Playing the Same Game Differently

England’s victory over Wales on the opening weekend of the 2010 Six Nations championship was a reversal of recent form, but also a reflection of which of the two nations is in the commercial ascendancy.


During the Six Nations, Welshmen support two teams: Wales and whoever is playing against England. Needless to say, English rugby’s dismal decline since the 2003 World Cup has been a source of some amusement to their near neighbours who have thrived during England’s fallow years, winning Grand Slams in 2005, 2008 and coming within a kick of one in 2009. So how do the English Rugby Union (RFU) continue to sell out Twickenham stadium even though the team hasn’t played a decent game of rugby in seven years while the Welsh Rugby Union (WRU) live in perpetual fear of fans not showing up? Why do O2, Guinness, Nike and Powerade continue to view English rugby as the best return on investment? The RFU’s commercial director Paul Vaughan thinks he knows why: “England is the biggest rugby market in the world and the audience that follows the game here is high value to sponsors and broadcasters. When we work with sponsors they know that they are buying access to an excellent market.” But what of the ‘on-field product’? Surely the purpose of the RFU is to produce the best international side possible? “Of course losing is never easy,” says Vaughan. “You would love to be able to win all the time, but you have to live within your means.” That attitude is radically different from that of Steve Phillips, group finance director for the WRU and Millennium Stadium, who says: “As a brand we want the game day experience to be special, we want people to turn up because of an epic game or because they like the way the team plays. “If we started losing a lot of matches, there would definitely be an impact on ticket revenue and, depending on where we were in our sponsorship cycles, there might be an impact there too. “We’re very dependent on team performance. It doesn’t affect things like broadcasting money but ticket sales are massively affected. When we won the Grand Slam in 2008 you couldn’t get a ticket for love nor money, and in 2009 we came close again and ticket sales were strong. But if the team isn’t successful, it can look different. You’ll see it have an effect on hospitality as well because if a ticket is perceived as being easy to come across, then the value of a hospitality SPECIAL REPORT | RUGBY UNION SportsPro Magazine | 109 England’s victory over Wales on the opening weekend of the 2010 Six Nations championship was a reversal of recent form, but also a reflection of which of the two nations is in the commercial ascendancy. PLAyIng ThE SAmE gAmE dIffEREnTLy By Tom Henry England’s Danny Care, chased by Welshman Shane Williams, dives for the line during the Six Nations match between the two countries at Twickenham on Saturday 6th February 2010 offering drops. And of course if we are successful, we are attractive to sponsors.” However, across the Severn Bridge in England, winning has not only appeared an anachronistic concept recently but is now almost an irrelevance as far as capitalisation goes. Games at Twickenham generated UK£29.2 million for the RFU last year, accounting for a quarter of their UK£118 million turnover. The union’s gate receipts have actually increased by UK£4.1million since the 2006-2007 season, when England mystifyingly reached the final of the World Cup in France. Vaughan, a genuine rugby fan and canny commercial operator, is understandably pleased with the RFU’s position in the marketplace: “People say tickets are expensive at Twickenham, but it’s only what the market will bear. We sold out every game during the 2009 Autumn internationals except for Argentina and, even then, we had 75,000. When I started working here in 2001, tickets were underpriced so we started looking at what the big football clubs were charging and figured out how that could apply to our market.” Even in terminology, the two unions strike a very different chord. The RFU talk in terms of demographics and markets whereas the WRU are more likely refer to spectators and fans. Far from mere semantics, the vocabulary used points to two very different business models. The RFU are trying to create a ‘perfect circle’ between affluent fans and eager sponsors by acting as a mediator between the two, whereas the WRU are involved in an ‘end to end’ market, supplying a product directly to the public. The point can be illustrated with a quick bit of maths: the WRU turned over UK£50 million last year and only UK£9 million of that came from sponsorship. A straight line can be drawn from team performance to game day attendance to profitability. That problem looks like it won’t be