Newcastle’s Red Bull takeover litmus test for Prem Rugby governance
Red Bull’s ownership of Newcastle will be a “litmus test” of the quality of Prem Rugby’s current governance structures, according to a top business management consultant.
The energy drink giant entered English domestic rugby this summer with the purchase of lowly Newcastle, who take on Saracens this evening in their first sell-out since 2018.
But Leonard Curtis’s Alex Cadwallader has urged caution, insisting what is an “encouraging” move for English rugby will come down to how freely Red Bull will be allowed to roam.
“To be able to attract Red Bull is very encouraging and demonstrates that a seasoned and serious investor still sees value in owning an English Prem Rugby club,” the former Newcastle player says.
“Red Bull have a good track record in creating efficient structures that produce competitive teams. They have often felt comfortable challenging the old ways of doing things and will no doubt have some fresh ideas.”
A Leonard Curtis Rugby Finance report released last year stated that losses across Prem Rugby topped £300m, with Newcastle losing £2.4m in 2022-23 with debts of nearly £40m.
Prem Rugby governance
“In terms of increasing Newcastle’s revenue, this will not be an overnight fix,” Cadwallader adds.
“The litmus test for Red Bull will be whether the current structures and governance will allow them to implement their plan fully. Will their recruitment plans be restricted by the current salary cap? How will the league react to any joint initiatives with any of their other sports teams? Will they want more control of their key assets, the players, than the various unions will allow?”
Prem Rugby has reportedly explored franchising with many in the game admitting something needs to change to turn the league’s teams profitable amid the rise of the R360 breakaway.
Cadwallader concluded: “As our first report showed, the current model hasn’t created any sustained financial success across Prem Rugby.
“Red Bull have clearly identified Newcastle as an opportunity to make a real impact, and their new approach may unlock the potential of the domestic game in England. Hopefully they will develop and identify a successful model that others can adopt going forward.”