Rugby Union aims to convert new revenues

By Russell Padmore Business reporter, BBC World Service

Club such as Wasps are looking to sell the game to a wider audience

The decision makers who have guided the financial rise of rugby union are determined to avoid the over-spending pitfalls experienced by some football clubs.

The debt burdens that forced English clubs like Portsmouth or Crystal Palace into administration are a lesson to heed.

In the amateur era, before 1995, rugby union's financial lifeblood was the income generated by international matches.

However in Europe clubs like Leinster and Munster in Ireland, or the French giants Stade Francais, are proving to be lucrative operations.

The growing attendances for Guinness Premiership matches in England have even tempted clubs like Wasps and Saracens to play each other at Wembley, the national stadium for football.

Family challenge

Wealthy club owners like Steve Hayes of Wasps know they need to sell the game.

"The competition we have is not just other rugby clubs or football clubs," he says.

Wasps owner Steve Hayes believes fans wants exciting rugby

"It's everything a family can do now, which is cinema, ice skating, bowling, you know there's lot for people to do."

Wasps has been presented with a reported £1m tax bill from HMRC, but Mr Hayes says the club is is "very confident about our future on and off the pitch".

"The short and long-term prospects here, including the development of a new stadium, are very exciting and show the good health of Wasps."

Rugby Union's marketing machine went into overdrive ahead of this past weekend's crucial St George's Day match between Wasps and Bath.

The recent shirt signing session at one of London's plush department stores with X Factor winner Alexandra Burke, is testament to the attempts to push the sport further into the public consciousness.

'More interest'

All businesses know the value of getting endorsement from a person who is a favourite with the public, and they will not have been disappointed by the fans' reaction to Burke's enthusiasm for the game.

However, it is all very different from when players like Simon Shaw at Wasps first took to the field in the amateur era.

"The more interest we generate for the game the better," he says.

Rugby Union is looking to secure its own X Factor with fans

"I felt that when it turned professional in 1995 it should have been that way from the start.

"These one-off games are fantastic in principle, but to try and generate bigger crowds week-in week-out, that's the ultimate aim."

But, despite all these positive signs, English rugby has had warning signals to keep its finances in order.

Three professional clubs - Coventry, London Welsh and Birmingham Solihull - all nearly folded, and are only still playing thanks to wealthy backers.

Sustainability

In some sports players are enjoying telephone number salaries, but in England the rugby union clubs are keeping costs in check with a cap on wages paid to players.

Not all of our clubs are making money so it's important that we grow the revenue, but at the same time control the costs and the salary cap is a key part of that Mark McCafferty, chief executive of Premier Rugby

The downside is that good players might be tempted to sign for teams abroad, where there is no salary cap.

"You have to keep your costs and your revenues in line in a way that you can sustain," says Mark McCafferty, chief executive of Premier Rugby, the body which represents the 12 professional Rugby Union clubs who compete in the Guinness Premiership

"Not all of our clubs are making money so it's important that we grow the revenue, but at the same time control the costs and the salary cap is a key part of that."

'Huge appetite'

The advertising industry is attracted to the fact that many of the game's followers are in the ABC1 category of consumers, representing those at the top end of salary earners.

Some Rugby Union facts Record 1.5 million fans at matches in England this season More than 628,000 supporters watched Magners Celtic games Tickets to English rugby matches as cheap as £5

"There's a huge appetite for quality live sport, if it's presented and priced properly and that seems to be what rugby union has got absolutely spot on at present," says Kevin Roberts, editorial director of Sport Business.

One of the attraction for fans is that it is cheaper to get through rugby union turnstiles than the cost of seeing a top football match.

It can cost £50 ($76) to watch a match in England's top flight football Premier League.

Compare that with tickets at £5 for the recent rugby union match at Wembley between Harlequins and Saracens.

"It is possible to get tickets for most games and they're reasonably priced," Mr Roberts adds, noting that post-recession families are still looking for economical days out.

Financial discipline

In business, corporations want to dominate their industry and it is the same in sport as teams react to the desire of fans for success.

Football clubs seeking instant success have been tempted to spend money buying top players.

But if the financial gains of victory do not match their outgoing costs then teams can collapse, unable to pay their debts.

Fifteen years into its professional era rugby union is still learning financial discipline, but the business people running the sport are determined to avoid the mistakes made in football.

It is developing slowly but surely, a fact that is highlighted by the number of live rugby matches shown on television.

When it comes to keeping supporters interested rugby union chiefs could do well to heed the words of the famous hotel magnate, John Willard Marriott.

"If customers are treated right, they'll come back."

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