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Major League Rugby faces a pandemic – and corrosive politics

<span>Photograph: Stuart Walmsley/Getty Images</span>
Photograph: Stuart Walmsley/Getty Images

When Pat Guthrie was introduced to rugby union, in California in the 1990s, like many converts from American football he fell for it hard and fast. Soon he was working in the sport, producing and directing broadcasts for TV.

Related: Major League Rugby to kick off season four in March – with Covid plans in place

He saw attempts to professionalise the US game come and he saw them go. Then, in 2017, along came Major League Rugby. For a small stake, Guthrie became a 1.6% owner of the Glendale Raptors, a team in the suburbs of Denver. In a way, he was living the dream. It was, he says, to establish “locally sustainable professional rugby” dedicated to improving the national team.

“The players would be at a very modest salary,” Guthrie says, “and there would be a very strict salary cap that would be enforced. The whole idea of the business was that it would be packaged with tight financial controls, so that each of the ownership groups could sustain the investment that would be required over the first five years.”

At kick-off in 2018, the Raptors had one asset that set them apart: Infinity Park, a 5,000-seater and the first such purpose-built rugby stadium in the 50 states. Six other teams lined up for kick-off, playing out of small multi-sport venues: Seattle, San Diego, Utah, New Orleans, Austin and Houston.

Glendale made the first championship game, losing to the Seattle Seawolves, and expansion clubs signed on: first Rugby United New York and Toronto Arrows, then Old Glory DC, Rugby ATL and the New England Free Jacks. Big-name players came too, Tendai Mtawarira, Ben Foden, Matthieu Bastareaud and Ma’a Nonu among them. Season three ended after just five games thanks to Covid-19 but if the virus spares the 2021 schedule, Chris Robshaw will play for San Diego while the Dallas Jackals join the fray.

To the rugby world, MLR brims with promise. Guthrie insists “there is no one in America who wants professional rugby to work in America more than I do. The idea that I am somehow anti-MLR or in any way trying to harm the development of rugby in the United States, is a non-starter. I’ve been doing the opposite of that my entire life.”

But he says he is determined to speak out. As the pandemic gathers strength for a second wave that could yet threaten kick-off for season four, Glendale are gone, withdrawn from the league in May. A Hawaii team announced with much fanfare in July will not enter next year after all. To Guthrie, and to others around the US game to whom the Guardian spoke on condition of anonymity, all is not well.

After play was suspended, the league announced that the players had been paid for a full season. Speaking to the Guardian in September, commissioner George Killebrew heralded the move as evidence of the league’s financial health. In reporting for this article, league, ownership and broadcast representatives told the Guardian MLR was healthy and on course to thrive and expand.

On the other hand, official accounts seen by the Guardian show very little revenue generated since the inception of the league and for new franchises, a common source of funding for new US sports leagues, the entrance fee has already reached $10m.

In Guthrie’s telling, the departure of Glendale, the team from RugbyTown USA – for which he insists he does not speak in an official capacity – and other troubles can be traced to financial struggles and political infighting, all prey to interests around a rugby world which sees America as its greatest untapped market.

•••

Before it could kick-off, MLR needed a commissioner. It picked Dean Howes, once chief executive of Real Salt Lake in Major League Soccer.

The next job, Guthrie says, was to “figure out what they were going to do for broadcast”. In October 2017 came a deal with CBS Sports Network, “touted to all the owners” – and the public – as “a partnership with CBS”.

US rugby lovers had never had access to regular coverage. MLR now had real air time – also on ESPN+ and local networks – the value of which could not be under-estimated. Like any start-up, however, indeed any league outside pro sports’ top tier, it had been required to buy it.

“It was a contract with CBS,” Guthrie says, “that required that MLR pay for production costs, pay for distribution costs and give up very serious commercial sales and licensing rights.” In short, TV raised little revenue.

It was a problem – but one to be expected. In the words of Patrick Crakes, an experienced US sports TV executive: “Even if a tier-one sports broadcaster likes CBS really believes in MLR, they’ll still have to buy the time. They’re an emerging league. That’s just the way it is.”

Having produced and directed hundreds of rugby broadcasts over a 20-year career, including a spell as director of content for The Rugby Channel, an ill-fated venture at USA Rugby, Guthrie knew hard work lay ahead. Working with Dragonfli Media Technologies, a production company with a background in extreme sports, he directed the first CBS game, Glendale beating the Austin Elite 41-26 at a snowy Infinity Park.

Related: USA Rugby announces steps towards World Cup bid, backed by MLR owners

Guthrie directed more games but his relationship with Dragonfli and the league was never smooth. Later, after the season was over, he decided to review “all 31 MLR broadcasts, evaluating the directing, the cut, the talent, the graphic insertions, the replay flow and other relevant matters”. He concluded that “24 of the 31 games were well below broadcast standards”, and that costs were high.

