Analysis: How European clubs are managing wage inflation, increased revenue and squad growth

As the face of European club and international rugby changes amid significant investment from private equity firm CVC Capital Partners, the finances and structure of rugby in the northern hemisphere have never been more intriguing.

With the Gallagher Premiership beginning this weekend and the Guinness PRO14 moving into its fourth round later this mongth, Esportif Intelligence have released their annual ‘European Rugby by Numbers’ review focusing on the financial strength and squad management of the clubs in both competitions.

RugbyPass have delved into the report and found some of the highlights that make for very interesting reading as the 2019/20 European club season gets fully underway.

In terms of average attendance, the Premiership’s 14,000 average outstripped the PRO14’s 9,200 last season, although those figures were much closer when comparing the top four sides in each competition with the PRO14’s 12,900 much closer to the Premiership’s 13,5000. The report notes that this is due to the three Irish provinces being in the top four of the PRO14, while attendances at the four Welsh regions diminished in 2018/19.

More of a divide was noted in the estimated primary broadcast deals of the two competitions, where the Premiership’s annual £40million deal with BT Sport significantly outstripped that the PRO14’s yearly £20m-25m – excluding South African contribution – deal with Premier Sports.

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Both leagues remain considerably behind the Top 14, however, with the French league’s deal worth £65m last season and set to rise to £88m for the current season albeit that is shared with the Pro D2. These figures do not include secondary broadcast deals the competitions have in place, such as the Premiership's deal in China.

The differences in attendance figures and broadcast deals are reflected in the value of players in the competition, with the Premiership averaging a figure of £150,500 per player and the PRO14 at a mark of £126,500 per player. As a result, there has been a knock-on effect on the financial positions of those clubs.

Overall revenues in the Premiership were up by five per cent in 2018 to a total of £205m, although they still recorded operating losses of £36m across the league. By comparison, Top 14 revenue sat at around £300m and there were combined operating losses of £27m. Due to the array of different ownership and funding models in the PRO14, the report stated it was more difficult to compare their figures.

The report also looked at the coaching and management of the sides in the Premiership and the PRO14, with the former averaging 5.5 senior coaches per club while the latter averaged 4.6 senior coaches. Again, where that disparity changes somewhat is when taking into account just the top four clubs where the Premiership’s average of 5.5 remains steady, but the PRO14’s mark goes up to 5.3 senior coaches per club.

On to the playing squads and Esportif Intelligence found that PRO14 squads remained largely the same size between 2017/18 and 2018/19 while Premiership squads had increased on average from 41 senior players to 43 and from 13 academy players to 16. The number of players used in the season was also up, from 47 to 49. Leinster recorded the most players used across the two leagues with 57, followed by Munster with 54 and Bristol Bears with 53.

On average, Premiership clubs had three more academy players than the PRO14 teams last season, had an additional player signing senior terms from their academy and recruited 11 new players, rather than seven in the PRO14. The PRO14 sides did average a higher retention of players, though, with 32 compared to the Premiership’s 29.

Domestic player figures were high in the PRO14 with around 70 per cent of players on senior contracts being eligible for the nation they were playing in, a figure that jumped to 74 per cent in the top four side of the competition. In the Premiership, the number fell to 57 per cent.

Average Premiership spend on senior playing squad rose from £6.1m to £6.4m last season, while a mark of £5m in the PRO14 stayed steady from 2017/18 to 2018/19. In both competitions, the starting XV accounted for roughly 60 per cent of that total senior squad spend. The rise of £300k in squad spend in the Premiership represents a significant slowing in wage inflation following the jump from £5.2m (2016/17) to £6.1m (2017/18) when the Premiership increased its salary cap.

One factor consistent across both competitions is that the clubs within the top four more heavily rewarded their domestic players financially. In terms of starting XV spend, the Premiership clubs average 49 per cent on domestic players and 51 per cent on foreign players.

That jumps to a 57 per cent  and 43 cent split in favour of domestic players at the clubs in the top four. In the PRO14, an average of 69 per cent to domestic players and 31 per cebnt to foreign players becomes 75 per cent and 25 per cent respectively at the top four teams.

These numbers provide an insight into the financial and squad management processes behind the clubs in the top tier of home nations rugby. With the impact of CVC’s investment in both competitions yet to be fully felt, these figures could provide an important baseline moving forward.

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