Peter Bills: Ofcom decision highlights financial precariousness of English rugby

If you take heed of the cries of anguish from sports bodies like the Rugby Football Union, last week's announcement by Ofcom, the communications regulator, that Sky Sports will have its wings clipped in a financial sense over TV rights, is a disaster.

The result of a 3-year enquiry by Ofcom into Sky's domination over sports rights in British television has concluded that it is charging others far too much for access. The regulatory body announced in a report that such a position of dominance of the market and the tariffs it sets for others to gain access is no longer tenable. Cuts of up to 23 per cent have been proposed.

Of course, this has rung alarm bells in places like Twickenham where negotiating vast TV fees with BSkyB for coverage of the English game has become an assumed right. Perish the thought that a nasty regulatory body like Ofcom, more interested in the consumers and what they are being forced to pay for such a service, might come along and wreck a very cosy, beneficial arrangement.

For the fact is, even in a country like England where the population has ballooned close to 65 million and where hundreds of thousands of young people play the sport, professional rugby still cannot pay its own way. Twickenham may wave balance sheets at critics like myself and say sneeringly "Look at us; we're creaming it."

They may be, but look at a club even as successful as London Wasps, past Heineken and Guinness Premiership champions and home to a multitude of international coaches – Ian McGeechan, Warren Gatland, Shaun Edwards – not to mention a host of big name international players. A booming business? Wasps are seeing crowds down by anything between 1,500 and 2,000 each time they play. Season ticket holders are quietly slipping away, content to buy tickets for the occasional game now rather than pay for every match.

Of course, some of this is to do with the world's worst recession for 80 years. But top class rugby's struggle to pay its own way and run as a successful business long pre-dates the recession.

What has masked the problems of all the English clubs, where losing anything between 1 and 2 million pounds a season is considered the norm, has been two factors; one, the wealthy individual benefactors who have become owners and lost tens of millions collectively over the years since 1995 when the game went professional and secondly, the TV money. Without that, the whole ship would have capsized years ago.

No wonder Francis Baron, Chief Executive of the RFU, rushed to the airwaves this week to denounce the Ofcom decision and warn of the consequences to several sports, rugby included. The game is petrified of seeing a reduction in the money BSkyB will pay to the RFU for TV rights. Twickenham knows that no-one else would pay anything like as much and a reduction in the fees would be catastrophic for Twickenham and the English clubs. Furthermore, Baron's contract to pay the money to the Premier clubs has 7 years to run.

The only trouble was, the man from Twickenham was economical in furnishing his listeners with certain other relevant facts. Of course, it hardly takes a genius to see that if BSkyB are unable to go on charging their rivals such inflated fees for access to their sports rights, that loss will be passed on to governing bodies like the RFU.

But what Baron did not mention, was the amount of wasted money at Twickenham itself and, by inference, the English clubs. Consider, for example, the sum of £100 million, the amount the RFU is giving the English clubs over an 8-year period to help shore up businesses which still cannot stand on their own economic feet, after 15 years of professionalism.

And where has the lion's share of that money gone? To pay for a glut of overseas players who have come into the English game, trousered vast salaries and denied places in the English Premiership club teams to countless numbers of aspiring young English players.

If Baron is sincere about his guardianship of the game's money, why did he not summon his lawyers last year when it became clear that the Premier owners had, allegedly, conspired to divert this £100 million, intended to guarantee the flow of young English talent into the England squad, into their own private clubs and pockets.

This flood tide of overseas players has significantly reduced the number of players available for the England team. Thus, the national side has suffered failure after failure since that famous World Cup triumph seven long years ago. Since then, England has won nothing and continues to look as though they're going to win nothing for another seven years.

Yet the thought of insisting most of that £100 million focuses on the English game, doesn't occur to Twickenham. It has been happy to sit back and see it disappear out of the game in the pockets of Samoans, Tongans, New Zealanders, South Africans, Australians, Argentinians and such like.

The wailing in anguish and gnashing of teeth from people like Baron is because they can see their own profit margins taking a hit because of the Ofcom decision. No wonder he revealed RFU lawyers are studying the judgement with a view to a legal challenge. But perhaps Twickenham would do better to study its own spending habits and make savings there.

For sure, there are plenty to be made.

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