Select Committee on Culture, Media and Sport Appendices to the Minutes of Evidence


Memorandum submitted by Buchler Phillips


  To consider the problems associated with the professional game, it is essential to examine the nature of the sport at grass-root level.

  Rugby Union still remains a largely "elitist" sport, mainly emanating from and sustained by the public school system. Its inaccessibility to most state educated children is a major drawback. Rugby is a difficult game to play either singularly or within a small group as opposed to soccer, which impairs its attraction to children in their formative years. Similarly the traditional and physical image of rugby dissuades many children from taking up the game. As rugby lacks "street credibility", it remains traditionally a game that is taken up by children of former players or those at public schools.

  Rugby intrinsically suffers from its complicated playing set-up and rules preventing those with a passing interest from following or taking up the game. This and the lack of available playing facilities as compared with soccer largely prevents the game becoming more widespread.

  There also exists a strong tradition of camaraderie and elitism amongst rugby players, which has led to a definite stereotypical public image of the typical rugby player. This image has been reinforced in part by the general lack of exposure of Rugby Union to the masses. Moreover, recent public relations disasters involving high profile players such as Lawrence Dallaglio and Will Carling have only served to reinforce a negative image of the sport. Finally, the narrow field of vision for this minority sport immediately sets it at a disadvantage.


  Professional clubs have typically been formed from member amateur clubs who are, traditionally, more focused on the playing side of the club rather than the provision of entertainment in comfortable surroundings for paying spectators. As a result, the majority of clubs rely on very localised support with limited branding. Most rugby grounds themselves only have modest catering facilities and a limited leisure business focus and remain on the whole incomparable with their footballing equivalents in terms of comfort and facilities offered.

  Many rugby clubs tend to cater for supporters with an in-depth knowledge of the game thereby limiting the attraction to others who tend to feel like outsiders. In short, the complexities of the sport mean that at a spectator level it is relatively inaccessible to non-rugby playing children and adults. More importantly, rugby remains traditionally a Saturday sport and consequently suffers from the competition offered by higher profile Saturday events and sports. As a result rugby suffers from limited media exposure which further reduces public exposure.


  In our view the failure of professionalism is due to many reasons. Primarily there has been a failure to appreciate that professionalism needs to focus on improving the quality of the surroundings for spectators in the first instance before making the sport more exciting at club level. Rugby Union administrators in seeking to replicate the success of soccer, have failed to challenge the growth of Rugby League which was a more logical target. Just as importantly, the confused message sent to the general public of the overriding importance of international matches, controlled by the RFU, compared to league fixtures has devalued the standing of club games.

  The continual internal squabbling within the clubs and rugby associations has produced a confused and fragmented fixture list, which in turn has affected consistency of matches leading to wavering support levels. Most sport followers like a regular weekend fixture list, a consistency that rugby has failed to provide. The constant loss of many key players to international matches has added to the diminished value of the home product; a problem that has affected the Cricket County Championship for many years. The rising number of international matches throughout the season has also detracted from the importance of the domestic league and cup competitions.

  In addition the season begins in late September when the weather is already beginning to deteriorate acting as a further deterrent to attracting new spectators who are most likely to attend matches in pleasant weather.

  Most importantly, the sport is concentrated almost solely to the affluent South East and Shires with too little grass-root support in the North of England, as a result there is little interest in the sport outside of these areas. Similarly, there is little exposure of international rugby outside Twickenham, where the corporate focus and inaccessibility of Twickenham diminishes the level of general interest amongst a public who have little or no prospect of attending a match there.

  This under utilisation of Twickenham as the national stadium for rugby seriously hinders the growth of Ruby Union's popularity. The value of a visit to Twickenham must not be underestimated as a means of winning over rugby converts. Finally, the inconsistent form of the Home Nations coupled with the vast superiority of the Southern Hemisphere game impairs the ability to expand the appeal of Rugby Union.


  The vast majority of rugby clubs play in sub standard stadia which continue to retain an amateur feel to them. The stadia are on the whole generally too small with inadequate seating facilities, which does nothing to encourage spectators to feel they are attending a "special event". The present broadcasting facilities at rugby clubs also remain largely inadequate and unprofessional. The relatively poor facilities will always be an impediment to attracting a wider range of sponsorship and corporate entertaining, which are essential sources of revenue.

  However, the clubs themselves have insufficient finances to bring their stadia up to modern standards which would help to attract new customers. In many cases there remain insufficient cost benefit incentives to build new modern rugby stadia at club level. On the whole, those clubs that have experimented in sharing grounds with local professional football clubs have found that it is either largely unworkable or that the stadium itself has been too large, thereby destroying any atmosphere generated by a smaller rugby ground. One cannot underestimate the value of creating a lively atmosphere at a stadium as a means of attracting and retaining new customers.

  In our view Rugby Union has yet to embrace the thorough marketing concept of a leisure based business underpinned by a rugby club, a concept successfully embraced by a number of more forward thinking soccer and Rugby League clubs. As a consequence, the majority of rugby clubs retain a "member club" feel to them, further increasing the perceived isolationist atmosphere of rugby clubs to potential new customers.


  Many of the present problems faced by professional rugby clubs are caused or at least increased bythe present administration of the game. There remains within rugby a general lack of professionalmanagement and the sport is still largely represented by paid and unpaid volunteers dating back to the days of amateurism.

  Most rugby clubs' management have a relatively low key knowledge of their potential customer base and consequently give out confused messages as to whether they are catering for members or supporters. Internally, what little marketing and branding of clubs that has been undertaken by rugby administrators is still in an embroyonic stage and is strictly localised. This again restricts the potential for enhanced branding of club products and the corporate sponsorship which falls on the back of it.