•••

MLR expanded for 2019, Rugby United New York and the Toronto Arrows taking the league north. In the west, the LA Coast announced entry for 2020. It all brought global publicity, particularly around New York.

Behind the scenes, Glendale were far from happy. At a board meeting in Chicago in November 2018, the Raptors presented a review, drafted by Guthrie, of Howes’ performance as commissioner. Alleging non-compliance with the league operating agreement, the review also examined broadcast standards and relationships with distributors, identifying more than $2m of lost revenue or additional broadcast costs caused, the review said, by the decision to use a production company with no experience in rugby, and a failure to sell sponsor packages.

In answer to Guthrie, Michael Jacquet, chief partnership officer at Dragonfli who also worked on TV and sponsorship deals for MLR, told the Guardian production specifications for broadcast were “dictated by CBS Sports and ESPN … And those production standards were met.”

Jacquet also said “the first two years, the production budgets that I helped craft and create came in on budget every year.” That, he said, meant that the “$2m miss” identified in the Glendale review was “entirely a revenue miss. That was not an expense miss.”

Guthrie says his goal in drafting the review “was to get my very detailed, serious concerns in front of the owners”. As the review did not prompt any action, in January 2019 Guthrie laid out “a 56-page draft complaint”, itemising in legal terms the mismanagement he alleged.

“My goal was to get my very detailed complaints in front of people who would take the time to look at them carefully,” he says. It was a bold move – and one he came to regret. He admits he “did not plead it well”. The draft complaint also said he sought damages.

“But it was never intended to be filed,” he insists, “and it was never filed. It was a legal love letter to my fellow owners who, outside of the Glendale group, weren’t listening to me. And it was driving me crazy.”

MLR responded, Guthrie says, by declaring all management actions approved by the board in hindsight. To Guthrie and Glendale, it now seemed, the only way the team owners could exercise control was to remove the commissioner.

Either way, MLR had cause for concern. Looking to expand, it needed to find funding. Fortunately, a white knight was close at hand. Like many in American rugby, Errik Anderson played the game at college, in his case Dartmouth, a power of the national game. Now a biotech entrepreneur, chief executive of Alloy Therapeutics, he wanted to bring a New England team to the table.

Negotiations with Anderson led to a new provision in the league operating agreement which in Guthrie’s words allowed the newcomer’s venture capital firm, Global Rugby Ventures, “to become an equity investor in any MLR club, up to 25%, without such transactions being required to be reported to all of the other owners as the original operating agreement had required.”

Chad Gough of the Colorado Raptors passes, watched by Paul Mullen (left) and Joshua Furno of the San Diego Legion.
Chad Gough of the Colorado Raptors passes, watched by Paul Mullen (left) and Joshua Furno of the San Diego Legion. Photograph: Stuart Walmsley/Getty Images

That, Guthrie says, meant that “if you were in Seattle, say, and you were struggling to make your cash calls, you could call New England and say, ‘Hey, we need 20 grand for our cash call this month.’ They can wire that money and you can do a deal.

Related: Chris Robshaw, ex-England captain, signs for San Diego Legion in MLR

“It was extraordinary. I don’t think there’s precedent in any professional sports league operating agreement in history. It’s important as it relates to control of decision making. If a group could get control of a super-minority of clubs, they would be able to stop, or veto, through negative voting action, any business decision that required super-majority consensus.”

Speaking to the Guardian, Anderson and Global Rugby Ventures chief executive Paul Hourigan contested Guthrie’s presentation of a deal which, Hourigan said, was “not the MLR ATM”.

Anderson said: “We want to do this in a way that brings capital into the league and scale things behind an owner-operator model. That means, over the long run, one owner, one team.

“GRV only takes minority positions in teams behind management teams we believe in. It’s like every other investment we make as an investor where we are always betting on the team. We don’t see GRV as the management team to run or control a team. Instead we are here to support the individual game plan of each owner we invest alongside. GRV does not vote in the MLR boardroom.”

•••

In US rugby, a fractured landscape forever prey to politics, nothing is ever simple. As Anderson was building what would become the New England Free Jacks, another well-financed interest came into view, thousands of miles to the west.

Adam Gilchrist, an Australian co-founder of the F45 Training franchise, wanted to bring MLR to Los Angeles. The LA Coast, run by Scottish expat Stuart Proctor, was in the middle of a six-month exclusive negotiation period, meant to precede entry in 2020. At a board meeting on 8 August 2018 described by multiple sources, Howes told the assembled owners the Coast bid did not have enough money or appropriate stadium options. The board voted to end the agreement early, opening the door to Gilchrist.

In a statement to the Guardian, Proctor said: “Howes’ claims were simply untrue. We had two viable playing options, both of which had been communicated in detail. As for financing, we had firm commitments from a number of investors including one of the New Zealand Super Rugby teams, and had not even closed our first investment round.”

Nonetheless, Howes and Gilchrist went on to reach a deal that Guthrie says contained two key provisions.

