The interim chief executive of the WRU Steve Phillips would be receptive to future Six Nations tournaments being televised by pay-for-view providers, while the involvement of private equity CVC Capital Partners in both the Guinness Pro-14 and the English Premiership raises the potential for a new British Isles league.
Former union finance director Mr Phillips, who hopes to see the interim role becoming a permanent arrangement, said that the recent deal with Amazon Prime for the Autumn Nations Cup, reportedly worth £15m shared between the participating unions, was a welcomed development, with the safety net in Wales that games will also be broadcast free to air by Welsh language S4C.
With the game globally hit by the financial fallout of the pandemic and players agreeing to salary cuts, Mr Phillips said the union is in constructive discussions with NatWest Bank over a new funding agreement, having already struck with the bank a separate deal that will see £20m going to the four professional regions in Wales (who will be liable for the interest, but not the capital) via Coronavirus Large Business Interruption Loan Scheme (CLBILS) finance.
The CLBILS deal with NatWest is expected to be signed off shortly.
The WRU has an existing £35m funding facility with NatWest, struck in 2018.
Some £15m is ringfenced for Ebitda (earnings before interest, taxes, depreciation, and amortisation) enhancing capital projects, with £20m in the form of a working capital facility. To date around £5m has been drawn down by the union from the £15m capital project pot, of which around £3m was invested at the Principality Stadium in a so called diesel rotary uninterruptible power supply device (DRUPS), which has provided a safety net in the event of a loss of power during rugby internationals and other events and being more cost effective than having to hire per event diesel back up generators.
Only firms with annual revenues of more than £45m can access CLBILS, so Mr Phillips said it made sense for the WRU to leverage its balance sheet — it generated revenues of £90m in its last financial year — to support the regions. Under CLBILS, for which the 海角视频 Government is providing an 80% guarantee to accredited lenders in the case of default, capital repayments are exempted in year one. If capital remains after three years, borrowers have to refinance, which is projected to be the case with the WRU.
Mr Phillips said: “The CLBILS loan is being targeted solely at helping the regions as we have the balance sheet to do that.
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“There is also a different piece ongoing on how the WRU copes. So, we are revisiting some of the existing facilities that we have with NatWest. Within that {£35m] facility there is £15m for Ebitda enhancing capital projects, we are £5m into that, but I cannot see us doing any Ebitda enhancing projects anytime soon, so given it is already in the existing headroom if we could repurpose say half of that into the working capital facility that would be good and discussions with NatWest are very positive.”
He added: “The Welsh Government and the Development Bank of Wales have also been really helpful and supportive and if we do hit problems with the Six Nations they said they would be there to help, which we are very pleased about.”
Pre-Covid the WRU was able to refinance a number of maturing debentures at the Principality Stadium, from the 1969 and 1999 issues, which generated just over £8m.
Mr Phillips said the WRU had modelled a number of financial scenarios for the Autumn Nations Cup games, ranging from no crowds to some spectator capacity, having identified grounds in London for home matches, as well as for the outstanding Six Nations game against Scotland which was cancelled in March due to the pandemic and which will be played next month.
He also confirmed the Autumn Nations Cup group game against Georgia was .
On the games in London he said: “We have a designated London venue for each of them and we have had to work around the Premier League.
“If you asked me six weeks ago [some crowds] I would have been optimistic, but with all the things going on now it is probably looking less likely given the various outbreaks and localised restrictions. The players prefer to play in front of people and we of course have an obligation to fans that if we can get government approval to let them in, then we should. We have a baseline model of no crowds for the autumn, so any crowd would be upside, which helps mitigate some of the loan.”
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The Amazon Prime deal for the Autumn Nations Cup is on the same percentage share basis agreed for the Six Nations TV deal.
Mr Phillips said: “For the Six Nations England and France are marginally bigger, so we have ended up with a blended average between the two [tournaments] and Wales has an agreed percentage and that has been applied to what Amazon will pay.”
The Six Nations 2021 tournament will be the last year in the current split terrestrial TV deal involving the BBC and ITV.
On the tournament, which is no longer protected by the 海角视频 Government as a jewel in the crown sporting event that has to be shown free to air, also going down a pay to view or pay per view, route, Mr Phillips said: “I think Amazon coming in [autumn tournament] is great news. It’s a new entrant and a massive brand. S4C also has rights which for us in Wales and the Welsh language is very important.”
He added: “On being receptive to the Six Nations from 2022 being through a paid-for TV channel or platform? Yes, we would be. But that would need to be done in conjunction with all the other unions.
“If normality returns we will have a standard programme of Wales games in the autumn of 2021 anyway and because we have now all joined up [home nations on TV deals] we would be doing the media rights all at one time.”
