This is a testing year for the expansionist ambitions of rugby union. The 2019 Rugby World Cup in Japan is the first outside an established nation, with the performances of the hosts, among others, providing a useful barometer of the game’s burgeoning global maturity.
But one of the biggest tests for a sport still only a quarter of a century as a professional discipline has been putting together viable domestic competitions – particularly outside its very biggest markets. Major League Rugby (MLR) played its first season in 2018, with an initial seven teams playing to modest but consistent crowds averaging in the low thousands. 2,901 fans made the trip to the Tolero Stadium in San Diego last July to watch the Seattle Seawolves take the inaugural title, beating Glendale Raptors 23-19.
For MLR commissioner Dean Howes, these are only the seeds of what the league can grow into in due course.
“Its potential to me is why we’re doing this,” he says. “Rugby is played on every continent. Rugby is an international sport. I don’t know that it lives up to its full potential even internationally compared to some other sports but it has great potential to.
“It is a wonderful sport to watch inside the stadia. It’s constant action. It is just a great spectator sport and not all sports are.”
Howes is speaking to SportsPro from the US with MLR’s second season – that has seen the league expand to nine teams – already underway. The 2019 edition has seen Rugby United New York and Toronto Arrows joining founding members from Austin, Houston, Glendale, New Orleans, San Diego, Seattle and Utah. The annual salary cap, according to ESPN, is believed to be US$350,000 per team, compared with the UK£7 million (US$9.06 million) spent by clubs in England’s Gallagher Premiership.
MLR’s second season has seen the league expand to nine teams with more to come in the future
MLR is the second attempt this decade at an official US league but, by virtue of making it back for another year, it is already the more successful. The five-team Pro Rugby, which was previously licensed by USA Rugby in a three-year deal back in 2016, ceased operations within nine months of kick-off. By contrast, MLR’s experiences have bred the confidence that there is a strategy in place to make it a going concern.
The target going into year two, which Howes believes the league has met, was improving the media output and the “product on the pitch”.
“We learned a lot,” says Howes of the opening MLR season. “I would say that the individual owners learned a lot. They learned a lot about game day experience. They learned a lot about their local markets and local demographics. We learned, just as we thought, that the infrastructure for the youth here in the United States in rugby needs to be improved. So we learned we need to sink our roots deeper inside our communities.
“As the league works at the top, pulling all this stuff together, the individual teams need to sink deep into their communities, get involved with their communities, get their players and management team involved. Because we really need to be involved in all aspects and levels of rugby so that it can reach its full potential.”
Before becoming MLR’s first commissioner ahead of its 2018 launch, Howes was chief executive and vice chairman of Major League Soccer (MLS) franchise Real Salt Lake. He was also part of the executive management team at Rugby Utah, which spawned MLR’s own Utah Warriors.
We have the advantage of not being encumbered by anything in the past so we can look at these things and say, how does it fit into this sport?
MLS has offered a useful template for MLR, but Howes is conscious that the latter has come into being in a different era.
“Our structure as a single entity copies MLS because I spent a lot of time in there as a team owner,” he says. “But the truth is that we watch everything. When the NFL signs a deal with Amazon, we’re watching it, or when the NBA signs its first casino partnership with MGM. This is a dynamic world, internationally, so we look at everything. And again, we have the advantage of not being encumbered by anything in the past so we can look at these things and say, how does it fit into this sport? How do we fit it into this sport? How does it materially help or hinder our commercial rights?
“But structurally we followed MLS and strategically we follow a pattern that I have followed both on a team basis and have learned by being involved in several leagues.”
These are interesting times in club rugby union. Over in its European heartlands, England’s Premiership Rugby recently sold a reported 27 per cent stake to private equity firm CVC in a deal worth UK£200 million. CVC has since been linked with a bid for the multi-nation Pro14, a league featuring teams from Scotland, Wales, Ireland, Italy and South Africa, as well as a £500 million offer for a 30 per cent stake in the Europe’s leading international tournament, the Six Nations Championship.
For Howes, MLR’s newness gives it the scope to consider an appropriate response to rapidly emerging conditions.
MLR commissioner Dean Howes is an industry veteran, having previously served as chief executive and vice chairman of MLS franchise Real Salt Lake
“Some very long experienced leagues have to make some corrections to become more commercially viable, whereas we believe we’ve set ourselves up for the long haul on that and have the luxury of doing that here in this market,” he suggests. “But we just need to make ourselves relevant to people outside of the rugby world, and I think as we do that – and I think the sport has the right to do that – then it’s going to be a major sport. It won’t happen overnight but I think it has the potential to be a major sport.”
In order to achieve that goal, MLR is seeking to attract a fanbase that has not yet made a lifetime commitment to more established US sports like football, basketball, baseball and ice hockey. In short, that means going after a younger cohort.
“I think the target here aligns itself very well with sponsors,” Howes says. “We want to go after the millennial. We want to go after that group that’s just now getting spendable cash, that are looking for alternate entertainment, that are not as locked in as Gen X and the baby boomers on traditional sports.
“We want to go after those young families and the Gen X families, the group that’s just above that. We want to get into these communities and set up places and give parents the alternative to American football, which is struggling big time at the very young ages because of injury concerns.
“We want to focus on them and getting their kids involved because when the kids are involved and go to games, then the parents will be going to games. If the kids have heroes that they’re watching on TV, then the parents will be watching those heroes on TV.
“Rugby appeals to a certain demographic here that is highly educated, and whose income levels are very good. So we just need to make sure that that particular demographic that’s extremely attached to the internet and social media side, we need to get them attached and let this thing grow by pushing it but also by organically growing it through that community that’s very connected.”
