The Scarlets are about to embark on a new era with chairman Nigel Short having stepped down after nine years at the helm to be replaced by Simon Muderack. Alex Bywater chats to Muderack about his ambitions for the Scarlets, private equity and his plan to negotiate the murky waters of Covid-19.
Scarlets hope to follow Manchester United’s model of success as new executive chairman Simon Muderack plans on taking the Welsh region to another level on and off the field.
Muderack and former New Zealand hooker Sean Fitzpatrick are new faces on the Scarlets board having joined last month. Fitzpatrick’s iconic status means his appointment got all the headlines, but Muderack’s presence could be even more important given his expertise in dealing with private equity investment.
The experienced businessman knows from previous roles exactly how those deals work and will play a key role in making the Scarlets attractable to CVC and other potential investors. “We have great ambition to further develop financial opportunities for the Scarlets,” said Muderack.
“I’d like to think the footing the board have put the club on will continue to improve, particularly as we come out of Covid-19. If you look at the Manchester United model going back 10, 15 or 20 years it was never about necessarily paying top dollar for the best players.
“You spend the money where it’s appropriate to augment and enhance your squad. The very famous example is where Manchester United declined to pay the cheque for Ronaldinho but instead made an investment in a young chap who went on to be fairly successful called Ronaldo.
“There is a strong commitment to the culture at the Scarlets and belief in the concept where no individual is bigger than the team. We continue to develop a tremendous amount of talent in the region. It’s a great place to grow your rugby career. It’s not just about on field talent – it’s about your infrastructure too. We would love to paint the rugby world red.”
CVC have already invested in the Gallagher Premiership and Guinness PRO14 and are set to buy a stake in the Six Nations. As rugby continues to battle huge financial difficulties caused by the devastating impact of Covid-19, the CVC money – bluntly put – is set to be a huge saving grace.
From Scarlets’ perspective, this is where Muderack’s expertise comes in. “The game is undoubtedly going to change. The current model is not sustainable and private equity is investing,” he said.
“Investors with big pockets who will take advantage of the value creation opportunity that is going to arise in rugby are circling the game. There are going to be some winners and losers in that and this is a significant moment in the history of rugby.
“If you add up the combined funds of these private equity companies alone you have over half a billion pounds of financial firepower on tap. Those guys do no write cheques without going through exhaustive processes which show they believe they can return value to their shareholders.
“Formula 1, as I understand it, is the most profitable investment CVC have ever made. They clearly see that they can emulate at least a degree of that in rugby. Highly qualified people have studied the game and believe there are opportunities.
“Everyone has a doom and gloom view, but CVC do not. There is interest in investment and that came at the peak of the pandemic which is significant and while I was in this process with the Scarlets.
“That was a pivotal moment and it suddenly clicked with me about my relevance to the game and the club going forward. Coming into this process and working with the board we were adamant we wanted the Scarlets to be at the forefront of the opportunity that is about to materialise.”
The Manchester United model means borrowing a lot of money and using any profits the club makes to pay it back.