Warburg Dillon Read, one of the world's leading investment banks, has been asked to investigate a possible securitisation of some of the future revenues from broadcasting rights, sponsorship deals and advertising enjoyed by the home unions in England, Ireland, Scotland and Wales. Under the proposed scheme, the unions would sell off a percentage of what they expect to raise in the form of a financial bond.
The game would benefit almost immediately. Clubs in financial straits would have much of their present burdens alleviated, while the grassroots would also benefit. Estimates of the amount that would be raised range from a conservative pounds 250m to pounds 600m.
The initiative for the proposals came from Dr Tony O'Reilly, the former Ireland and Lions international who is chairman of Independent News & Media, publishers of The Independent.
Fran Cotton, chairman of Club England, the Rugby Football Union committee responsible for the upper levels of the game, said: "This is a major decision in rugby history. I think pounds 250m is the minimum. It could be as much as pounds 500m or pounds 600m. It will give financial strength to the unions and enable them to restructure the game from top to bottom. They will also be able to refinance the debts they have at a lower interest rate than their current borrowing.
"It will also prevent any predator coming in to take over the game. The soul of rugby is no longer for sale to anyone. Control of the game can now be retained by the law-makers rather than being handed over to investors who are looking for a return on their financial input."
Brian Baister, chairman of the RFU, said: "No details have been put before us on paper. We know only what our International Board representatives were told in Italy by Allan Hosie, chairman of the Six Nations committee. But when we have a formal document we will discuss it at our management board meeting on Wednesday.
"If it is viable it would give us a price on the game and would make sure we would not undersell the game, which is improving all the time. It means that it will become a seller's market when we sell the game."
News of the scheme followed the announcement last week of two similar plans for the restructuring of English rugby, one put forward by Tom Walkinshaw, the owner of Gloucester, the other by Rob Andrew, who headed an RFU-backed task force.
Cotton said: "This scheme leaves the Walkinshaw plan out of sight. There was pounds 85m on offer from unnamed sources; we are talking of far greater sums of money with this bond. And this also shows the benefits of Rob Andrew's plan, which has laid down the requirements for a strong English team and a strong English game."
Leicester's coach, Dean Richards, a member of Andrew's working party, said: "If people are talking of that amount of money to make the game a viable product then this scheme has to be looked at very closely."
Matt Dawson, the England scrum-half, also welcomed the news. "It is encouraging that this proposal is on the table and being considered by everyone," he said. "It is better for rugby as a whole that no one gets sidetracked by individual unions or clubs. As long as clubs and unions meet somewhere in the middle it can only be good for the game."
Among other benefits, the Warburg scheme would allow the home unions to sort out the debts they have incurred in improving stadiums. The RFU, for example, is servicing a debt of pounds 33m for Twickenham, which it is repaying at around nine per cent (pounds 3m per year). It could, in theory, borrow the capital sum, repay the original mortgage and then repay the new loan at much-reduced interest.
The former secretary of the RFU, Tony Hallett, whose Richmond club this year became one of the victims of professionalism, said: "I wish something like this had been in place in time to help Richmond. But it still gives us a chance. I think anything that gives the game funding from grass roots up has to be very good."
He added: "There is a need to develop the game across the whole of the country and that takes cash. Right now there are pockets of the game and large tracts where there is no rugby union. This proposal will also help with the infrastructure on the developmental side with support for the youth game, the academy, and under 21s."