Select Committee on BBC Charter Review Minutes of Evidence


Examination of Witnesses (Questions 1239 - 1259)

TUESDAY 13 DECEMBER 2005

Mr Mark McCafferty

  Q1239  Chairman: Thank you very much for coming, Mr McCafferty. Perhaps I should explain that the Select Committee has done one report already and we are now looking at a number of areas which we really did not have time to do justice to. Sport is one, the World Service is another, religion is another, so rather a mixture of subjects, but today obviously we are doing sport and what we would like to understand is Premier Rugby League and its implications. Perhaps I should declare an interest straightaway in as much as I am Chairman of a company that sponsors Leicester Tigers which, as you know, is the leading rugby club in the country.

  Mr McCafferty: Some people would take issue with you over that, Chairman, but I am sure we respect your opinion!

  Q1240  Chairman: There we are. Can you just tell us the role of Premier Rugby in relation to the sale of broadcasting rights?

  Mr McCafferty: Yes, there are 12 professional Rugby Union clubs in the Premiership and they own Premier Rugby Ltd, which is a company, and that is the company that I run executively on their behalf. One of the things that we are tasked by them with doing on their behalf is to sell the broadcasting rights for the competitions in which they participate. There are three competitions: the Premiership itself, where we sell the broadcasting rights for that competition; there is the Powergen Cup which is sometimes referred to in shorthand as the Anglo-Welsh Cup, which is a new tournament for this year where we operate in selling the broadcasting rights with the Rugby Football Union and the Welsh Rugby Union; and then the third competition in which they participate is the European Cup competitions, and there our clubs are clubs from one of six countries and we play a role in contributing to the sale of these broadcasting rights, but they are sold by a separate organisation on behalf of all of the clubs in the six countries involved in Europe.

  Q1241  Chairman: As far as the Premiership is concerned, you signed a five-year contract with Sky Sports in 2004?

  Mr McCafferty: That is right, yes.

  Q1242  Chairman: That is for all domestic television rights so it is an exclusive contract?

  Mr McCafferty: Yes, the highlights from the Premiership are part of a package however alongside the autumn internationals of England which are sold to the BBC alongside the rights to cover the Powergen Cup, as I mentioned.

  Q1243  Chairman: So it is rather like Premier Football to that extent that the live rights go to Sky but the BBC can use the highlights, which is really a recording of the games?

  Mr McCafferty: Correct.

  Q1244  Chairman: Do we know how much Sky paid for those rights?

  Mr McCafferty: It is not a public number, however there are two ways of looking at it. As far as the revenues which are generated centrally on behalf of the 12 clubs by Premier Rugby, it is about one-third of the total revenues we generate there, and the other revenues come from title sponsorship rights, such as currently with Guinness, and partner programmes which we develop around the competitions. Looked at a second way, if you take the collective turnover of the 12 clubs and you net out the transfers that go between us as their central organisation and the clubs, then the turnover of those clubs is probably in excess of £90 million.

  Q1245  Lord King of Bridgwater: 90?

  Mr McCafferty: £90 million, which makes it a larger collective organisation than the Rugby Football Union, but within that £90 million about 15 per cent or so would be from television rights.

  Q1246  Chairman: I think I am still with you. The third is the what, is the cost of the—?

  Mr McCafferty: The organisation of Premier Rugby. The company Premier Rugby is at the centre. Of the revenues it generates, about a third comes from broadcasting.

  Q1247  Chairman: What is the total of revenues it provides?

  Mr McCafferty: It is between £35 and £40 million.

  Q1248  Chairman: Then another way, do I add one to the other so to speak?

  Mr McCafferty: Not quite. You have to take the revenue of the 12 clubs and then you net out the money that we transfer from the centre to them because effectively the monies that are generated at the centre, once costs are taken care of, are then distributed out to all clubs, so you have to net off to not double count.

  Q1249  Chairman: Okay.

  Mr McCafferty: Of the business of Premiership Rugby's clubs about 15 per cent of it is made up of broadcasting rights.

  Q1250  Chairman: I am sure my economist friends around the Committee will have worked out the exact figure by now; why do you not just give it to us?

  Mr McCafferty: It is in the region of £12 to £14 million.

  Q1251  Chairman: Thank you very much. In getting that was there a great competition between the BBC and Sky?

  Mr McCafferty: Yes, it is a package that goes out for competitive tender not only for the Premiership but also the other package of rights that I mentioned of the highlights and the Powergen Cup.

  Q1252  Chairman: What are the audience figures for Premiership Rugby on BSkyB; do we know that?

  Mr McCafferty: In terms of in-home figures it averages about 120,000 to 130,000. Then it would rise obviously as it goes through the season towards the end of season games and as we get towards the Premiership Final it would probably peak at around 200,000. That excludes any audience viewing within rugby clubs or pubs or any of that.

  Q1253  Chairman: And Sky sell that on, do they, to pubs and clubs?

  Mr McCafferty: Yes, but obviously we do not see the viewing figures that are captured from that. This is just the viewing figures from within homes.

  Q1254  Chairman: Do you know how that compares with rugby on free-to-air television?

  Mr McCafferty: Our latest experience is with the Powergen Cup and we have had so far this season three televised rounds of that, and of the games that were chosen for broadcasting I think the first two games were 1.3 million and the last game, which was a Leicester Tigers Northampton Saints game, which was a decisive game for qualification, was 1.9 million viewers.

  Q1255  Chairman: Two million?

  Mr McCafferty: So closing in on two million which is a very significant number obviously.

  Chairman: I told you, yes! Lord Maxton?

  Q1256  Lord Maxton: That is a very significant difference between free-to-air television and satellite, is it not?

  Mr McCafferty: Yes.

  Q1257  Lord Maxton: So surely the bigger audience encourages more people to actually take part in the game? Should you be looking more at not just the cash return but also the responsibility you have to the game at all its levels?

  Mr McCafferty: I think we do. That is why from our point of view a balance between the satellite coverage of the Premiership and free-to-air coverage of highlights and live coverage of cup competition is quite effective in promoting the game as well as generating commercial returns for the organisation which has to sustain that game.

  Q1258  Lord Maxton: What about the Heineken Cup; how do you sell that? Do you sell that in relationship to whom? You are part of it but only a segment?

  Mr McCafferty: Correct, we are one of six countries involved in that.

  Q1259  Lord Maxton: You form another company?

  Mr McCafferty: There is a separate company called ERC. In fact, the shareholders in that company are the Unions themselves.


 
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