Since BT Vision announced it had won the rights to broadcast English Premiership rugby from this season, it also included coverage of English club matches in Europe from 2014. The announcement came with a sharp rebuke from the European Rugby Cup (ERC) headquarters in Dublin, with a claim it had already allocated exclusive coverage of European matches to satellite broadcasters BSkyB for the next four years.
ERC claimed that Premier Rugby's European deal with BT Vision is "in breach both of International Rugby Board regulations and of a mandate from the ERC Board itself".
"It was unanimously agreed at an ERC Board meeting on 6 June, 2012 that ERC would conclude a new four-year agreement with Sky Sports. Premiership Rugby was party to that decision."
Over recent years there has been little love lost between both parties and it appears that BT Vision have leveraged those differences as they expand their sports offering and expand their commercial clout in the Pay-TV market.
Only a few months ago BT gazumped their major competitor for UK live Premier League soccer games, BSkyB, by paying 70% above the odds for 38 live games – all the 18 first-choice picks.
All of which more than shocked BSkyB at the time, who just managed to protect their key soccer offerings - Super Sundays and Monday evening football. However the knowledge that BT had originally bid for all the rights - and were ready to spend more than £2bn if necessary - represented a very clear statement of intent to BSkyB - and a new reality. A fact that was not lost on Rupert Murdochs' organisation.
Or so we thought, until the Premiership rugby deal was announced this week.
Clearly BT are now a serious competitive threat to BSkyB with both now chasing the valuable "Triple play" strategy [consumers taking pay-TV, telephony and broadband from the same supplier] where Sky has so far been cleaning up. Indeed currently one third of Sky's 10 million subscribers take triple play.
Although BT Vision have been making some inroads their fast broadband service too often loses out to Sky’s attractive premium content and with six years gone - and a reported £800m spent since launch - the broadband service has only 700,000 subscribers. Nothing close to their original target of 3 million subscribers by the end of 2010.
This pay-TV failure had started to threaten the longer term prospects of BT's core fixed line broadband/telephony business. Hence this uber-acquisitiveness in 2012 into the once dominated BSkyB markets.
For Premier Rugby's the new agreement with BT, divided into a deal to show Premiership rugby from next season and European club rugby from the start of the 2014-15 campaign, is worth up to £152m.
In contrats ERC argue it has also agreed a deal with BSkyB for exclusive coverage of European club rugby from the start of the 2014-15 season, with Premier Rugby arguing that ERC's right to negotiate broadcast deals on behalf of unions is only valid until 2014.
The added confusion beng that European Rugby Cup organises the Heineken Cup and the European Challenge Cup and its members are part of the six nations rugby unions.
Premiership Rugby, which represents the 12 top-flight clubs in England replied to the ERC by saying:
"We also note ERC's reference to its board meeting on 6 June, 2012. No specific broadcast deal was presented or voted on at this or any subsequent ERC board meeting. In any case, any such deal could not have included matches involving Premiership Rugby clubs.
"ERC's suggestion that Premiership Rugby may be in breach of IRB regulations is wrong."
Off the pitch there has been long-running tension between the ERC and English and French clubs, who separately announced earlier this year that they will pull out of he ERC once the current agreement governing participation runs out at the end of the 2013-14 season.
Both the French and English clubs want changes to the way European rugby union's blue riband club tournament is structured, seeking a new system that would reduce the number of RaboDirect Pro12 teams that automatically qualify for the Heineken Cup. Plus removing the current guarantee that leads to Scotland, Ireland, Wales and Italy all being ensured representation.
As there is no relegation from the Pro12 the English and French clubs have always argued this gives Irish teams, in particular, an advantage, because they can rest players for league matches keeping them fresh for Europe - without facing any real consequences. The dominance of Munster and Leinster over the past five years in the Heineken Cup only serves to add to that argument of imbalance.
For the rugby fans in England this change will represent an added headache as viewers will need to have both pay-TV services to follow the Heineken Cup properly - it seems.
It comes into a market that is already complicated at 6 Nations level for Irish viewers for instance, as England games at Twickenham are only available on Sky Sports. Yet all other games played outside the RFU HQ are available on terrestrial TV channels for Irish viewers.
Or the struggle to ensure the Rabo Pro12 matches are covered live by non pay-tv channels.
