- Governing body expected to bid for 2027 or 2031 tournament after launching feasibility study
- Collapse of Rugby Channel and Rugby International Marketing almost bankrupted union
- Strategic partnerships with Ernst & Young and AEG Rugby offer chance of commercial reboot
After almost going bankrupt in 2018 following the collapse of for-profit subsidiary Rugby International Marketing (RIM), USA Rugby is pinning its hopes on being awarded the 2027 or 2031 Rugby World Cup to transform its financial fortunes.
World Rugby, the sport’s global governing body, is keen to tap into the commercial potential of the North American market – and help grow the game in the region – following the popularity of the Rugby World Cup Sevens at Oracle Park in San Francisco, California, last year, which drew more than 100,000 fans.
“I think [the United States] is obviously going to be a destination for the World Cup one day. It’s up to USA Rugby to organize themselves and put forward a magnificent bid,” World Rugby chief executive Brett Gosper told The Independent in July 2018. “There’s a big queue of countries looking to host it, both North and South Hemisphere, so we would love to see them put in a very strong bid and we know they’re very capable of it. I can’t really put a date on that but we’d be excited by an American bid.”
A decision on the 2027 Rugby World Cup hosts is expected around 2021, with Argentina likely to prove the major challenger to an expected United States bid, which will follow a feasibility study from USA Rugby to determine its likelihood of success.
Japan is hosting the event this year, with the 2023 tournament in France, meaning that the 2027 Rugby World Cup is due to be staged outside of Europe. In September 2018, World Rugby chairman Bill Beaumont suggested the tournament could go to an “emerging nation”, further boosting USA Rugby’s hopes.
“If you get the timing right, it could be a game-changer,” Mark Griffin, the USA Rugby commercial director, tells SportBusiness. “Either in 2027 or 2031, the game [in the US] should have a much stronger foundation to support a World Cup at that point. There should be increased density of participation both at grassroots level and obviously with having many more years of professional rugby under our belts.
“Major League Rugby has pretty strong ownership groups, they are building facilities, and fast forward a few years there will be some pretty robust fanbases built around those franchises,” he said.
Griffin said an American bid will rest in part on the obvious scope and wealth of the country’s existing sports market, but will also tap in part into the forthcoming 2028 Summer Olympics in Los Angeles.
“The commercial potential that exists within the US given the size of the country, the size of the sports market, the size of potential growth that rugby has here and obviously it fits in well from a broadcast perspective,” he said. “There is a lot of upside to that. I think everyone would welcome a feasibility study to understand what the potential is and what the right timing is.
“There is some obvious connectivity with the Los Angeles Summer Olympics in 2028, with rugby [sevens] being involved there. That is a dialogue that we will continue to have with World Rugby. It is something we are looking into seriously.”
Overcoming ill-fated Rugby Channel venture
Ahead of a bid, however, USA Rugby must first get its commercial affairs in order following a period of deep instability and near financial disaster.
In 2015, the governing body created RIM, a for-profit subsidiary tasked with monetizing commercial rights and developing new revenue streams to fund the growth of the game in the US.
RIM was majority-owned by USA Rugby, but had outside investment from strategic partners, including the Rugby Football Union and Gallagher Premiership team Harlequins, who both reportedly invested £1.4m ($1.72m). London-based sports marketing agency CSM Sport & Entertainment was also a minority investor. In total, USA Rugby sold 25 per cent of RIM for $7.5m.
The following year RIM launched the Rugby Channel, a subscription-based online streaming service which offered exclusive live and on-demand coverage of top-tier domestic and international rugby matches. This included USA and England men’s and women’s Test matches, the men’s and women’s USA Rugby College Championships, and global club competitions such as the Top 14 and Pro 14.
Although well-intentioned, the Rugby Channel proved a disaster. A lack of subscribers (there was a peak of 11,000) and capital to fund the project – coupled with the emergence of new, much broader streaming services such as ESPN+ – put the service in deep financial trouble and led to $4.2m losses for RIM by the end of 2017.
Eventually a deal was struck in May 2018 for US-based subscription streaming service FloSports to acquire the Rugby Channel and place all its content on its FloRugby vertical.
RIM’s money troubles were also exacerbated by its ill-fated attempt to stage a Test match in June 2018 between Wales and South Africa at RFK Stadium in Washington, DC. Held outside the traditional international window, the game was in trouble from the outset with cash guarantees to both teams reportedly reduced from $1m to $750,000 before it even began.
An attendance of 27,000 was needed for RIM to break even financially. But due to a number of leading players missing and poor marketing, just 21,357 fans showed up, leading to further financial losses.
These mounting problems led to the resignation of four members of the USA Rugby board, including chairman Will Chang and chief executive Dan Payne, in the spring of 2018.
Meanwhile, World Rugby was forced to loan USA Rugby a reported multi-million dollar sum to ensure the Rugby World Cup Sevens tournament in San Francisco, which RIM also organized, would be a success. Despite the 100,000-person attendance and high ratings on NBC Sports, it proved another money-losing venture, in large part due to the cost of housing all the players in the expensive Bay Area market.
