English rugby union’s top teams and the sport’s private equity backer are in advanced talks to fund a multimillion pound loan to Newcastle Falcons to help it meet financial criteria allowing it to play next season.
Sky News has learnt that the nine other Gallagher Premiership Rugby sides, which include current league leaders Bath, Saracens and Harlequins, and CVC Capital Partners are drawing up plans for a loan worth about £4m to the north-east club.
The Falcons, who are propping up the Premiership table with just two wins from 11 matches, are said to need the additional funding in order to meet the tests applied by the league’s recently created Financial Monitoring Panel.
Newcastle’s plight comes two years after Worcester, Wasps and London Irish all went out of business, leaving the Premiership with just ten teams.
A further loan, which could be finalised within weeks, would require approval by the Department for Culture, Media and Sport (DCMS), according to insiders.
The exact size of the loan has yet to be determined but one source said it could be worth between £4m and £5m.
Premiership clubs are said to be keen to ensure that any new funding they provide ranks on at least equal terms to emergency loans provided to the sport by the government during the pandemic.
In 2021, the then culture secretary, Oliver Dowden, signed off an £88m support package to the top flight of English rugby to ensure the league’s survival.
Much of that funding has yet to be repaid.
CVC, which bought into Premiership Rugby in 2019, owns a 27% stake in the league.
Under its stewardship, broadcast audiences and attendances have turned a corner, with total TV audiences up 40% this year – partly as a result of an increase in the number of games being shown.
Sponsorship revenues are said to have nearly doubled since CVC’s initial investment, with fan interest among the crucial 18-34 age demographic rising by 30% during the last year, according to insiders.
The Newcastle loan talks come amid negotiations over a new broadcast rights deal for Premiership Rugby, with sources suggesting this weekend that TNT Sports, the incumbent rights-holder, was expected to agree to a renewal at a premium to the current sum in the coming weeks.
One insider said the sport’s improving commercial backdrop meant it made sense for Newcastle’s nine fellow Premiership clubs and CVC to support the bottom side financially.
It emerged last November that Semore Kurdi, who has backed Newcastle Falcons for more than a decade, had put the club up for sale.
Rugby executives said this weekend that a number of family offices were among the parties which had expressed an interest in buying the Falcons.
It was unclear, however, whether any form of deal was imminent.
A takeover would include the club’s 30-acre Kingston Park stadium site.
The Falcons have been lossmaking for some time, despite Mr Kurdi’s moves to cut costs, with Newcastle Falcons spending millions of pounds less on wages than it is permitted to under the sport’s salary cap.
Of the clubs which collapsed, London Irish has been acquired by a consortium fronted by Eddie Jordan, the former Formula One team-owner, while Wasps said in November that it had secured land in the south-wast to build a new stadium as part of its revival plans.
Worcester Warriors said this month it had submitted an application to the Rugby Football Union to enable it to compete again from next season.
CVC, Newcastle Falcons and the DCMS all declined to comment.
Content Source: news.sky.com