Those sponsors at this point include two rugby suppliers – kit partner X-Blades and training equipment provider Ram Rugby – along with British luxury clothing brand Barbour. Its media portfolio is broader-based.
“We either broadcast locally or nationally every single game, so that is a critical part of our marketing,” Howes notes. “Right now, that costs us more than we make on it because of where we are on this continuum. That will change over time, but right now it’s really being done for marketing reasons.”
CBS Sports Network currently carries at least one game a week from the league nationwide, while a partnership with the over-the-top (OTT) service ESPN+ ensures comprehensive domestic coverage and RugbyPass is providing access to an international audience. Again, Howes sees MLR as well placed to negotiate a changing media environment.
“We love our deal through ESPN+,” he says. “We have a deal with Facebook and YouTube, too, and groups like Amazon are getting into this space. This is a world that is ever-changing. ESPN was closing in on 100 million subscribers just a few years ago, with massive amounts of money being generated from that. They’re now in the low 80s and going down. They’ll probably settle in the upper 70s.
“They’ll still be powerful but that same group are not as prone to be attached to their cable or their satellite. They get everything through their phone and sling it on to their TV.”
MLR sponsors at this point include two rugby suppliers – kit partner X-Blades and training equipment provider Ram Rugby – along with British luxury clothing brand Barbour
The US sports rights market, Howes argues, will also be affected by an upcoming round of collective bargaining agreements among the US major leagues – “and this is another reason why we feel this is the time to do this”. It could be a moment that creates new opportunities for a startup competition.
“ESPN is not going to be able to pay what they used to be able to pay if they’ve lost ten, 15, 20 million subscribers,” he says. “Raising their prices is not going to be the answer because even more people will drop. So there’s kind of a new energy coming out of ESPN+, Amazon in this space, others are looking to get into this space even on sports rights. Facebook is becoming very aggressive on this.
“It’s just how you figure out the economics of it. And the nice thing about being a brand new league – while there’s a lot of things that aren’t nice – is that we’re not encumbered by anything. We can follow the trend of doing what’s right and what will be even more right five years from now without being encumbered with some kind of relationship or dependent on some kind of relationship right now.”
MLR is not the only property to have identified the potential of a US rugby audience. Overseas unions and leagues have played a succession of games in US venues, with varying degrees of success. Just 6,271 watched England’s Saracens play Newcastle Falcons in a Premiership regular season game at the 18,500 Talen Energy Stadium in Philadelphia in September 2017, but international matches have often drawn far more substantial crowds.
Premiership Rugby’s latest title sponsor, US-based insurer Arthur J Gallagher & Co, and its minority owner CVC have both stated an appetite for another push for American success and Howes believes these games can be “an asset” to MLR if their needs can be aligned.
International rugby union has proved popular in the US, with Ireland’s win over New Zealand in Chicago drawing a big crowd
“The trouble with those things is that if they’re overdone, they spend so much of their time and assets on just putting on the event and they don’t get into their community,” he says. “This is a big, big country. You can be a national league but you’ve got to get into your individual marketplaces. Your brand has to be relevant there because that brand will literally change behaviour of how people are going to spend their money.”
Among Howes’ suggestions for helpful fixtures are MLS-style games between MLR All-Star teams and foreign visitors, as well as other friendlies involving local and overseas clubs and international Test matches.
“Unfortunately,” he says, “the commercial side of this is what makes the world go round, and there is a discipline and rules to the commercial side of this that you have to be just as focused on and disciplined about as you ask your players and your management team to be.
“We have to do things the right way – not always expedient, not always the way that makes you money early on. I believe that and from my conversations, I believe that CVC believes that, too. I think they have a lot of good ideas. Whether they all align perfectly with a startup league in the United States, I don’t know, but I can’t help but think that there is an alignment there.”
Three more teams will join the MLR fold in 2020, with the New England Free Jacks, Washington-based Old Glory DC and Atlanta’s Rugby ATL bringing the total number of sides involved to 12. That will mean an expansion to 96 annual games and the introduction of Eastern and Western Conferences.
“Inside of a single entity, every single team once they join has an equal vote, and so we had new voices at the table,” Howes explains, referring to the two newcomers in 2019. “So it’s integrating them and managing them and getting them up to speed on how the structure of the league works.”
We have to do things the right way – not always expedient, not always the way that makes you money early on
The further development of the league will be dependent on three things: “media, players, facilities”. Based on wider trends, he would expect the media product to start reaching financial maturity in its third three-year cycle. “Somewhere in your ninth year, you’re going to be really getting traction on your media deal side,” he adds.
“I think your technical skill side takes a full generation,” he continues. Central to the long-term health of American rugby will be the ability to attract young players aged ten to 14, familiarising them with the sport and its technical aspects so that “it’s second nature to them by the time they enter a high school or a college or a professional programme”.
“We’ll keep getting better and better,” Howes says, “but we will need to have international players helping us to get to 16 clubs, which is probably where we’ll end up and at least sit for a little while. I think our national team will become competitive faster than that but I think our league and our ability to attract international players at the highest level, that’s going to take probably a decade.
“We will open up our second rugby-specific stadium in Houston this year. We have two or three more planned. But that is an important part.”
Howes argues that “professional sports need their own home” but his hope for the league is that “ten years from now we’re starting our second generation, our add-ons to our stadium, because our facilities become too small”.
MLR is pushing these initiatives “at the very beginning” in the hope that it will deliver a real future for rugby union across the US.
“Rugby really is a great sport,” Howes says. “It’s intimate and fun and entertaining on the television. It’s the same as a sport. We just need to convert more people that are sports people and entertainment to find some of that sport and entertainment in the world of rugby. And that’s going to take time. There’s a process to that.
“Organisationally, you have to be set up in a way that you can grow and sustain yourself. We believe we have done that.”