In February 2019, RIM was put out of its misery and essentially shut down. It was reintegrated into USA Rugby, under the name USA Rugby Partners, as the union began the process of completely restructuring its commercial efforts.
“The purpose of RIM in the first place was to support USA Rugby and try to create more sustainable revenues for USA Rugby, the execution ended up not being that way,” says Griffin, who joined USA Rugby in June 2018.
“At the time it solved a liquidity problem in that it raised funds by obviously seeking investors in that entity so that fixed an issue at the time that needed to be fixed. I think where things came unstuck was [in order] to compete in [digital broadcast] space, the amount of capital you require to invest in the technology is significant and beyond the capital that had been raised. I think that had been under-estimated,” he said.
Griffin said the move to shut down RIM was also aimed at preventing further financial wreckage for the entire union.
“The Rugby Channel was losing a significant amount of money and…there was a risk that the Rugby Channel collapsing could have brought down the whole house of cards. That was an absolute reality last year,” he said. “If you want me to say it could have forced the union into Chapter 11 [bankruptcy], I think that would have been a possibility. That had to be avoided at all costs especially in a year when we were hosting a Rugby World Cup Sevens.”
Strategic partnerships with Ernst & Young, AEG Rugby
The decision to put all USA rugby union internationals on streaming start-up FloSports, however, has not gone down too well among some members of the US rugby family.
“The sooner that USA Rugby gets out of the FloRugby deal the better, putting rugby behind a paywall is crazy. It’s a growing sport and it needs viewers,” James Kennedy, the majority owner of Major League Rugby team Rugby United New York, tells SportBusiness.
But Griffin has defended the move, revealing that USA Rugby received a fee from FloSports to acquire the Rugby Channel, including ongoing royalty fees for the acquired broadcast rights. Furthermore, as part of a seven-year partnership, FloSports underwrites the production costs of broadcasting its domestic international matches, which can be around $30,000 a game.
Finally, USA Rugby has secured the right to sell two men’s and two women’s matches from its domestic inventory on other networks annually, giving the union a chance to expand the reach of its national teams.
“Given the number of domestic matches that we control each year, two matches isn’t bad if we can pick them strategically once we know what are calendars are for 2020 and 2021,” Griffin says.
To help revive its commercial efforts, in April 2019 USA Rugby signed a long-term partnership with multi-national professional services firm Ernst & Young which, as well as becoming the Official Principal Partner of the USA men’s and women’s senior national teams, is working with the union to devise a corporate strategy via data-driven insights and digital engagement. This includes fan and player engagement and experience capabilities, marketing and analytics, and development of revenue models.
Griffin is additionally focused on growing participation levels, at the youth and college levels, to ensure the long-term health of the sport in the US. This includes placing rugby development officers in key markets across the States and working with states’ athletic associations and universities to secure extra funding at a local level.
To further aid its commercial efforts, USA Rugby is also working closely with AEG Rugby, a subsidiary of sports and entertainment AEG which has helped stage Gallagher Premiership games in the US in recent years, including London Irish v Saracens in Red Bull Arena, New Jersey, in 2016 and Saracens v Newcastle Falcons in Philadelphia’s Talen Energy Stadium the following year.
This includes working together on the Rugby Weekend – a triple-header of matches involving international teams on US soil, which was last held at Chicago’s Soldier Field in November 2018 – and the HSBC World Rugby Sevens Series, which will be held at the Dignity Health Sports Park in Los Angeles in February 2020.
Dan Lyle, the director AEG Rugby, tells SportBusiness: “The American rugby landscape has been quite convoluted for a long time. I’ve always classified it as the 45-year-old start-up. We’ve never created a real, robust strategic plan, well-vetted, and that is the process we’re going through with our new sponsor Ernst & Young.”
He adds: “When we talk about growing the game here, we can’t just talk about the top pyramid we have to build up the mass participation at the base, both little kids running around to supporting rugby’s inclusion into the educational infrastructure both at the varsity level at high school and obviously at college.
“Those are the things we can do between now and a Rugby World Cup happening [in the US] to set that really robust platform so when that tournament does happen that the commercial benefit comes from it but then the game has the foundation in place to accelerate growth from that point on.”
Despite the many problems USA Rugby has faced in recent years, Griffin remains quietly optimistic about the future of the sport in the US – including the slow and steady growth of Major League Rugby – and the role the governing body can play in its growth.
“Our focus is looking forward,” he says. “We’ve put a lot of time and energy into the strategic planning process. Everything is focused on building on long-term value with some metrics that we’re looking to hit in the next few years and to provide some critical support to the high-performance element of the game with more resources and to fuel growth at the youth level and to bolster the collegiate framework as well.
“We have a really good opportunity to grow. I’m really excited about the opportunity ahead,” Griffin says.