Examination of Witnesses (Questions 1239
TUESDAY 13 DECEMBER 2005
Mr Mark McCafferty
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!
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.
As far as the Premiership is concerned, you signed a five-year
contract with Sky Sports in 2004?
Mr McCafferty: That is right, yes.
That is for all domestic television rights so it is an exclusive
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.
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.
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
Q1245 Lord King of Bridgwater:
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.
I think I am still with you. The third is the what, is the cost
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.
What is the total of revenues it provides?
Mr McCafferty: It is between £35 and £40
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.
Mr McCafferty: Of the business of Premiership
Rugby's clubs about 15 per cent of it is made up of broadcasting
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
Mr McCafferty: It is in the region of £12
to £14 million.
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.
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.
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.
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.
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