The Guinness Pro-14 league, made up of teams from Wales, Scotland, Ireland and Italy and South Africa, recently struck a deal with private equity firm CVC Capital Partners, which has invested around £120m in return for a minority equity stake of 28%.
The WRU will draw down its guaranteed £30m of funding from the deal over the next four years with CVC’s equity interest ratcheted up accordingly.
Mr Phillips said: “Due to Covid there is a contingency piece in it as well which if you hit all the metrics could see a further £6m or £7m.
“The sooner you draw it down [CVC money] the quicker you get diluted as well. If you don’t believe that CVC can move the commercial dial you should never have done it and we do believe that they can. By the time that we get diluted by 28% we are hopeful that the dial has moved accordingly.”
But couldn’t the unions whether collectively, or individually, have raised similar amounts, without giving away equity in the Pro-14 to a private equity firm with a longer-term exit strategy, with the WRU for example raising finance securitised against future income from the Principality Stadium?
Mr Phillips said: “Those kind of conversations were had and the deal has been done. You have got to take on board that these guys know what they are doing and have a track record in Formula 1 and MotoGP.”
With CVC’s minority equity stake also in the English Premiership, having invested more than £200m in 2018, what are the prospects for a future British Isles league involving clubs and regions in England, Scotland, Wales and Ireland?
Ammanford-born Mr Phillips said: “It is definitely an option and what they [CVC] are very good at, and have demonstrated, is bringing people together. They are big on synergies and ‘banging heads together.’ It’s an option, but it is not the only option. Their pitch was, which they did very well, was based on their track record on what they could do in the commercial space. Their theme is getting returns back to the clubs that are participating.
“There are other options like South Africa. The skill is to have as many options as possible, particularly in these current times.”
There has been speculation that the two current South Africa teams in the Pro-14, although due to Covid, they cannot participate until early next year at the earliest, could be replaced by Super Rugby sides the Bulls, Stormers, Lions and Sharks.
On the current two participates in the Cheetahs and Southern Kings, Mr Phillips said: “We are in regular dialogue with SARU (South African Rugby Union) over this and it is a South African government position that nothing is going to happen before January. We have structured the season such that the South African teams can join later if the South African and other governments allow.”
On bringing in the bigger sides from South Africa into the league, Mr Phillips said: “Until we know more about it is difficult to say. There will be commercial, rugby and season structure issues to consider. On the think list, if you like, is also if all the other Pro-14 countries are participating in the Six Nations are the likes of your Leinsters and Scarlets, who would be depleted because of international call ups, really wanting to be playing some of those South African teams? That again would be all part of any conversation.”
The union, in a joint venture, with the Celtic Manor Resort and property developer Rightacres, backed by L&G, is building a new luxury hotel next to the Principality Stadium on Westgate Street in the centre of Cardiff.
Mr Phillips said: “Pre-Covid the idea was a partial opening in December 2020 with around 100 to 170 rooms with a wider opening in February or March 2021. Now given delays and rescheduling, notwithstanding the fact that there are people on site working with social distancing, we think the earliest we would be open now would be June, 2021, which is kind of okay really considering where we have ended up.”
The WRU has a 80% stake in the region the Dragons, with the remainder held by its chairman David Buttress, who is exploring acquiring the union’s stake.
Mr Phillips, 56, said: “It is a live conversation and willingness on both sides to look at that. However, considering where everyone is at the moment [Covid] we would want more certainty on that.”
He said a potential route for the union divesting its stake in the region could be through taking forward commercial development on the Rodney Parade site, particularly its training pitch area. While at an exploratory stage the union is also looking at the potential for a rugby experience visitor centre.
While it has its critics, Mr Phillips said he is personally supportive of the 60 cap rule, which means unless the threshold is achieved then players have to play for a Welsh region to be selected for international games, or if in England or elsewhere, had signed contracts before being capped.
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He said: “My personal view, and not that of the WRU, is it is a good thing as a consequence of it is that we have seen a lot of Welsh players coming back to play in Wales.”
Any changes would need the approval of the Professional Rugby Board, which oversees the professional game in Wales.
On his relationship with Wales coach Wayne Pivac, Mr Phillips said: “We had a chat last week about how we work together, mutual expectations, and how we help each other. It was very good.”
On the interim status of his role, with previous chief executive Martyn Phillips leaving the union next month, he said: “We have ended up in a good spot with interim as I might think in six months time it is not really for me and equally the WRU might say the same.”
Mr Phillips has been succeeded as finance director in an interim capacity by group financial controller Tim Moss.