Examination of Witnesses (Questions 360
WEDNESDAY 16 NOVEMBER 2005
Mr Paul Vaughan, Mr Allan Munro and Mr David Moffett
Would it be fair to say that the spur of competition did not do
the BBC any harm in terms of competition?
Mr Vaughan: Absolutely. At the end of the day,
if they want the rights, they ought to earn the rights rather
than just expect to be given themwhich I think was probably
the problem pre-1997, if you take the Six Nations, where complacency
can set in. There is no challenge to them. In fact, the quality
of the production and coverage has dramatically improved since
Sky came onto the scene. I think that covers all sport, not just
Q361 Lord Holme of Cheltenham:
It is difficult for the rugby enthusiast to understand why the
Six Nations is a group B listed event, when, for instance, the
Rugby League Challenge Cup Final is a group A listed event. What
would be your attitude if, in the aftermath of the World Cup and
the much higher levels of interest and enthusiasm about rugby,
the Six Nations became a group A event?
Mr Vaughan: Our view is very much that if you
list and protect events, the broadcaster has to be given the right
funds to be able to buy them at a relatively economic price. Otherwise,
it just cuts away the lifeblood, in terms of the investment that
we need to make, because we would have no revenue, because there
would be no need to bid any relative sum of money.
Mr Moffett: I do not think we would have a problem
with the Six Nations being an A-listed event, provided that they
pay the market rate for what it is. It happens in Australia. In
Australia, they have anti-siphoning laws (as they call them there)
where they have lots of events that are listed, but the sports
that are listed get paid substantial sums of money still by free-to-air
television. It is really more the view, I think, that if you can
get more people to watch the event then that is a good thing,
but they still have to bear the market price for that event. I
think what you are then protecting is the ability for as many
people as possible to watch an event that they want to watch.
As long as it is not seen as some way of getting something for
nothing or at a very reduced rate, I cannot see us having a problem
with that. It is just that still market forces have to prevail.
Q362 Lord King of Bridgwater:You
have talked about the Six Nations and then we have this autumn
series which is happening. I am not quite clear who runs that.
Who runs these other areas? Is it the International Rugby Football
Mr Moffett: Yes. They do not run it. They have
a fixture schedule which comes out, archaically, about once every
12 years. Everybody agrees who they are going to play in the autumn,
and who we are going to play down in the southern hemisphere in
their autumn, our spring. Those games are scheduled, as I have
said, up to 12 years in advance, so this is part of the scheduling.
We run, own and control all that. The actual scheduling of it
is done through the IRB.
Q363 Lord King of Bridgwater:
That is my question. They do not have the negotiating rights.
Mr Moffett: No.
Q364 Lord King of Bridgwater:
If you were to play Australia, it would be for Australia to negotiate
their broadcasting rights and Wales would get a cut of it.
Mr Moffett: No, we do not. They keep their broadcasting
rights and all their gate money and then we keep ours.
Q365 Lord King of Bridgwater:
One hundred per cent.
Mr Moffett: Yes.
Q366 Lord Maxton:
I am interested in this idea of the commercial rate and balancing
what you can get from television rights against having a broadcaster
which gives you exposure, and thereforewhich concerns someone
like myself mostgetting people to play the game or join
clubs and take part in club activities. Because I think it is
worthwhile remembering that, although you get all this income,
each club itself has to generate income as well, and that is part
and parcel of what happens in rugby. How do you do that? Your
income is almost entirely from the Six Nations, is it not, in
Mr Munro: No. Gate receipts
Q367 Lord Maxton:
I meant in broadcasting terms.
Mr Munro: In terms of broadcasting, yes, entirely
from that. It is no real surprise that we have been going through
a tough time over the last few years. We are on the road to recovery
but it is going to be a long haul to get us out of the mire. Inevitably
one of the things that has suffered has been the amount that we
have been able to distribute down through into the club game.
Many clubs like my own, still involved in the club game, have
to go about earning money the way most clubs do anyway, through
subscriptions from the players and former players and so on, through
gate receiptswhich, quite frankly, are not greatand
sponsorship and other functions like fund-raising dinners and
so forth. But quite often you find that these functions tend to
bring the community closer together.
Q368 Lord Maxton:
For some time you did have a deal where they sold the club game
Mr Munro: Yesand also to the BBC before
Q369 Lord Maxton:
The BBC you do not even try.
Mr Munro: We no longer have that.
Q370 Lord Maxton:
They are not interested or you are not interested.
Mr Munro: No, they are not interested.
If rugby had more exposure on the BBC in Scotland, would that
have an impact on the game?
Mr Munro: I believe so, yes.
In the quality and the whole thing coming through?
Mr Munro: I think it gives those people playing
the club game a lot more interest in watching themselves, if you
like, or their direct opponents playing. It generates income lower
down, because not everyone can play international rugby.
