The future of the club game
The Club CEO
Tony Rowe OBE, Exeter Chiefs
Although we’re the only Premiership rugby club showing profit, that doesn’t mean I think something has gone wrong at the others, we were just fortunate that we started with a blank sheet of paper. Some of the Premiership clubs have a legacy from years before, so they’ve got massive overheads before they even start.
When I took over running the club in 1998, we had a part-time groundsman, one full-time guy who was the stadium manager, a full-time secretary and a part-time guy doing the marketing, so there were no massive overheads. And from that point, it took us twelve years to reach the Premiership.
The business of today has a main board of directors that are all non-executive and run Exeter Rugby Group PLC. The management board that run the business at Sandy Park are guys we’ve recruited over the last ten or so years. They’ve developed, as we’ve developed. When we started at Sandy Park in 2006 we had a turnover of £1m, now we turnover in excess of £20m, and we have a staff of 50 that run the place every day – and that’s excluding players. On match days that number blooms to 500.
We make a profit because, a) we’ve managed the growth of business in a business-like fashion, and b) we’re very careful not to increase overheads, unless we’ve got to, either on the commercial or playing side. We run it as a business.
That business plan started with our stadium. My original brief to the architect was ‘build me a conference centre that will eventually become a 20,000-plus stadium. We made it so that we could add blocks as we go, so first we built the west grandstand, then we’ve added bits as we needed them and could afford them.
The biggest challenge year-on-year is not running the business, it’s getting the money to grow it. We’ve had this plan to increase the stadium to 20,000-plus, we’ve got plans to build a hotel, we’ve got plans for a 1,000-seater auditorium, but it’s where you get the money from.
One of those sources now could be CVC. I think the CVC deal is the start of the change of professional rugby, I think it’s fantastic. One of my criticisms of our game over the last ten years has been the lack of money. We’re not attracting the monies we should be attracting. Over the last few years with the BT TV deal, we’re actually taking our game to a much wider audience and it’s amazing what we manage to run a Premiership side on. We run a full-time professional squad with all the bits and pieces that come with it, for under £10m a year, and yet a lot of football teams pay that for one player.
CVC have come along and put in a couple of hundred million and they believe they’ll get a return otherwise they wouldn’t have invested. I think most of us [in Premiership Rugby] have been impressed by their past record in sports such as F1 and I think the time is ready for the game to move on. But I think CVC will pull it off and this sport will change dramatically over the next five to ten years.
I know World Rugby tried to get something going and it didn’t get off the ground, but at club level, it would only take a few of the French big clubs that have got big financial backers to actually fall out big time with the French rugby union and who knows what could happen?
I wouldn’t be surprised to see a European Champions League.
I think the game will evolve to that, because, interestingly, whereas we always get big numbers for the Premiership games, with the European Champions Cup, we have to work really hard to sell the tickets so I think a European Champions League might have more appeal to it.
I just think the commercials around a European Champions League are far greater than a domestic league. The European Champions Cup hasn’t really grasped the commercial support from Europe, and as the sport is growing, the French are trying to make inroads into more commercial aspects, as are we, and I just think that will drive us to a game with more appeal to more supporters.
But then, who really knows where we’re going? We’ve still not decided if it’s going to be twelve or thirteen teams the season after next.
We will always support the idea of promotion or relegation, but whether it’s feasible going forward, with the advent of CVC, I think to some degree the Premiership has already ring-fenced itself financially. The biggest challenge any club entering the Premiership is that, a) they have the finance for the ground, and, b) they have to be able to finance at least £10m to put a competitive squad and support staff together. And then the running costs for 365 days a year.
We were quite fortunate that when we stepped into the Premiership that we could get away with spending £3m in that first year, but you can’t do that now. Even a club like Ealing, if they are spending £3m on players now, when they step into the Premiership, the salary cap is £7.5m plus marquee, dispensation for academy, and other bits, so it’s a big leap.
That’s why I say the Premiership is already ring-fenced financially. The gulf is huge.We were able to step over that gap, but now, much as I and the club support relegation and promotion, the leap is so much bigger.
In a situation that it goes to thirteen clubs, it would make sense to go to fourteen, but then you divide the cake up fourteen ways rather than thirteen, so unless there’s more money involved, it’s not a conversation. No matter which way you turn, it comes back to money.
Another change is with international players. The problem we have in England and where we’re different to other nations, is that the union doesn’t own the players, whereas elsewhere unions can dictate to the teams who they can and can’t play. We have to release players to our home union, at their beck and call, but we pay the players.
As every season comes and goes, more and more demands are put on the international players on the squad, and these international players are the most expensive players in the squad, I’m not sure we can go on every year agreeing we’ll release for another game and another game.
A couple of our most expensive players are internationals and we barely had half a dozen appearances out of them last season – commercially that doesn’t make good business.
As rugby matures, and more money comes in, people like myself will look at the playing side, and what we’re spending money on and whether we are sure we’re getting a good return for investment. That is what will force a change.
Premiership Rugby has a reasonable relationship with the RFU, we’re not at loggerheads, we do sit down and discuss things. So it’s about getting the understanding that, from a club point of view, if we’re investing millions each year into a group of players and loaning them out for a fraction of that cost, then, at some stage, you are going to ask, ‘why am I doing this?’ We’re not quite at that point, but the RFU realise that this has to be taken into consideration when we talk about the future.
Right now, the Premiership is pretty good. It’s very competitive, almost any team can beat any other team. It could be improved with bigger grounds and more fans, but we’re getting there.
I also think all of the clubs are in very safe hands, some of them have a few financial challenges, but hopefully CVC can alleviate those problems.
People are very quick to point out when a club has lost £4m or whatever. But they never say, ‘hang on a minute, there’s thirteen businesses that provide entertainment for supporters and twelve people who put their hand in their pocket to keep the sport going’.
When Nigel Wray puts his hand in his pocket to the tune of a few million, nobody acknowledges him or thanks him. The sport needs to be grateful for that. I just hope that the CVC deal will now bring more funding in, so we’re able to manage the finances better.”