Irish rugby will not go on an overseas spending spree for galacticos when the IRFU gets its cash windfall from CVC Capital Partners, Munster CEO Ian Flanagan has warned.
Media reports this week have suggested the private equity firm is nearing completion of a €360m investment deal for around a 14 per cent stake in the Six Nations, while a €145m purchase of a stake in the PRO14 is also on the cards.
With the IRFU a stakeholder in both organisations, that could mean a sizeable cash injection into Irish rugby similar to the windfall split between English top-flight clubs when Premiership Rugby Limited sold a 27 per cent stake to CVC in 2018.
Talking recently to the Irish Examiner, Munster chief executive Flanagan cautioned against a transfer splurge that would.simply result in a player salary spiral that could not be sustained.
Instead, Flanagan suggested any windfall for the Irish provinces would be used to “futureproof” them as sustainable businesses.
Asked last month about CVC’s agreement-in-principle with the PRO14 for a stake in the five-nation, union-owned league, Flanagan in his first interview since succeeding Garrett Fitzgerald as Munster CEO last autumn, said: “It’s an ongoing discussion, nothing is signed yet.
“You probably have as much detail as we have because the clubs aren’t involved, the discussions are being held by the unions.
“They’ve obviously come into English Premiership rugby, our basic understanding at the moment, and that’s all it is, is that the money, if and when it happens, there will be a level of that available for investment in long-term infrastructure because how we ensure, and not just Munster but the other three provinces, we are sustainable as functional businesses for the long-term (is the priority).
“If this does happen, it will be a great opportunity potentially for the four provinces, working collaboratively with the IRFU, to invest in long-term infrastructure. Now, whether that’s buildings, whether it’s stadia, whether it’s training grounds, that’s all to be discussed, but it’s clear that if anything does emerge from this it will be to ensure that clubs can be sustainable businesses and I use that term very advisedly but just that they function as businesses. That’s where the money is going to go.
“It’s not going to create, it’s not going anywhere near players’ salaries, and that’s across the board. The plus of the Irish system is that the four provinces are owned by the IRFU and so we’re all harnessed in that regard and we will work collaboratively with the IRFU if there’s money to invest.
“It’s clear that this all designed to futureproof the clubs as businesses because this is non-recurring money. This is a once-off chunk of money so even if you were to think about this as someone who knew nothing about rugby but just purely from a business point of view, if you have a chunk of money now there’s no point in doubling or tripling your cost base in salaries because that money will come once and then it’s gone.
“So it’s clear that this is to go into long-term capital infrastructure projects.”
Flanagan, with a marketing background in various sports, including the English Premier League with Leicester City, would not be drawn on reports that a British-Irish league would be an inevitable consequence if CVC were to add a foothold in the PRO14 to its seat at the English Premiership table. “I know very little about it.
“All I know is what they’ve done when they were in Formula One. I’ve seen a little of what they’ve done in English rugby to date. If it happens it will be positive for rugby. It will give Munster potentially some great opportunities to develop and to grow but that’s all we know at the moment.”