I was looking at the Green Paper, and, although it is obviously
not a minority sport in a whole-UK way, it sounds as though it
is veering into a minority sport in Scotland.
Mr Munro: Its numbers have been declining in
Scotland for some time. Our biggest challenge, quite frankly,
apart from the financial problems that we have, is to grow the
numbers of people we have playing the game.
Mr Moffett: I think there are some issues that
underline some of the significant differences between us, especially
with a very powerful union like the RFU. We have a particular
player development policy in Wales, in that we want to bring our
own players through. We actually would like to see a time when
we do not have any foreign players playing for our professional
teams, because in Wales we are about three things: Wales, Wales
and Wales. We need to have enough cash and enough money to be
able to do that if we are going to do it successfully. It is how
you use your money. I am very critical of football in this country,
because the Premier League is a league played in England, it is
not an English premier league. I think that is something that
we are definitely trying to guard against. I know that in the
RFUalthough you can speak for yourselffrom discussions
I have had with Francis Baron and with Paul over the times, there
is an issue to address there. If they are going to do that and
we are going to do that, it is going to take money, to be able
not only just to play the existing players at that level but also
to bring up all the other players that you want to bring up through
the academies. To do that, you need money. I did spend nine months
in Sport England. Sport England provides the RFU with quite a
lot of money for their academies, but we in Wales do not get much
support at all, so we have to get it somewhere else. For us, because
of the nature of our small country and what-have-you, it is largely
BBC sponsorship and gate money.
Q374 Lord King of Bridgwater:
One of the interesting points is to do with devolution. One of
the arguments for it was that things like sport would tend to
do rather better in devolved administrations than they do under
a national government, but you are saying it is not happening
well. You do not have to answer that! It is a complete aside.
One of the interesting things that came out of your evidence is
that the broadcasting revenue you get does not represent quite
such a disproportionate part of the income as it does in cricket.
Was it 26 per cent?
Mr Vaughan: Twenty per cent in England.
Q375 Lord King of Bridgwater:
Is that the sort of figure otherwise?
Mr Moffett: About 33 per cent.
Q376 Lord King of Bridgwater:
Talking just about how the BBC approach their negotiating on this,
they presumably have one ticket in their advantage, which is that
they can make it possible for you to get higher sponsorship income
than would come under the satellite range because they deliver
to a bigger audience and therefore the sponsor is prepared to
pay more for it.
Mr Moffett: I do not think that is true for
us. Certainly an ability to get a sponsor is enhanced by being
on the BBC, because, as I said earlier in my evidence, we suffer
from not having large companies in Wales that we can actually
get into. We are competing with these guys for their sponsors,
because we have to come into England to get a sponsor.
Mr Vaughan: Certainly terrestrial coverage does
enhance the value to a sponsor, but it is the relative value.
That is where we are at the moment. If you take Guinness, who
have come into the premiershipwhich is purely on Sky television
currentlymost of their value is derived through the written
word and newsprint. That is quite interesting in terms of how
you look at the relative value, because everywhere you look in
terms of the papers it is always "the Guinness Premiership".
It is on Sky, where they probably have an average of, say, 100,000
people watching per game, every live game, but there is a lot
of it. If we were to take the Guinness premiership and put it
on terrestrial television, I am pretty sure that the value of
sponsorship that Guinness actually give to the premiership currently
will not increase dramatically.
Q377 Lord King of Bridgwater:
We are getting a bit of a flavour here as to whether the BBC,
in the bidding process and knowing what they really want to go
for and how to go about it against competition, are finding that
they have one or two problems. Are you prepared to talk about
their impressions of their abilities and whether there needs to
be some review? I am talking about television but radio as well,
in which it is said that the people ought to review the ways in
which the BBC goes about its bidding.
Mr Moffett: From our point of view, radio does
not really represent large sums of money. We just add it on to
our total broadcasting contract. I think that there are lessons
that the BBC have to learn about negotiating. That was never more
evidenced than in the negotiations for the European Cup, when
there was a deal to be done at one stage and there was perhaps
a less than aggressive attitude taken. It was a competition that
they should not have lost because of all the other benefits that
they can give, but I think they perhaps set a figure in mind and
they were not going to go past that. Normally, it is not an exact
science, trying to get the money for television rights, it is
completely inexact. It is a matter of what you can negotiate.
Q378 Lord King of Bridgwater:
You used the phrase "the market price" which I was interested
in. I wondered if there really was one.
Mr Moffett: Well, the market price for anything.
I am trying to sell my house at the moment, and I have got it
up at this level and nobody is coming to look at it, so I have
got to see if I can
Q379 Lord King of Bridgwater:
That is what you discover.
Mr Moffett: Through negotiating, yes.