Published on November 20, 2012 | by Rob Britton

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Rugby takes a risk with BT

An audacious bid by telecommunications company BT to provide coverage of rugby union in the UK was accepted in early September. The deal includes exclusive rights to the Aviva Premiership, Heineken Cup, and other domestic fixtures in this country. But will the new rights holders be able to bring more money into the sport?

BT fought off competition from current broadcasters such as B-Sky-B and ESPN with the £152 million bid, seen as extraordinary because Sky has always been the main broadcaster for rugby union in the UK. The main concern is that, with the TV deal in place until 2015, investors looking to buy clubs could be put off by the overall market value of English rugby.

Chief executive of Premiership Rugby Mark McCafferty believes that the bid is secure and isn’t a major risk at all.

“They are a major player with their own platform, they have the resources to invest and live sport is central to their strategy,” Mark McCafferty.

Rugby union has always been a popular sport in the UK, and with the 2015 World Cup being hosted in England, the move is seen by most outsiders as a monumental risk for the future of the sport in the UK. BT believes it can help set up new events to rival the likes of the Heineken Cup, and the Amlin Challenge Cup, to boost the economic state of the sport.

With English rugby now having a wage cap on all clubs, players such as Jonny Wilkinson have ventured abroad, because the surge in rugby is greater overseas than in the UK. France remains the most popular destination because of its popularity within the country, the healthy financial state of their domestic competition and the continued improvement in playing standards.

 

Potential risk

Many believe that BT’s deal with rugby union will end up going the same way as Setanta Sports and ITV Digital did when they tried to cover live sport. But BT has a few advantages over previous broadcasters: It is an enormous company within the UK, with about 728,000 subscribers, who will not need to switch if they have a different internet provider, although they will need to sign up to BT broadband.  On top of its lucrative rugby deal, BT has paid £738 million for 114 Barclays Premier League football matches over three seasons, and is in talks to show more live sport, in order to establish itself alongside the likes of ESPN and Sky Sports.

However, there are already clouds on the horizon for the new found union, especially concerning BT’s exclusive rights to the Heineken Cup in this country. The Heineken Cup (rugby’s equivalent to the UEFA Champions League) is run by the ERC (European Rugby Cup Ltd) who are currently in dispute with both the English and French rugby clubs over changes to the tournament’s structure.

The Anglo-French clubs concerned are threatening to form a breakaway competition when their deal with ERC runs out in 2014 (the same time that the deal with BT kicks in). Having a company already signed up to broadcast any such tournament adds considerable strength to the club’s bargaining power. To add to the brinkmanship, ERC have signed a new deal with Sky to broadcast the Heineken Cup until 2018 and it is all starting to get very murky.

The choice for teams stuck in the middle, such as those in Ireland and Wales, appears as such: accept more money with the BT deal, but with wider gap between their share and the Anglo-French clubs, or accept the less equitable offer from B-Sky-B, but with more equality for all the clubs concerned.

 

Improvement

BT’s deal is said to be a 50 per cent improvement on what broadcasters ESPN and Sky currently pay. And the new guidelines agreed with BT would mean teams from countries such as Germany, Portugal, Spain and Russia, would be able to compete for a top European trophy, rather than another Anglo-French tournament.

Premiership Rugby has admitted it did not want to part with Sky which has helped bring in a large revenue for the game. But with Sky covering more football matches, a sufficient deal could not be agreed by both parties. The blueprint for Premiership Rugby is to match the stature of championship (second tier) football, with a large fan base and substantial revenue coming in from advertisers and BT.

 

London Wasps

Premiership side London Wasps had a more than disappointing campaign last season, narrowly avoiding relegation to Division One, which would have been a massive blow to the game because they are a giant name within the league. The reason for their slump was due to a lack of funding, as they are already sharing a stadium with League Two side Wycombe Wanderers. But a consortium bought the club just before the new BT deal was announced, stating it’s intent to bring trophies back to the London side. With help from revenue generated from BT over the coming years, this will mean clubs such as Wasps will no longer need to worry about going into administration, as long as they can handle their money within reason.

So as BT looks to embark upon their new challenge of broadcasting live sports. There are two equally likely outcomes: rugby union’s popularity could surge as a result of generated revenue, or the deal could collapse completely.

The blueprint for covering live sports is a difficult one, and the format built by BT might not go to plan, but the company can see the obvious rewards all around should it succeed. The future is exciting for rugby union, and it should be fascinating to see BT’s attempts at bringing rugby union in the UK to a whole new level.

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