In Play with B&K

Welcome to Volume 2 of the regular update from the Bray & Krais sports law team.

Breaking down English rugby’s investment boom

Even with full sporting focus on the Fifa World Cup, it is hard to miss the boom period English rugby is enjoying, signalled by a wave of international investment and Eddie Hearn’s Matchroom Talent Agency’s first foray into the sport. Bray & Krais sports lawyer Alex Goodchild dives into why and how money is now flowing into the game.

Why now?

A brief history of English rugby’s ownership model offers a glimpse into why overseas investors had stayed away.  Unlike in Ireland, where provincial clubs are centrally owned and run by the IRFU, the English model historically depended on individual owners funding and running Prem clubs.  These benevolent custodians, not dissimilar to traditional Premier League owners, assumed significant risk. An apt example is Tony Rowe, who has for 30 years run and funded Exeter Chiefs under financial strain.

This was exacerbated by the pandemic, which forced Prem clubs to play a season with negligible income due to crowd restrictions.  Rowe estimates that the mini-recession cost Prem chairmen over £20 million each.  Clubs relied on government loans (collectively £120 million), RFU subsidies and private loans, with interest payments since straining cash flow.  In the 2022-23 season, unsustainable debts, Covid’s revenue shock and owners no longer willing to put their hands in their pockets saw Worcester, London Wasps and London Irish enter administration and enforced relegation.

Exeter Rugby Group Plc’s accounts to June 2025 show a loss of £10.3 million and sustained deficits, mirroring league-wide trends.  With Rowe stating that he is unable and unwilling to underwrite the club’s ambitions any longer, but Exeter maintaining that longer term prospects are improving (reflected by performances on the pitch), the takeover by Black Knight Sports and Entertainment, a consortium led by Bill Foley and which also owns AFC Bournemouth, represents a shot in the arm, providing fresh capital and commercial savvy to modernise the club’s growth strategy. The consortium, for its part, will be betting on long-term growth at a relatively low entry cost.

Three factors underpin longer term optimism: the new ring-fenced franchise model, governance reforms, and a belief that rugby is undervalued, with untapped revenue streams.

No-relegation model

In February 2026, the RFU approved the abolition of relegation and promotion from the 2026-27 season, replacing it with a “criteria-based expansion and demotion model” aimed at expanding the top flight from 10 to 12 teams by 2029.  Recent investments in Newcastle, Northampton and Exeter indicate that the added stability is attracting capital from overseas and outside the usual investor class, even if it may go against European sports traditions.

The rationale is simple: investors want a competition they can easily model, with predictable cashflows and reduced tail-risk.  With Prem TV rights worth £4 million a year to clubs, relegation would trigger an abrupt revenue shock, jeopardising multi-year plans.  Equally, the threat of relegation historically deterred US investors.  It is thought to be an alien concept for them and parallels with football are unhelpful as the gulf between Prem Rugby and Champ Rugby is far starker in viewership and revenue terms than it is between the Premier League and the Championship.

Institutional reform

There is also a perception that fragmentation between the domestic and international game stymied rugby’s commercial growth, with a saturated calendar and competing interests creating friction between the national union and Prem clubs.

That improved with the Men’s Professional Game Partnership, effectively a JV between the RFU and Prem Rugby (and Prem players), each represented on a new Professional Rugby Board.  Under the agreement, clubs are subsidised by the RFU (in total, £33 million per season from 2024-2028, moving to a profit share, in the next cycle, of 26% of the RFU’s Profit Before Rugby Investment). 25 elite players can be offered enhanced contracts.  In return, the clubs will cooperate better with the RFU in releasing players for England duty and training camps. The deal is designed to provide long-term stability and harmonise stakeholder interests, with the Joint Marketing Agreement announced alongside it also aimed at creating synergies over social media and ticketing promotions, boosting matchday attendance and growing TV audiences.

This development, coupled with the familiar salary cap, and better governance around the Prem’s sustainability, via an independent financial monitoring panel, appears to have boosted investor confidence in rugby as a long-term asset class.

Belief in commercial growth

In 2018, CVC Capital Partners (CVC) acquired a 27% stake in the Prem for £200 million.  Private equity’s involvement suggests that rugby union may be undervalued relative to its fanbase, with investors bullish on its potential to improve commercial performance.  At the point when CVC invested, revenue was growing at around 9% annually, largely supported by broadcast deals with TNT Sports.  While TV rights are at the heart of the revenue model – the latest deal of £200 million over 5 years, which is equally shared, reportedly represents 20% of combined central and local club annual income (£200 million) – there is impetus to grow sponsorship, merchandising and matchday income.  This is aided by Prem Rugby Limited’s role in the franchise model in providing centralised support and coordination over the commercial strategy.  It has overseen a collective ticketing strategy, a central provider of data-driven fan insight, and collective kit and sponsorship deals.  Pre-CVC, Prem Rugby note that there was no central support or marketing budget.

