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Rugby union is so firmly entrenched in the rich tapestry of British sport that it’s easy to forget that the game has only been professional for a little over three decades.
Whereas other sports ditched amateurism for commercial gain much earlier in their lifecycle, the amateur idealists of rugby football were so steadfast in their commitment that they were prepared to divide their sport and limit its national appeal than entertain the idea of paying players.
But by the end of the twentieth century, amateur loyalists were fighting a losing battle, and rugby union joined the professional ranks in 1995, opening the floodgates for a commercial transformation.
The problem was that rugby had resisted professionalism for so long that it hadn’t afforded the time to develop and had to find answers overnight.
There was a lack of a unified strategy between unions, many of which still operated as amateur institutions, and the power vacuum in England was filled by entrepreneurs who invested millions, influenced early broadcast deals and negotiated player contracts when there was no precedent to determine what players were worth.
This Wild West era set the template for what was to follow. Rising event, commercial and broadcast revenues in the top-flight Prem Rugby competition were offset by rising costs, especially player wages, creating an unsustainable foundation that collapsed during the Covid-19 pandemic.
Prem Rugby chief executive Simon Massie-Taylor has made financial sustainability a priority for the competition (Image credit: Getty Images)
The Covid-19 crisis and long-term trends
To lose one historic club to bankruptcy in Wasps could be considered a misfortune. To lose a second when Worcester collapsed would seem like carelessness. To lose three when London Irish failed, well that’s a full-blown crisis.
There have been attempts to change English rugby’s financial fortunes before. A UK£200 million investment from CVC Capital Partners in exchange for a 27 per cent stake in Prem Rugby was heralded as a “new era” back in 2018.
However, the pandemic laid bare the structural vulnerabilities of the league. Empty stadiums exposed an overreliance on matchday income, and CVC’s injection of fresh capital was swallowed up by the need to keep the lights on. Government loans of up to UK£124 million added further debt to club balance sheets but this was still not enough.
“The pandemic became this unsolicited crisis, but also the perfect storm,” Simon Massie-Taylor, who became Prem Rugby chief executive in 2021, tells SportsPro. “The reality was that the show had to go on – the sport had to carry on playing – but … we lost about UK£400 million during that period.
“All the private equity investment basically got sucked up, government loans were put in place, and for the houses built closest to the sea — the three clubs that went into insolvency – there wasn’t really any other option.”
Why rugby “needed to move on”
According to one study, all ten Prem Rugby teams made a loss during the 2023/24 season, with a combined deficit of UK£34 million (US$44.6 million) in 2023/24. Over the past decade, the figure is UK£176.9 million (US$232.1 million).
To remain solvent, many clubs have relied on subsidies from philanthropic owners who do not expect a return on investment. Worcester Warriors’ rise from the eighth tier of professional rugby to the top flight was largely due to the financial support of Worcester Bosch founder Cecil Duckworth, while Bruce Craig has invested significant sums into Bath and Bristol Bears are owned by a wealthy benefactor in Steve Lansdown.
“Obviously we are operating in a loss-making environment, but the fundamental driver for us as a club – and for all of the rugby clubs – is how we can grow revenue,” said Bristol Bears chief executive Tom Tainton, speaking at SportsPro London in April. “That’s going to be the catalyst for us to get onto the pathway to financial sustainability. It’s not going to be the [silver] bullet, but it’s certainly going to help us in the right direction.”
Growing and diversifying revenue streams will aid all clubs, with many seeing external investment as a catalyst.
Prem Rugby agrees, having seen sport become an increasingly attractive asset class for investors because of its predictable revenues, loyal fanbases, and a belief that many properties are under commercialised. Although the pandemic was disastrous for Prem Rugby, the fact that sport continued and survived has reinforced its reputation for resiliency, particularly in an investment landscape dominated by artificial intelligence (AI).
The league sees no reason why it can’t capitalise on this demand, noting the skyrocketing valuations of other teams and leagues, as well as the interest in disruptor properties with a fraction of the history, infrastructure and community that rugby has.
“The mission for the Prem was to get ourselves into a state where we could be backed by those kinds of investors, because everyone is very conscious about securing the legacy of these clubs,” adds Massie Taylor. “We’d relied for a few generations on the benevolence of owners and individuals who were passionate about the sport, and that needed to move on and become more sustainable.”
‘Promotion and relegation was not working’
Massie-Taylor says the league was growing at a rate of ten per cent prior to the pandemic, while viewing figures and attendances are on the up. A record UK£200 million domestic broadcast extension with TNT Sports until 2031 has also been agreed, providing more revenue certainty than the previous two-year arrangement.
