South African Rugby Bucking The Trend And Turning A Profit
South African Rugby Is The Only Real Thing That Works In South Africa And Why The People Are Proud Of The Team.
South African rugby is the one of only two rugby nations globally making a profit from the sport with the other being England. The big difference is England sold off 27% of future revenue to CVC a private equity firm. Whatever profits they make they are having to give up a fair chunk for ever. South Africa vetoed this idea when they were approached with a similar deal and the profit they make stays in rugby.
For the first time this year commercial revenue from advertising has surpassed television revenue and is set to continue to rise. Marketing and selling advertising space is far easier when you are back to back world champions with everyone wanting a piece of the action. Just ask the top Formula One teams who can charge double or triple for the adverts on their cars than those at the back of the grid. Everyone loves a winner and companies are prepared to pay top dollar to be part of the journey.
The new revenue is not only helping South African rugby but other teams from Europe who are playing in the United Rugby Championship, The Champions Cup and The European Rugby Cup. This year it was announced that South African rugby would become the sixth shareholder in the Pro Rugby Championship DAC. The other shareholders being Irish rugby, Welsh rugby, Scottish rugby, Italian rugby and the CVC Capital partners.
With the South African teams now involved which the Irish were firmly against at one point they have bought in new major sponsors. All the clubs involved in this tournament are benefitting from the increased revenue on offer. Invested came in as title sponsors and Vodacom have added extra sponsorship. These clubs will all turn a profit and why the English based teams wanted to scupper this event and create a new cup tournament so they would also be included.
The profit being made by the England Rugby Football Union like I said is being shared with an investment partner being CVC so whatever the profit they make it is already being diluted. The plan is to share some of the profit with the English Rugby clubs, but it is looking far too small to make much of a difference.
The English rugby clubs are reportedly losing a combined 34 million GBP per season and have racked up an eye watering 340 million worth of debt. Giving each club 2 million GBP annually is only paying off the interest on that debt and is not fixing the real problem being lack of revenue.
I find it quite ironic that England rugby has dominated and bossed European rugby for so long and the smaller unions like the Irish, Scottish and Welsh are now sitting on the other side of the fence benefitting from their partnership with SA Rugby.
Next year it is rumored Croke Park in Ireland will host the 4th test between New Zealand and South Africa which will help boost Irish rugby's coffers along with those of SA and New Zealand. Talking of next years New Zealand tour to SA this is all about making money for New Zealand who are in dire straits having sold off nearly 6% of their revenue to Silver Lake Investments. South Africa is where the money is in rugby and this is all down to being the dominant force in world rugby.
When you have school rugby coaches earning more than coaches coaching international teams it is easy to see why everyone wants a piece of the pie. The difference between SA and the rest is they got their house in order back in 2018 concentrating on the grass roots level of the sport and today most school boy rugby matches are broadcast or streamed on live television to millions around the world. Parents who work on Saturdays can watch their kids playing and not miss out. This is something the other countries do not have and it is not unusual to see 15K supporters attending school matches. School teams have major sponsorship deals rivaling professional teams and facilities professional clubs can only dream about. Rugby as a sport is growing in South Africa because they have got the grass root level support in place.
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