For the Irish Rugby Football Union [IRFU] this also could be a major problem - as was identified in their July AGM - and that future uncertainty about the Heineken Cup was a major risk to their finances.
The Honorary Treasurer Tom Grace identified that the IRFU and the provinces have benefited enormously from the competition over the last 12 years, doing well from the sale of season tickets, gate receipts and prize money.
“Any proposed change to the structure of the competition will require the collective attention of the union and the provinces. I believe it is a big issue that needs to be handled carefully.” said Grace.
Provincial income improved by €1.8 million last season mainly due to the progress of Leinster and Ulster to the Heineken Cup final, which was won by the former. If the ERC income was to be reduced in the near future then then it would add unwanted financial pressure on the provinces. It could have significant impact on the viability of Connacht for example and also force more provincial players to seek contracts in England. Or indeed France for the top players.
In Ireland, none of the provinces cover costs from year to year with player salaries, staff salaries, travel costs, rental of facilities, and other overruns paid for by IRFU money - all made through the international game.
For players it could mean preferring England where non-international players in the Premiership can earn on average £125,00-£150,000 a year, with an international making double that with match fees and bonuses. In France the best players make up to €750,000 a year at clubs such as Toulouse, with an annual budget of over €30 million.
In contrast Munster’s annual budget is only about €5m.
While several clubs’ and rugby stalwarts have proffered negative comments about the new deal, the Premiership clubs remain united behind the rapidly escalating row with ERC.
In the meantime Saracens chairman Nigel Wray called for the structure of the Heineken Cup to reflect the financial muscle of the French and English clubs.
“The Heineken Cup was set up by the Unions and fair play that they created it,” Wray said. “The English and French clubs contribute by miles the biggest part of the revenue and we don’t get our just reward. That must be put right.
“The structure is clearly wrong in that we have to knock each other out to get into the tournament and all the other guys stroll in. And that’s not right – we have to fight to get in and we provide most of the revenue. The terms have to be changed.”
It is also thought that an Anglo-French alliance would be unified in the negotiations and there is agreement between the two as to an urgent need for a revamp.
“It is inappropriate to give news about TV rights in Europe,” said Patrick Wolff, vice-president of the Ligue Nationale de Rugby and one of two French representatives at the ERC board.
“I was disappointed. It is not appropriate that this is to be put on the agenda. We do not know for sure if ERC or the clubs or another organisation owns these rights.
“Of course I understand that this is the usual pressure exerted before negotiations but I was sorry to see financial issues being discussed before we talk about how the competition needs to be improved. We don’t want to start all this by having lawyers there arguing about TV rights. We must talk first about the sport.”
So far though there is no mention of a signed irrevocable agreement between BT Vision and Premiership rugby, and so the timing has to be seen as a negotiating tactic given the scheduled ERC board meeting in Dublin next Tuesday. It should proved more than interesting given that those who sit on the board are not known to have shirked many tackles in their playing days.
The European Rugby Cup members are: Independent chairman: Jean-Pierre Lux; England: Rob Andrew (Rugby Football Union), Peter Wheeler (Premiership Rugby); France: Michel Palmie (French Rugby Federation), Rene Bouscatel (Ligue Nationale) ;Ireland: Philip Browne (Irish Rugby Football Union), Peter Boyle (IRFU); Italy: Fabrizio Gaetaniello (Italian Rugby Federation), Orazio Arancio (FIR); Scotland: Ian McLauchlan (Scottish Rugby Union), Mark Dodson (SRU); Wales: Roger Lewis (Welsh Rugby Union), Stuart Gallacher (RRW)
Worryingly, if there is to be a loser in this contrived debate, assuming it is all postulating and the Heineken Cup remains in place, it will be Irish rugby and the IRFU's budget.
Back in 2010 the IRFU estimated the proposed free-to-air initiative by Minister Ryan for the Heineken Cup would result in a loss of income of €10-€12 million annually (or 15-18% of annual income). The finances have deteriorated further since that study and so any more depletion on projected income would have an immediate effect on the game - leaving the IRFU severely challenged in these already chastened times.
For ERC Chief Executive, Derek McGrath, it will be a meeting in which he will need the utmost patience as this issue will run through a number of phases before being resolved.
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