But to make its clubs even more attractive, the recently rebranded Prem Rugby is introducing some more radical changes. The most controversial is the end of promotion and relegation between the top flight and second-tier ‘Champ’.
Movement between the two leagues hasn’t been in effect for several seasons due to the three bankruptcies and because no team eligible for promotion has been able to meet the necessary criteria. However, this will be formalised moving forward. Also notable is that sporting performance will only be one consideration. Teams will also be judged on finances, investment potential, infrastructure and geography.
Traditionalists consider the meritocracy of the pyramid to be an intrinsic part of English sport, whereas closed leagues are more akin to the franchise systems employed in the US and other parts of the world. They cite Exeter’s rise through the leagues to become Prem and European champions as evidence that scrapping promotion and relegation would end the dreams of clubs across the country.
Massie-Taylor rejects the franchise label and sees this weekend’s finalists Exeter as an anomaly rather than the norm, noting the lack of other examples. He believes the new system will drive up standards, encourage investment and support growth, while actually making it more likely for new teams to gain a foothold in the top flight – benefitting the game as a whole.
“Promotion [and] relegation, beyond it being a deterrent for investors, was a detracting feature… it was also not working,” Massie-Taylor explains. “We were essentially having the same clubs going up and down. There was no new team coming into the Prem apart from Exeter in 20-odd years.”
‘Perception vs reality is quite different’
Another criticism is that the new rules could lead to a lack of jeopardy, leaving teams at the bottom of the table without anything to play for. Massie-Taylor says he doesn’t expect this to be the case, arguing that the constant threat of demotion or the battle for the playoffs and European qualification will ensure most games will mean something.
“Even last season (2024/25), when there technically wasn’t relegation, we only had one dead rubber match, so the entertainment product is there, the aspiration is there – it’s just under a different system… perception versus reality is sometimes quite different,” he says.
Bristol Bears, who have been promoted and relegated on a number of occasions in the professional era, are supportive of the changes, believing it is in the club’s best interests to have a healthy league to compete in. Meanwhile, Saracens chief executive Charlie Beall considers the overhaul to be in keeping with a more professional sport.
“I see [the changes] as a lifting of standards and professionalisation rather than a fundamental re-imagining of the league structure,” Beall tells SportsPro. “We’re hugely supportive of them.
“I think the term franchise was confusing to people and there are murmurings around lack of jeopardy at the bottom of the of the table. But I think the benefits far outweigh those concerns, and we’re already seeing how it’s attracted investor interest in the league.”
Black Knight Sports and Entertainment, of which Michael B Jordan is a backer, is set to take over Exeter (Image credit: Getty Images)
Red Bull, Dyson and Oscar-winning investors
Prem Rugby will view the recent flurry of investment activity as evidence that its structural changes are already working. Red Bull’s takeover and rebrand of the Newcastle Falcons at the start of the season was seen as a huge development given the power of the energy drink firm’s marketing machine and its deep pockets being used in a geographically strategic part of the country for Prem Rugby.
Billionaire Dyson chief executive James Dyson’s acquisition of 50 per cent of Bath and the prospect of Bill Foley, the owner of Premier League side Bournemouth, and actor Michael B Jordan taking over at Exeter has many people excited.
But structure and investment are only part of the equation. Prem Rugby also needs to convert some of the millions of fans who watch England internationals into supporters of the club game who buy tickets and pay for broadcast subscriptions.
“There’s nine million rugby fans in the UK,” says Massie-Taylor. “But actual hardcore Prem fans [are] a smaller number of that, about two million, and that ability to eat into that market alone is the growth potential that we’re chasing.
“As a top-of-the-funnel marketing engine [international rugby is] incredibly powerful – that’s where the stars become the mega stars, because of the reach the international game has got.”
Tainton says the on-field game is as good as it has ever been, but the sport needs to be more creative and less risk-averse in terms of how it is covered on broadcast and digital channels to win fans over. This might mean leaning into the entertainment factor of rugby or promoting athletes as ambassadors for the game that can transcend their sport.
Indeed, apart from Jonah Lomu and to a lesser degree Jonny Wilkinson in England, it could be argued that only Antoine Dupont and Ilona Maher have achieved that in recent years – and required Olympic exposure to do so.
Beall agrees, arguing that rugby is now well positioned to attract new and casual audiences – as long as it “gets out of its own way”.
“No sport in the last 15, 20 years has [not] become entertainment, [hasn’t] become cultural crossover… it manifests itself in art and music and fashion and all these other areas, but rugby has stayed rugby,” he says.
“Those traditional values of rugby…make those of us who love the sport value it, but equally it’s held it back. Rugby was behind the curve, but it has the ability to catch up.”
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