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‘A £100m offer could be made next month’


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16 minutes ago, Ray Cashmere said:

That would require the RFL to have £100m+ worth of bricks and mortar assets which I'm pretty confident it doesn't have.

Most of the 'value' currently derives from Super League as a commercial entity (insert joke here). I don't see anything contained within that which the RFU would give a second look at. That's *before* you take into account the reputational considerations for all the parties involved...

If, as Hetherington seems to suggest, a new commercial subsidiary will be created under the RFL of which said unnamed investor will have a controlling stake of, they will need to drive the value of TV rights, the sponsorship portfolio and their IP to get a return on investment.

Its nothing to do with bricks and mortar. 

 

Its about taking a stake in future earnings or revenue 

So say the next sky TV deal ciuld be worth say 30 million a year over 5 years 

The venture vultures would take 50 million of that 5 year deal and in effect they would be in a position to regain all of the 100 million in 15 to 20 years 

 

And venture capital deal should be around 250 million 

Edited by The storm
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26 minutes ago, The storm said:

Its nothing to do with bricks and mortar. 

 

Its about taking a stake in future earnings or revenue 

So say the next sky TV deal ciuld be worth say 30 million a year over 5 years 

The venture vultures would take 50 million of that 5 year deal and in effect they would be in a position to regain all of the 100 million in 15 to 20 years 

 

And venture capital deal should be around 250 million 

Without the potential growth opportunities this investment creates there is more chance the next Sky deal will be closer to £10m a year than £30m. 

I dont like venture capital, but it's looking very much like a choice between that or the game continuing to slowly decline.

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4 minutes ago, ATLANTISMAN said:

One question i would ask is what happens to all the commercial deals that clubs have in place?

Some have 2/3/4/5 year deals on the commercial front.

Do they can paid off with compensation.

I really don't see how this would work but maybe I am just a dummy:)

 

 

Paul

 

This deal should not have any impact on individual clubs existing commercial arrangements. This isn't about individual club sponsorships or kit manufacturers, at least not initially, it's a strategic level investment.

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1 hour ago, gingerjon said:

You don't need to grow the asset. Obviously, that's the nicest and fairest way, and if they cared about rugby league it's what they would do so we all hope that that would be their direction. But alternatives exist that are less pleasant. Their only requirement is to make money for themselves. If, at the end of the day, they reason that that could only be achieved by selling all of the assets of British rugby league to the RFU (this is an extreme and unserious suggestion) then that would be the direction they would go in.

Serious question Gingerjon.  Are you saying that an Equity Company can unilaterally take such a decision without consulting their partner?

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Just now, Adelaide Tiger said:

Serious question Gingerjon.  Are you saying that an Equity Company can unilaterally take such a decision without consulting their partner?

That's a really good question and I'm far from being an expert but it would depend on the level of control surrendered in return for the investment. In an extreme example - which I should stress I don't think will happen but, similarly, I don't think we'll get a benign silent partner chucking money our way in return for the feelgood factor of more rugby league happiness - the venture capital do take a controlling interest and/or their continued investment is dependent on certain things happening which, if they do not happen, means the investment must be repaid.

Build a man a fire, and he'll be warm for a day. Set a man on fire, and he'll be warm for the rest of his life. (Terry Pratchett)

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58 minutes ago, The storm said:

Its nothing to do with bricks and mortar. 

 

Its about taking a stake in future earnings or revenue 

So say the next sky TV deal ciuld be worth say 30 million a year over 5 years 

The venture vultures would take 50 million of that 5 year deal and in effect they would be in a position to regain all of the 100 million in 15 to 20 years 

 

And venture capital deal should be around 250 million 

I'm sorry but you're absolutely miles off. You can't just extrapolate the current TV deal over 20 years and assume that Sky will somehow be compelled to pay you the same. The recent re-negotiation proves exactly that. No one is investing £100 million on the hope that that happens. 

 

 

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In a page and a half we have gone from Strategic Investor to Private Equity and then Venture Capital!

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"The history of the world is the history of the triumph of the heartless over the mindless." — Sir Humphrey Appleby.

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36 minutes ago, Ray Cashmere said:

I'm sorry but you're absolutely miles off. You can't just extrapolate the current TV deal over 20 years and assume that Sky will somehow be compelled to pay you the same. The recent re-negotiation proves exactly that. No one is investing £100 million on the hope that that happens. 

 

 

That is my point 

 

Its speculation 

These venture capitalists are vultures 

They dont care as long as they get a return 

So they may well speculate on tv revenues, or international tours or world cup revenue even 

 

They may take a slice of every cherry pie we have 

 

Its dangerous 

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22 minutes ago, GUBRATS said:

Where and on what will the 100 million go ?

My guess would be: 

- A funding facility to enable clubs to bid for infrastructure upgrades

-  Rapidly scaling up OURLeague as a streaming service 

- Staffing costs (especially in the commercial & marketing departments)

- Strategic investment in growth sectors (women's & wheelchair competitions/ established non-heartlands clubs)

 

I'd be surprised if licencing didn't feature as part of this. 

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1 minute ago, GUBRATS said:

Thats the worry 

It wouldn't surprise me though. Some of these owners have got very big loans to their clubs to cover years of financial losses (eg Ken Davy £17m, Ian Lenagan £6m etc). Most owners do it for the love of their clubs but the opportunity to get some of their cash back must still be tempting.

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1 hour ago, GUBRATS said:

Where and on what will the 100 million go ?

I imagine that a minority part of it will go to the SL clubs, the bulk will be used for 

 

30 minutes ago, Ray Cashmere said:

My guess would be: 

- A funding facility to enable clubs to bid for infrastructure upgrades

-  Rapidly scaling up OURLeague as a streaming service 

- Staffing costs (especially in the commercial & marketing departments)

- Strategic investment in growth sectors (women's & wheelchair competitions/ established non-heartlands clubs)

 

I'd be surprised if licencing didn't feature as part of this. 

Agree with this, including some new form of licencing or minimum standards.

I also think some will be put towards building the Commercial arm Hetherington talks about.

Possibly the SL clubs may get a minority slice of the cash up front as a sweetener.

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2 hours ago, The storm said:

That is my point 

 

Its speculation 

These venture capitalists are vultures 

They dont care as long as they get a return 

So they may well speculate on tv revenues, or international tours or world cup revenue even 

 

They may take a slice of every cherry pie we have 

 

Its dangerous 

Venture capital is not massively relevant here but, out of interest, why do you have such a negative view of Venture Capitalists which perform a pretty valuable role in business; funding startups, early-stage, and emerging companies that have been deemed to have high growth potential but would struggle to get access to traditional lending.

"The history of the world is the history of the triumph of the heartless over the mindless." — Sir Humphrey Appleby.

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1 hour ago, M j M said:

It wouldn't surprise me though. Some of these owners have got very big loans to their clubs to cover years of financial losses (eg Ken Davy £17m, Ian Lenagan £6m etc). Most owners do it for the love of their clubs but the opportunity to get some of their cash back must still be tempting.

I understand the concern and I'm not saying it is impossible by any means but I don't see where the return on investment is for a potential investor/equity partner in doing this. 

I only see clubs getting money for infrastructure which may grow, directly or indirectly, the value of the competition.  Even then it is more likely to be in the form of a loan to protect return on investment.

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