Martyn Phillips, chair of Prem Rugby, points out that many US investors are priced out of the Premier League and major US sports, making rugby offering a cheaper alternative as the “next best thing”: “The thing with rugby is that people are thinking, ‘I can swallow one or two or three million a year of losses, because that’s peanuts relative to a Premier League football club, but I might be able to turn it from being worth £50m into £100m.'”.

Prem Rugby works as a market maker, advised by Raine Group and Deloitte, who both acted on the successful sale of eight The Hundred franchises, to attract new investment into the league and explore sales of teams that could be added to the league as expansion franchises in regions such as Kent and Yorkshire.  The thesis is that greater financial backing will breed a more competitive league and in turn a more compelling product.

Investment trends

Recent investments into Prem Rugby broadly track trends in football investment and can be split into three different buckets: (1) Multi-sport model, (2) minority investment, (3) direct investment in the league.

1. Multi-sport model

As well as Exeter’s takeover by Black Knight, who also own AFC Bournemouth and FC Lorient, see Red Bull’s takeover of Newcastle in August 2025.  Key principles of this strategy are:

• active involvement in the management of the club, drawing on management expertise developed across different clubs and sports;
• operational synergies, such as sharing of medical support, data analytics and, notably in the case of Red Bull, high performance facilities;
• opportunities for centralised and group-wide marketing and commercial partnerships, monetising audiences across different sports and territories.  Red Bull, who are experts in marketing generally and marketing athletes (such as Max Verstappen, Ben Stokes), can give Newcastle players access to sponsors and fan engagement tools previously out of reach, in turn boosting Newcastle’s appeal to commercial partners;
• buying “smaller” clubs at low entry points, diversifying risk and with a focus on increasing enterprise value.

Although there is nothing to prohibit multi-club ownership across different sports, investors contemplating multi-club ownership in rugby should pay heed to the cautionary tales of Crystal Palace and Drogheda United in the football sphere.  In rugby, there is a framework of comparatively more basic and at times inconsistent rules at the international, European and domestic level. Investors should take advice accordingly, particularly as the rules are untested.

2. Minority investments 

These offer, for investors, a more accessible way to participate in the upside of an attractive asset and, for the club, a fresh capital injection or the ability to leverage the new investor’s personal connections or knowledge of other markets.  A recent example is Steve Zander’s acquisition of a 14.5% stake in Northampton Saints in April.  Mr Zander is a senior figure at Cross Ocean Partners, an asset management firm, and will sit on the board as a non-executive director.

Given the fundamental lack of control, we would generally advise minority investors we act for on such deals to push for robust contractual protections in a shareholders agreement, including as to:

• board rights or observer rights;
• information rights;
• consent rights, particularly over matters which go to the club’s heritage/identity which rugby fans would be most sensitive about, and other key operational matters;
• anti-dilution mechanics;
• tag-along rights, particularly as there is no ready market for minority shareholding in unlisted companies.

That said, even in an equal partnership, such as the 50:50 JV established between Sir James Dyson and Bruce Craig at partner in March, there is no hard and fast rule.  The public announcement was clear that Mr Craig will continue to run the club, with Sir James committing capital to the group to reduce existing debt and support the development of the £70 million stadium.  This is unlike INEOS’s investment in a 27.7% stake in Manchester United, where INEOS took control of football operations.

3. Direct investment in the league

As mentioned, CVC acquired a 27% stake in the Prem’s holding company in 2018.  This is something of a signature for CVC, who also injected almost €2 billion euros into La Liga in exchange for 8.2% of La Liga’s media rights over 50 years, and can also harness their experience in Formula 1 and Ligue 1.

TV rights are a cash-generative, predictable and recurring revenue source, meaning there is comparatively less risk for CVC.  Further, the capital injected by CVC in La Liga was 70% ringfenced for long-term investment in infrastructure.  As revenue from sponsorships, matchday and merchandising among participating La Liga clubs is stated to have increased by 46% since 2021, CVC will be hoping those clubs become more competitive on the pitch, in turn increasing the value of the TV rights. The same principles will be guiding their investment in the Prem.

Agency agreements and player sponsorships

Capital investments are not the only way stakeholders are looking to take advantage of rugby’s “boom period”, with Matchroom Talent Agency’s signing Henry Pollock and Finn Russell and Hearn aiming to use the marketing potential and name value of star players to secure sponsorship deals that could see his talent “make more off the field than he’s making on it”.

Bray & Krais regularly advise on agency and representation agreements, sponsorship and endorsements deals and media appearances, whether for the talent, agent, sponsor or producer, as well as the commercialisation and protection of intellectual property and image rights.

Concluding thoughts

On the back of what was heralded the greatest ever Six Nations Championship, and with a trend of free-flowing and high-scoring games in rugby, viewer and investor interest in rugby is only set to increase.  As investors pour money in, it is important that they are properly advised on the structure and terms of their investment and regulatory complexities, and that players and clubs are fully aware of the legal and practical issues across the multifarious contracts that investors hope will drive commercial revenues.

The information given in this document concerning technical legal or professional subject matter is for guidance only and does not constitute legal or professional advice. Always consult a suitably qualified lawyer on any specific legal problem or matter.