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USA Rugby recently trumpeted a new partnership with the Rugby Football Union, its English counterpart, which sees the RFU become a shareholder in USA Rugby’s new for-profit entity, Rugby International Marketing.
Though USA Rugby and the RFU have disclosed neither the official amount of equity purchased nor the price, Rugby Today has learned the transaction is for in the neighborhood of 10-percent equity for $1.5 million. Nigel Melville will serve as RIM’s CEO, and USA Rugby board members Brian McClenahan, Chad Keck and Petter Seccia are on the company’s board, too. They’re joined by Sophie Goldschmidt, the RFU’s Chief Commercial Officer, who will represent English interest in RIM.
RIM is majority-owned by USA Rugby and designed to be a revenue generator for the non-profit national governing body. There are many plans for RIM, including an online rugby channel and commercializing international tests and events such as the 2018 7s World Cup.
“[RIM] enables us to maximize and expand these properties – the investment helps us staff and support these assets without taking money from membership dues, etc. to do this,” Melville told Rugby Today. “Those revenues can be directed to developing the game, which will continue to be our focus as the governing body for the sport of rugby in the USA.”
While more money and flexibility are general positives, glaring are some potential conflicts of interest. USA Rugby and the RFU are, at the very core of their existences, competitors. Their senior national teams go head-to-head directly – the men’s and women’s 7s teams in the World Series and the women’s 15s team in the Super Series. They, of course, have crossed paths, and likely will again, in quadrennial events like the Rugby World Cup, men’s and women’s, 7s and 15s.
With 10-percent equity in USA Rugby’s revenue generator, one of every $10 of profit earned by RIM will go to developing future England internationals who will one day line up across the pitch from the Eagles.
“The RFU’s financial returns as a partner in RIM will be reinvested back into the game in England,” RFU CEO Ian Ritchie said in a release. “Investing in the world’s largest sporting market makes a great deal of sense and we look forward to working with USA Rugby.”
If RIM proves profitable, English rugby will line its pockets off the successes of a competitor, essentially insuring its place in world rugby’s hierarchy, at least in relation to the United States. The move is unprecedented – it’s hard to imagine the New Zealand Rugby Union making a deal that would see the RFU profit off the All Blacks, isn’t it?
“The RFU are shareholders in the Six Nations, is that a conflict of interests when voting at World Rugby?” answered USA Rugby CEO Nigel Melville when asked about the unique relationship with the RFU.
The RFU’s investment in Six Nations would be like the Seattle Seahawks having a stake in the NFL – what’s good for one is inherently good for the other. RIM’s relationship with the RFU is more akin to the Seahawks, one of the NFL’s top teams, purchasing stake in and reaping financial gain from a perennial bottom dweller like the Tampa Bay Buccaneers.
The RFU won’t have any say in the domestic governance of USA Rugby – eligibility, membership, national championships, structure, etc. – but anything RIM has its hands on the RFU will have a say in as a strategic partner.
Take the British & Irish Lions’ proposed match against the Eagles ahead of their 2017 tour of New Zealand. The game was rumored to be set for Soldier Field, and it could have netted a pretty hefty payday for the organizers and the participant teams. But it has been reportedly nixed because of player availability – a problem USA Rugby has routinely encountered when dealing with the RFU’s member clubs. In this scenario, or one like it, RIM would stand to benefit from the match happening as an organizer, while the RFU would probably rather not meddle in player availability.
USA Rugby will also compete directly with the RFU for hosting rights, like they already did for the 2018 7s World Cup.
“If [the RFU] foresee a conflict of interest in terms of World Rugby voting, they will make World Rugby aware of this,” said Melville. “They are investing in a separate company owned by USA Rugby, not USA Rugby.”
These are just foreseeable frictions between USA Rugby and the RFU. Don’t forget about USA Rugby’s domestic conflicts. USA Rugby is trying to help launch a professional league, and Melville says the fledgling competition is developing well. Though it will not be owned by USA Rugby or RIM, both are working in concert with those behind the league to get it up and running.
One could argue USA Rugby’s plans have already negatively impacted private efforts to monetize the game stateside. The NRFL is currently the only example of USA Rugby wielding its sanctioning power against an independent company, leading to the cancellation of a couple of proposed matches involving professional clubs.
The NRFL’s efforts to comply with basic sanctioning requirements were essentially nonexistent, giving USA Rugby reasonable right to deny a blessing. However, more companies not named NRFL will continue to try and create leagues and stage commercial events. How will USA Rugby treat those direct competitors of the league its already in cahoots with?
“USA Rugby are working to get a league off the ground and will sanction that league as their official pro competition,” said Melville when asked directly if USA Rugby would use its sanctioning power or gravitas to stifle a competing league. “I think that others, should they want to invest, should get involved with that competition and help to make it bigger and better.”
Like many companies, RIM needs outside investment to get off the ground. That’s not the issue. The questions should be whether or not the national governing body should even own a for-profit company to begin with, and if it does, should the leadership mirror that of its own. Additionally, was the RFU a prudent choice for an investor?
Another question that begs asking isn’t a fun one: Just how American should American rugby be? It’s tough to tiptoe around this topic without being labeled a xenophobe or alienating so many of the quality foreigners involved in the American game, but it’s a worthwhile discussion.
Currently, the average American Joe Blow sports fan, the one any commercial entity needs to capture for long-term success, can look at American rugby and see an English CEO, English Olympic coach, Olympic and 15s captains with English accents. He sees Fly Emirates and Heathrow Express pasted on the jerseys, and if he tunes into tests this summer, he’s going to hear Australian and South African announcers calling game-winning drop goals from Irish flyhalves. Joe Blow can get online and see the college and high school All-American coaches are Irish, too. The 15s head coach is American, but his staff is mostly foreign. Both women’s senior national team head coaches are foreign.
That shouldn’t all be labeled as negative. Far from it. But many in the rugby community would argue a balance needs to be struck. The Eagles could just as easily be wearing Under Armour, an American outfitter, instead of foreign BLK right now. The hiring of Mike Tolkin, an American, as the head coach of USA Rugby’s flagship national team, was a watershed moment. Thankfully, Olympic eligibility has stemmed the practice of foreigners seeking a cheap cap as a vehicle to an overseas contract. The increased number of American-bred players making waves abroad is higher than ever before.
However, the fact that a tenth of the profits of USA Rugby’s commercial brainchild is now being sent across the Atlantic does more to tip the scales than level them. Everyone gets to draw their own line in the sand when it comes to just how star-spangled American rugby should be. Where Melville-led USA Rugby and RIM will put down their markers remains to be seen.