improving any time soon as Phillips admits that the WRU have seen a drop in commercial income during the last two years and also a drop in hospitality. Hospitality and experiential marketing, meanwhile, have been a key component of the RFU’s commercialisation in recent years. O2, the team’s principal sponsor, are a key example. Rugby as a sport and English rugby as a brand do not have any obvious synergies with O2. When the first sponsorship deal was struck between the two companies – then BT Cellnet – over 12 years ago, the rugby demographic was ideal for their product. But in 2010, O2 is the company of the iPhone and unlimited text message deals; in simple terms, it has grown up and become cool. So why maintain a relationship with the RFU? Sources close to O2 articulate it as an “access to privilege”, an acknowledgment of the type of people who are entertaining and being entertained on a matchday at Twickenham. However O2’s involvement with England has undoubtedly been good for the game. As Vaughan puts it: “We try to find parties that are willing not just to put money in but to be proactive in various different projects. “O2 are very good at getting behind community rugby events. They were heavily involved with our ‘Go Play’ initiative, which was designed to increase player participation after the 2003 World Cup. They also sponsor events like our ‘Scrum on the Beach’. They have been very loyal supporters of the union over the years.” Of course Wales will never beat the RFU in a straight commercial arm wrestle; the size of SPECIAL REPORT | RUGBY UNION 110 | Cardiff’s Millennium Stadium, which has a capacity of 74,500 was built for the 1999 Rugby World Cup and is now firmly established as the headquarters of the Welsh Rugby Union and Welsh national soccer team each market makes that an impossibility. But it is nonetheless noteworthy that in a country where children are born with gumshields in their mouths, the game does not draw greater commercial appeal as it does in New Zealand for example. But Phillips is confident that the game will continue to prosper in Wales, providing the team continues to win: “Last September we signed a participation agreement with the regions worth UK£6 million to facilitate player release for international duty. This agreement also means that regions are incentivised to produce Welsh qualified players and limit the number of non-Welsh players in each squad. This agreement will last for five years. “Once you have a premium product on the pitch then things start to fall into place. The more money we can chuck in the top end of the game, the more money we can distribute to the international game, the elite regions, semi-pro and grassroots.” It is clear that the WRU see player development as the commercial future: “We like to heavily incentivise our players. When they won the Grand Slam in 2008, they received UK£3 million. Last year they didn’t do so well and got UK£1.6million.” And the RFU? Well win, lose or draw, the RFU will be generating new business. Its lucrative deal with BSkyB for example is unique among the home unions. Vaughan says: “As far as TV revenue goes, we’re pretty well covered for the big games. We’re lucky to have a mixed contract package with Sky and the BBC. The BBC covers our home games in the Six Nations but Sky cover the Autumn internationals, U20’s internationals, Saxons Games, the varsity, Daily Mail schools and the Army and Navy game.” Although the sum for the current deal is undisclosed, previous incarnations of the broadcast package were worth over UK£85 million. But no matter how commercially successful the RFU have been, Vaughan acknowledges that ultimately fans want to see the team winning again. “If you look at the team who won the World Cup,” he says “there were guys in there like Lawrence Dallaglio, Martin Johnson, Neil Back – you know, really passionate guys driven by pride in the shirt and a will to win. We’re now trying to build something similar for the World Cup in 2015, a group that can come through these tough times together.” The fact that the RFU can plan this far ahead in relative calm is due in no small part to extra monies they are able to generate for themselves which are not reliant on team performance. It is the difference between selling goods out of your own shop, and owning the street on which the shop is built. For fans of either team of course there is only one way to judge a winner; what happens on the pitch is the ultimate test of who is in the ascendancy. But one cannot help but get the feeling that, as rugby matures into professionalism, the RFU and the WRU are playing different games. 109 2010 04 Tom Henry {filedir_26}SportsProMag_issue20_109-111.pdf [8070] [sportspro_april_2010] SportsPro April 2010