Why "rout of the Unions" may be good for those outside the 6 Nations

Why the end of the ERC and so called "rout of the Unions" could put the rest of Europe on a slightly more even playing field both in domestic and international rugby.

With the recent announcement of the European reforms, described by some as the “rout of the Unions”, it has seen has the Unions lose power with them no longer controlling European domestic rugby from their Dublin base. The new Switzerland based organisation European Professional Club Rugby (EPCR) which replaces the outgoing European Rugby Cup (ERC) will implement a more meritocratic format to the tournament, and the revenue will be split more proportionately.

The English and French who are already bolstered by some bumper TV deals for the Aviva Premiership (c. £22m) and Top 14 (c. £60m) will be getting richer through the deal. Whereas those in the Pro12, with a TV deal worth less than £10m, will also be getting richer due to the expected rise in revenue, though poorer in relation to the English and French.

However this actually levels the playing field somewhat, especially for international rugby. Previously the Union run teams were the beneficiaries of what could best be described as a gerrymandered system, and a leftover of a more amateur era. The privately owned club model unlocks more funds with bigger TV deals; however the split under the ERC went against them and in favour of those with a Union run model. Certain nations were getting far more than they were contributing to the ERC pot, Scotland for instance were getting c. €2.45m per team in the competition, compared to the French c. €0.86m per team. This has now changed, and realistically it was an inevitable change, as one of the key men behind the deal RFU CEO Ian Ritchie says the reform is a "continuing transition between all the elements of the amateur game into the professional game".

Francis Baron (RFU) and
Mark McCafferty (PRL)
agreed a £110m deal for
player release privileges

Before the Union run teams operated a system that was to a degree subsidised off others TV deals. Whereas the RFU paid c. £110m over 8 years for the EPS agreement with the English clubs, allowing them the privilege of access to players for extra preparation, training camps and matches outside the IRB international window, meanwhile the Unions such as the IRFU and SRU were getting even further benefits of total access and control over players on domestic duty for free as they of course owned the teams. It came at the cost of the commercial value of the Pro12, but the subsidies of a Union run tournament allowed the model to still maintain competitiveness, lessening the commercial value of European domestic rugby to the English and French whilst increasing it to those in the Pro12.

Shorn of the generous revenue split, if the Unions in the Pro12 want the privileges they have been getting, then now they'll have to pay for them one way or another. Either by starting to really feel the effects of a domestic product, with centrally owned teams, less investment and the conflicts of interest created by focusing on the national team, which is comparably low in commercial value to France and England. Or allowing private investment in to increase the value and then having to negotiate a deal to pay for those privileges, like the RFU did.

Greig Laidlaw was pulled
out of the last few weeks
of this season by the SRU

The current model that has worked well through subsidies but won't work as well without them, the Unions will no longer be able to get away so lightly from a league devalued commercially for the sake of international teams. Under the club model in the Top 14 or Premiership you would get laughed out of town if you asked for something like THIS to happen or THIS to happen, however equally under the Union model the SRU and IRFU would get laughed out of town for suggesting a decent TV deal for the Pro12 with broadcasters.

Sustainable competitiveness through a model of central control took a huge blow with the death of ERC, as Leinster CEO Mick Dawson told the Irish Times “it is going to be more difficult”. Even within the Pro12, where the Welsh broadcast deal contributes £3.2m to the pot compared to the Irish £910,000 and Scottish £140,000, there are doubts as to whether Regional Rugby Wales (RRW), who are currently embroiled in a battle with WRU who bizarrely haven't cottoned on to the fact they will need to be paying properly for privileges from now on in order to sustain domestic competitiveness or risk losing the privileges, will see their long term future in a tournament with relatively low commercial value and as they put it, "imbalances or subsidies negotiated by the Unions".

There are winners and losers from this situation, obviously a big loser is those operating the Union centrally controlled system, but from the perspective of those outside the Tier 1 clique the reforms are good news and will help a little bit (there's still international rugby as referenced later) to level the playing field somewhat.

Obviously, the 7th best European team Georgia, who are also a small TV market, would love subsidies from others TV deals to sustain the majority of their players at home, gain full control of them, and put them into a system largely that serves the national team. The Lelos, like the Pro12 teams, would have much better prepared national team as a result of that. However, they amongst others don't get that, which is why the playing field is sloped and only beneficial if you happen to be in the clique of 6 and one of the subsidised Unions.

An end to “imbalances or subsidies”
by ERC is a boost to all the 38 IRB
European members outside 6 Nations

If hypothetically, Georgia were to face Scotland in November, one team would be coming into the game with a large quantity of players based in France arriving in the week beforehand, the other considerably more rested and with preparation time helped paid for by the subsidies. Georgia with no subsidies from Europe do not have a rich enough domestic league to seriously compete to keep players at home, so have had to export players to bigger leagues Europe. That the other is getting domestic teams fully controlled by the Union subsidised is handing them a big advantage.

If certain Unions in Europe continue the Union run model of central control, then the effects of a weak commercial league could be felt and become uncompetitive in keeping the majority of players at home, playing field evened up a bit. If certain Unions increase the value of the league through private investment, then less Union control blocking opportunities for overseas talent could lead to potentially more opportunities for players under the club model (which has played a pivotal role in countries like Argentina, Georgia and Samoa amongst others in preventing Rugby from becoming as globally competitive as cricket), unless of course the Unions would pay a fair price for the privilege of enforcing wage inflating quotas, but they couldn't get it for nothing and would have to pay for it. This is talking possible long term effects of the EPRC far into the future, but either way it is a far better than the alternative outcome of status quo for the other 38 IRB member nations outside the 6 Nations.

One of the points put forward to the sceptics of the EPRC deal is Scotland and Italy needs the subsidies. That is an argument geared towards bias protectionism and towards certain nations, which works only to preserve the Tier 1 nations of 6 and putting them at an advantage towards the nearest competition from the ENC. It is tilting the playing field against the rest of the continent and harming the wider competitiveness of the international game.

IRFU get what RFU paid big for
and more for virtually nothing
as they own all their pro teams

Even in the 6 Nations, nations such as England who pay money for privileges, whilst also to an extent helping subsidise others to have even further advantages over them for nothing, also will benefit from potentially the Pro12 nations being put on a level playing field to them in regards to the privileges of player release. If you want it, you need to pay for it.

Another thing that of course come from the death of the ERC is a system that in theory (we still are yet to know any detail) allows a more open meritocratic pathway for those outside the 6 Nations. The tournament will likely have flaws and in the immediate short term it's unlikely many clubs would have the capacity to make much of an impact in Europe, but in the longer term it is a potentially attractive pathway that wasn't there previously should an investor be interested.

Just to reiterate, the reforms are far from perfect, with the most preferable idea of a UEFA style continental governing body proposed by the French not coming about. But they are significantly better for Tier 2 nations than the alternative of the ERC, not least as it's those who proposed that idea who have by and large won the battle as opposed to those who as the Guardian's Paul Rees put it "are fearful of a democratic approach" in the knowledge that they would have virtually next to no voting power amongst the ENC nations.

Now there are reforms in Europe, more meritocratic and less protectionist, to a more beneficial model for those whose domestic system wasn't being subsidised. Now the hope for the rest of Europe is that some of those reforms eventually seep into the international game, as the French wanted. In between World Cups, the Tier 1 milks their protected cash cows which of course everyone else is barred from. The rest of the world has no pathway to the top end of the international game other than a token match or two, which are of course done on Tier 1's terms and who have the aforementioned significant safeguarded advantages in their favour. That system still remains a big barrier to a more competitive international game.