proposed November Tests against the southern hemisphere sides have yet to be formally called off. But the ongoing and ever-changing Government and health guidelines in dealing with the pandemic, along with discussions regarding a global calendar, all add to the uncertainty over the game’s future.

Admittedly the CVC deals for stakes in both the Pro 14 and the Premiership went ahead despite the interruption caused by the shutdown.

In May, the firm finalised a deal for the Pro 14, paying a reported €140 million for a 28 per cent stake in the competition’s governing body, Celtic Rugby DAC. By then, CVC had purchased a 27 per cent holding in Premiership Rugby apparently worth €220 million.

However, an agreement on the Pro14 deal – negotiations for which had started about a month earlier – had already been reached before the lockdown. Hence the agreed figure could not be affected by the downward market turn.

Not so the Six Nations deal. Ad aside from the lockdown, the valuation of €330 million for a 14.5 per cent stake in the Six Nations was based upon the estimated value of the TV rights. That no longer applies, so CVC will not be paying that figure now.