World Rugby revives talks to raise funds for US expansion, sources say (updated)

USU Ventures AG

05/10/2024 08:41

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      World Rugby revives talks to grow sport in U.S.
    

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      U.S. hosting 2031 and 2033 World Cups
    

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      WR says has engaged global financial services leader 
    

  
 (This Oct. 4 story was updated on Oct. 5 to add comments from
Jefferies in paragraph 11, MLR in paragraphs 19-20)
    By Amy-Jo Crowley and Mitch Phillips
       LONDON, Oct 4 (Reuters) - Rugby union’s governing body,
World Rugby, has rekindled talks to raise funds for growing the
sport in the United States, three people familiar with the
matter said.
    Dublin-based WR, led by CEO Alan Gilpin, could use the funds
raised to invest in the U.S. by creating a new league or
investing in existing ones, the people said.
    The governing body first explored options in 2021, including
selling a stake in the World Cup’s commercial rights that would
be used to fund other areas of the sport, Sky News reported at
the time, but a deal never materialised. 
    The revival of talks would be a test of appetite for the
sport in the U.S. as it builds towards hosting the 2031 men's
World Cup and 2033 women's World Cup.
    The quadrennial men's tournament was last year won by South
Africa in France and is next scheduled to take place in
Australia in 2027. It is by far the biggest generator of funds
for the sport which turned professional in 1995. 
    France 2023 generated a 475 million-pound ($622
million)surplus for reinvestment in the game, with 300 million
pounds directly invested into unions and regions, WR said.
    Australia 2027 is projected to generate 550 million pounds
and the 2031 event, the first Rugby World Cup held in the U.S.,
is projected to earn 770 million pounds, not taking into account
the current investment process.
    The sources, who spoke on condition of anonymity, cautioned
that discussions are ongoing and may not lead to a transaction.
    Private equity firms Providence and KKR  KKR.N  have held
talks about participating in the process, which is being handled
by bankers at Jefferies, two of the people said. 
    The group is considering raising the funds by issuing debt,
one source said. 
    Jefferies, Providence and KKR declined to comment.
    
    GROWTH PLAN 
    A WR spokesman said the organisation was exploring
opportunities to fund a U.S. growth plan, aimed at accelerating
rugby’s growth in the country in the run-up to and beyond
hosting Rugby World Cups in 2031 and 2033. 
    "WR has engaged a global financial services leader to test
the market and identify potential commercial partners and
investors with the relevant expertise to help achieve key growth
goals," the spokesman said. 
    "A formal go-to-market strategy launched in early 2024 is
attracting enormous interest. As a result, WR is currently in
conversation with a number of interested parties who share our
growth vision. Conversations continue to be exploratory, and no
formal offers have been made or accepted."
    Funds raised would be used to develop the sport in the U.S.,
which has been a long-term target for WR as part of its attempt
to expand interest beyond the relatively limited traditional
strongholds of the sport.
    WR has held discussions with governing body USA Rugby and
Major League Rugby (MLR) about the optimum way to fund that
growth, which could involve creating a new league or boosting
the existing MLR set-up, sources said. 
        Founded in 2017, MLR is a professional league in North
America comprising 12 teams, featuring 11 from the US and one
from Canada.
    "Major League Rugby and our partners, USA Rugby and World
Rugby, share the goal of driving exponential growth for American
Rugby over the next eight years," Nic Benson, CEO/Commissioner
of Major League Rugby said in a statement. 
        "We're in constant contact on joint initiatives
including Anthem RC, a jointly funded initiative that created a
new professional team this year as a key pathway for aspiring
USA Eagles, and Imagine Rugby, our non-profit grassroots
initiative that will introduce millions of boys and girls to
rugby before the 2031 World Cup."
  
    Any agreement would have be presented to World Rugby’s 132
national member federations for a vote.
    
($1 = 0.7631 pounds)

 (Reporting by Amy-Jo Crowley and Mitch Phillips, editing by
Anousha Sakoui, Ed Osmond and Louise Heavens)
 ((Amy-Jo.Crowley@thomsonreuters.com;))