Rugby reaps reward for tackling problems

Central to the RFU plan, backed with an investment of £50m, is a series of primary objectives which includes English domination of the Six Nations. The RFU wants to win the Championship in six of the next eight years and is planning for four Grand Slams along the way.

A further £155m is being invested in grass-roots and community rugby.

The RFU has spent the past year establishing a series of licensing, media, broadcast, travel and leisure deals that will provide it with the income to achieve these objectives.

But it is the role of televised rugby that has underpinned the game's commercial success.

Aidan Day, managing director of Octagon Marketing, which handles sponsorship for the Zurich Premiership and the Heineken Cup, said: "The sport did not price itself out of the market. The subsequent improvement in the game's image has led directly to an increase in the quantity of television coverage."

Sky and the BBC are keen to show more rugby due, in no small part, to its cost. Whereas Sky pays more than £350m a season for live football, Six Nations rugby is available for one-20th of the cost.

Last year, Sky televised 79 live matches and the latest figures show that its audience for the Zurich Premiership has increased by more than 10 per cent. On the BBC, Rugby Special is to return in March as a direct result of the increase in the live match audience in Grandstand.

The BBC has confirmed it will bid for the rights for the Six Nations from 2003.

Peter Younge, head of programmes, said: "We want live coverage. Live is everything. Rugby union is a core sport for us."

He was far too polite to mention the fact it's also relatively inexpensive.

The good news is reflected in the RFU's accounts. Revenues leapt from £43.1m to £54.7m in the year to 30 June 2001 while profits improved by

30 per cent, rising from £5.6m to £7.3m.

Accounts show the RFU had £23.4m in the bank and that turnover in catering and hospitality doubled, resulting in an exceptional gain of £11.3m. There was a 31 per cent increase in match ticket income and a 25 per cent rise in the value of merchandise sales.

The establishment of the website rfu.tv has led to a separation of conventional from new media rights with the RFU and the clubs retaining all overseas licensing, video on demand, internet, broadband, and

The attraction to sponsors is that instead of dealing with a collection of professional clubs with different agendas, technology partners and broadcast rights available, they only need deal with one body.

Plans are in place for generating additional income to ensure that rugby does not become overdependent upon television receipts.

The selective development of high street retail sites, the staging of concerts at Twickenham and the establishment of an England Rugby travel company are indicative of the RFU's long-term thinking based upon sound commercial models.

The future profitability of rugby (and indeed other sports) may be jeopardised by the Treasury. The RFU estimates it will pay more than £6m a year in tax during its eight-year plan and is lobbying the Government to seek an exemption.

It argues this money could be used to fund the development of the sport at school and grass-roots level.

Rugby is by no means a perfect example of how a sport can succeed commercially.

Up to 10 per cent of tickets for major internationals are sold on the black market, most club grounds are best described as inadequate and the season could be better structured to create a momentum-building, 'crescendo' effect.

However, the way the sport has undergone a very public soul searching, ditched unrealistic financial optimism and built a solid commercial base is cause for celebration.