Rugby offered pounds 250m cash lifeline

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RUGBY UNION is being offered the chance to earn hundreds of millions of pounds by copying Premiership football and Formula One motor racing.

A plan being put to the British game's ruling bodies this weekend could result in a cash injection of at least pounds 250m and put an end to the financial problems which have cast such a shadow since the introduction of professionalism in 1995.

The scheme, similar to those which raised pounds 850m for Formula One and pounds 75m for Chelsea Football Club, would see the Home Unions, who control the game in England, Scotland, Wales and Ireland, issue a bond securitising television, advertising and sponsorship income over the next 10 years. It will in effect be like taking out a mortgage against future income.

This project is the brainchild of Dr Tony O'Reilly, the former Ireland and Lions international, who is Chairman of Independent News and Media plc, publishers of the Independent on Sunday.

The merchant bank Warburg Dillon Read, who are structuring the plan, say that pounds 250m is a conservative estimate of what could be raised.

It would give the Rugby Football Union the power to introduce many of the proposals outlined last week by the former England fly-half, Rob Andrew, involving a structure of 12 franchises spread over the country.

This could lead to a conflict with the present club owners, especially Tom Walkinshaw, of Gloucester, who is spearheading the clubs' own initiative to start a cross-border British League. He claims to have support of pounds 85m for the league, but the sport's governing bodies are opposed to the plans.

The millions they could now receive from the O'Reilly initiative should give them far greater financial muscle than Walkinshaw's scheme. Where that would leave the owners, some of whom have poured several million pounds into the game, is the next big question.