Does Dyson’s Bath investment signal a new era for Prem Rugby?
If there was major surprise surrounding Red Bull’s entry into Prem Rugby last year, fewer heads would have been turned by news this week of Sir James Dyson’s investment in Bath. Probably because plenty had assumed he was paying for the upkeep of the club anyway.
The deal – likely a debt-for-equity swap – by one of Britain’s richest men, however, is a turning point for Prem Rugby in a way that the investment in Newcastle wasn’t.
The Tyneside club represented a sale out of necessity; Bath’s investment – for significantly more money – came at least half a decade before the West Country club’s reserves could have dwindled.
And it signals a growing trend in stake sales across England’s top flight. No longer can the local (mostly) businessmen who have propped up the league for three decades continue to find pennies in their pockets. New capital is on its way in and for many that is exciting. For some it spells the end to the amateur feel rugby has been trying to shake off for years.
Prem Rugby boss
Prem Rugby chief Simon Massie-Taylor welcomed Dyson’s investment; of course he would. But the backing of a long-time fan is hardly game-changing. One thinks back to former Goldman Sachs investment banker Jack Ingles’ investment in Gloucester Rugby. He was a fan of the club receiving his investment, too.
But with the apparent shift from those who have traditionally owned rugby clubs in England to a new dimension of cash, the sport is changing in a way it hasn’t since professionalism.
On the outside looking in, Prem Rugby isn’t exactly a sexy asset class: a major private equity player, CVC Capital Partners, takes an annual sum out of the game, in a deal that helped save the sport half a decade ago; the television deal, the foundation of a strong Premier League and The Hundred, is poor; and mounting interest on Covid-19 loans risks putting prospective investors off.
But somebody will jump the gun, because there is money to be made… somewhere. Losses are relatively low in comparison to leagues across other sports and the financial commitment is light versus the $300m salary cap in NFL or the travel of Formula 1, for example.
A number of Champ Rugby figures have told Morning Wire that recent changes to the English structure – whereby promotion to the Prem will be restricted to those with the means (and backing) to compete – could spark a flurry of investment in second-tier clubs with ambitious plans to fight at the top of the game.
But until we see a new style of investor, paying top dollar for the asset they’ll own, understanding the financial landscape of the game is a difficult one.
Dyson hoovering up shares
Dyson, worth an estimated £20bn, will prop up Bath for its next era of competition having helped the club reduce its debts. The vacuum cleaner tycoon says he will eventually hand the club off to his kids. Lucky them.
But unless clubs like Bath can stop those debts mounting once more, the cycle will only be delayed rather than broken.
Rugby needs new capital, urgently. Red Bull provided it, but at a cut-price cost. It is great for them but would they have bothered if the asking price wasn’t £1 plus extras? Dyson’s injection, meanwhile, comes after supporting the club as a sponsor.
New British, European, American and Asian capital is what Prem Rugby needs. New ideas, bullish owners and the urge to shake up the system.
Prem Rugby are rightly riding the hype train of investment announcements, but neither are too electric in the grand scheme of things.
The wacky owners are yet to join the party. And if they do, the sport could get an awful lot more interesting.