250 million reasons game can hope for best

Chris Rea suggests that the City manoeuvre could provide the foundations for a flourishing future

Is it possible that the final days of the millennium and this last turbulent decade will produce the harmony and stability to steer rugby union peacefully into the next? The announcement that Warburg Dillon Read, the investment bank, have been asked to present their plans to the Home Unions for securitising the game's assets to the tune of at least £250m is more than just seasonal good cheer for a sport which is fighting a rearguard action on so many different fronts.

Is it possible that the final days of the millennium and this last turbulent decade will produce the harmony and stability to steer rugby union peacefully into the next? The announcement that Warburg Dillon Read, the investment bank, have been asked to present their plans to the Home Unions for securitising the game's assets to the tune of at least £250m is more than just seasonal good cheer for a sport which is fighting a rearguard action on so many different fronts.

The proposal is that the revenues from broadcasting, sponsorship and advertising should be securitised, a process which is not unlike taking out a mortgage. It would enable the hard-pressed unions to restructure their finances in a way which could regenerate the game from top to bottom. Bill Beaumont, a member of the Rugby Football Union's management board, said yesterday: "Having just heard of the concept, it is something we shall be discussing fully at the management board meeting later this week, but right away I can see that it has huge possibilities, with the potential to create stability for countries, clubs and players."

The unions would have a large degree of autonomy in how they choose to spend and invest the money, but in the case of England, Scotland and Wales, all burdened by the debt of building projects, it offers the opportunity for a thorough refinancing exercise. There is also the chance to create new streams of revenue. The Irish, for example, could decide to rebuild the quaint but now inadequate Lansdowne Road. A 50 per cent increase in their gate takings would presumably be a welcome addition to their annual income.

In the circumstances nothing could be more timely than the findings of Rob Andrew's working party into the structure of the English game. They appear to dovetail perfectly with the securitisation scheme. An English league running alongside a Celtic league and a French or possibly a Franco-Italian competition, then leading to the European Cup, seems an eminently sensible arrangement.

The most controversial element of Andrew's recommendations, the moving of the Six Nations' Championship to the end of the season, although logical in many ways, is a step too far at this stage. Nothing can be done in any case for the next two years, which gives ample time for detailed study and thorough market research. To tamper with such a financially successful property, which would be the bedrock of the securitisation, without very good commercial reasons would be supreme folly.

Above all, however, this plan enables the unions to be masters of their own destiny, with the power to own and control their properties. Here again, Andrew's plans for the English club game seem well suited to this initiative, in that the franchises he has outlined would be jointly owned and run by the RFU and the franchisee. Unencumbered by crippling debt, the clubs could work in partnership with the union to create a strong and healthy structure both at the professional level and the amateur grades below it. There would be no more need for the relentless confrontation which has soured relationships and hampered progress for the past four years.

There is likely to be a hostile reaction from a number of the club owners who have been driving through proposals for a British league. Those clubs supporting Tom Walkinshaw's scheme must commit themselves at a meeting called for Tuesday, but they would be unspeakably foolish were they to do so given this latest initiative by the unions, which, at the very least, deserves to receive a full and fair hearing.

There is far too much uncertainty surrounding the Walkinshaw plan. The key questions have not even been asked, let alone answered. Where is the money for this enterprise coming from? Where and to whom is the money going? Who will be the broadcast partners? Who will own and control the league? Who will own and control the players? These are not matters of fine detail but issues of profound importance to the game.

Within the securitisation scheme lies the opportunity for the sport to create a level of financial security which disappeared with the onset of professionalism four-and-a-half years ago. Since then, as Andrew has said, the game has been in freefall, selling off priceless assets and devouring itself in vain attempts to sustain the unsustainable.

From this venture could emerge a structure which would underpin the development of competitive rugby, amateur and professional. It would be a structure with sufficient financial resource to undertake and sustain the development of the game from top to bottom, along with the professional skill and bargaining power to exploit to the full the not inconsiderable financial opportunities which flow from rugby.

If the rugby unions are to stand as independent and powerful organisations, protected from the threat of hostile approaches from outside the game, they must be able to dictate the changes in the structure of the sport, its laws and the rules by which it is governed. Securitisation does appear to be the opportunity for which rugby union has long been waiting.