  Externally, there remains a significant confusion and fall out between the various regulatory bodies. The continual arguments between the RFU, ERP, EFDR and ESDR, which have led in the past to expulsion from international competition and an uncertain home fixture calendar on the eve of the playing season, has sent out a hugely negative message about Rugby Union. Finally we believe that there is a lack of clarity between the amateur and professional sides within a rugby club with overriding authority resting with the professional side of the club.


  We believe that the financial difficulties of rugby clubs have their roots in a number of failings. With one or two exceptions, attendances at rugby games have failed to reach expected levels and interest from satellite and terrestrial television was originally overestimated. Similarly, levels of corporate sponsorship have fallen below expectations for the professional game, due on the whole to corporate facilities at grounds falling way below acceptable standards for most high profile corporates. At present, even with downward pressure on players' wages, no club is able to generate an operating profit.

  The irregular pattern of the rugby season and in particular league matches has caused serious cash flow problems for most clubs. Matches are frequently being diluted through the mergers of clubs that have been sanctioned by regulatory authorities. The present plans to shrink the number of participating clubs in Division One from 12 to 10 are clearly fuelled by a desire to distribute a larger share of television revenue amongst the remaining clubs. Whilst this will undoubtedly enable clubs to reduce the size of their playing squads, the danger is that fewer competitive matches will severely damage the revenue and fixture regularity of those First Division clubs not competing in Europe. The introduction of the European Cup should produce increased revenue for the eight competing clubs, but will only serve to polarise the differential between the elite and the residual (majority) of professional rugby clubs.

  It is our view that the integrity of a club's league status has been seriously damaged by the recent mergers and takeover bids between divisions which destroys the competitive edge of professional rugby on a league system. Serious consideration should now be given to abandoning full time professional Rugby Union in the English Second Division. Unless radical steps are taken, the continued decline and financial failure of professional clubs will continue unabated.


  TV Sports Market magazine produces comprehensive viewing statistics for all televised sports. During the weekend 23 May 1999, the following statistics were published in relation to Rugby Union. These figures show how little following the "live" game has except for key international matches.

    —  15 May (Rugby Union, Tetley Bitter Final) Wasps v Newcastle live. Audience 109,000 on Sky Sports 2 and 812,000 on BBC 2 (highlights).

    —  21 May. (Rugby League) Leeds v Halifax live. Audience 54,000 on Sky Sports 3.

    —  23 May. (Rugby Union) Barbarians v Leicester live. Audience 53,000 on Sky Sports 3.

    —  3 April. (Rugby Union) Richmond v Newcastle live. Audience 164,000 on Sky Sports 2 and 1.1 million on BBC 2 (highlights, 4 April).

    —  4 April. (Rugby Union) Wasps v Gloucester live. Audience 87,000 on Sky Sports 2.

  These figures compare poorly with the Five Nations Championship:

    —  20 February. Wales v Ireland. Audience 4.4 million on BBC 1

    —  6 March. Ireland v England. Audience 5.6 million on BBC 1

    —  6 March. Scotland v Wales. Audience 5.9 million on BBC 1

  In many ways the huge difference in viewing figures between club and international matches on television can be explained by tradition. In the pre-Sky days terrestrial television gave little screen time to Rugby Union, for many years the only coverage was BBC 2's weekly Rugby Sunday. In contrast, soccer games had been shown live on both BBC 1 and ITV for many years before Sky bought the Premiership television rights. Similarly, Rugby League has long enjoyed television coverage on BBC 1's Grandstand programme. Indeed since the advent of Sky and the demise of Saturday afternoon sport on ITV, Rugby League has benefited from often being the only terrestrial televised team sport on Saturday afternoons. Rugby Union has never enjoyed widespread club coverage on television and as a result still struggles to produce viewing figures that are any way comparable to those enjoyed by international games. In turn this has meant rugby has been unable to produce the kind of Michael Owen or David Beckham style heroes that encourage children to both follow the game and just as importantly play the game. For many, Rugby Union on television (and in general) starts and finishes with the Five Nations and World Cup.


  It is our view that Rugby Union at a professional level cannot emulate the financial success of soccer, and many rugby clubs will have to recognise that in future they will need to operate on a semi-professional basis. The sport's attraction will continue to be underpinned by the influx of foreign stars, thereby diminishing the attraction of professional rugby for home-grown talent, rugby academies and broadcasting. Clubs will therefore have to address the drastic need for more modern and suitably sized stadia which can offer the kind of high quality facilities that spectators expect. Profit can be achieved through the production and delivery of a high quality exciting product where cost controls take priority and fall in line with reasonable revenue expectations.

  We believe that a severance of the administrative links between the professional and amateur game is required to provide clarity of vision. There needs to be a rapid improvement in the professional management and particularly the marketing of rugby and rugby clubs. On a playing level the sport desperately needs to become more user friendly in order to enhance its attraction to the general public and to underpin further investment by broadcasters. Finally, the international game needs to become more accessible to the general public. The predominance of corporate entertaining and the exclusivity of Twickenham urgently needs to be addressed.


  Lee Manning FCA (Buchler Phillips—Financial Consulting services)

  Lee Manning is a partner at Buchler Phillips, specialising in corporate recovery and financial restructuring. He has carried out a number of financial reviews for professional football clubs including Millwall FC, Crystal Palace FC, Portsmouth FC and a high profile Third Division club. He is currently joint supervisor of the CVA of Millwall Holdings Plc and Millwall FC.

  Lee Manning is also currently joint administrator for Richmond Football Club limited, a First Division, professional rugby club. He is also advising a local authority on funding negotiations with a tenant club in the GM Conference League. In addition the partners of Buchler Phillips were administrators for Moseley Rugby Club, Court appointed receivers of Coventry Rugby Club and current joint administrative receivers of Luton Town Football Club.

July 1999

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Prepared 14 December 1999