“One, the grant of a franchise was no longer co-exclusive, meaning Gilchrist was given all of Los Angeles” – the metropolitan area of 13.1 million people – “instead of potentially having to share it with another franchise.” The deal also granted “the right to create or split his franchise area and create two franchises of his own.

“But that wasn’t the shocker. The shocker was there was a provision in that contract which was called a ‘most favoured nation’ provision, which basically created a second Errik Anderson-like venture opportunity for the Gilchrist group.”

In short, both Gilchrist and Anderson could now take stakes in other MLR teams, or buy them outright. As Patrick Crakes points out, multiple ownership is not unknown in US sports leagues. In Major League Soccer, for example, the Hunt family once owned three franchises. In the case of MLR, Guthrie says, actions taken to address an intense need for funds had placed the league at the mercy of two big-money interests.

“The plans Errik Anderson had put in place to be able to support the franchises that might struggle and to be able to guide the future of MLR were completely thrown into disarray. The same rights he had bargained so carefully for, for so long, basically were sold to Adam Gilchrist in secret to get the $2.5m the commissioner desperately needed.”

On 6 June 2019, Guthrie says, Howes “basically sold the league’s future for $2.5m. For that sum, he sold the right for Gilchrist to be able to buy any team in the league.”

A representative for Gilchrist’s company, Loyals Rugby, told the Guardian there were “fundamental inaccuracies” in Guthrie’s account, but declined further comment. Howes did not respond to a request for comment.

•••

If the politics off the field were fierce, so was the action on it. New York and Toronto showed well but in San Diego in July 2019, Seattle beat the Legion to retain the MLR Shield. The crowd was promising – around 5,000. Shortly after the game, however, the league owners flew into Denver airport.

Former All Black Rene Ranger speaks to Raptors team-mates during the match against the San Diego Legion in Las Vegas in February 2020.
Former All Black Rene Ranger speaks to Raptors team-mates during the match against the San Diego Legion in Las Vegas in February 2020. Photograph: Stuart Walmsley/Getty Images

By a straw poll vote of 13-1, they decided Howes would be removed. He was given six months to find his replacement. In December, that replacement was announced: Killebrew, a long-time executive with the Dallas Mavericks, an NBA franchise famously – to American rugby fans at least – owned by a billionaire rugby fan, Mark Cuban.

Related: 'It's in my blood': how rugby managed to unite America's elite

In Guthrie’s telling, the new commissioner landed between Gilchrist on the west coast and Anderson on the east, two well-financed interests then yet to field a team but nonetheless faced with a choice, “to either cooperate and create the MLR together, or one will eat the other”.

In Anderson’s telling, they decided to co-operate. As he put it, “inside the boardroom, the owners are very coordinated. We might disagree on tactics, but we’re aligned on long-term strategy and we’re all allowed to do what we want in our own region. And we’re good partners.”

Either way, some of the founding teams now had a foot in one camp while some had a foot in the other. The Raptors, led by Glendale’s fiercely independent mayor, Mike Dunafon, were unwilling to pitch their tent with anyone. As Guthrie shows, they were no more willing to stay quiet.

“The seven original founding clubs,” Guthrie says, “bought in on their A-class stock, with the expectation that would lead to them being able to benefit from the value of the expansion monies that came in [and] was not supposed to be used for operations.

“But because the league has been so cash-strapped, with increasing costs and no incoming revenue, each time they have taken a new expansion team on and new expansion funds have come in, on an ad hoc basis that money has been deposited for general operating purposes. So basically, the original seven founding club members’ bargain has been completely undone.”

That, he says, means “there’s no upside to any of the original seven founding clubs any longer. It’s really just a matter of, you know, can they afford to continue under what are certainly exponentially expanding costs.

“They have zero revenue coming into the center, other than cash calls from the existing members, and any expansion fees.”

In January this year, cash-strapped Austin – winless in year two, rebranded as the Herd – announced a new owner and another new name. The owner was Gilchrist, the name was the Austin Gilgronis – bizarrely, for a yet-to-exist alcoholic drink, named for the man with the money. In the shortened third season, the Texas team would improve. But it was a head-scratching move from LA, and one which contradicted Anderson’s dictum of “one team, one owner”.

Anderson said “people consider Adam Gilchrist to be a genius of marketing, and a great operator, and he has a plan”, and added: “When it became clear the old Austin ownership group … weren’t going to transition into the newer era of Major League Rugby and scale with the organisation”, Gilchrist stepped in.

“He said, ‘I will step up because I’m not running a team this year, and I’m already in MLR. Why don’t we run this team for this season? We plan to launch LA next year.’ And so I did a lot of work on Adam’s behalf, as his partner at MLR.”

As of this writing, Gilchrist still owns MLR franchises in Austin and LA.

•••

Thanks to Covid, season three ended abruptly in March. Off the field, things came to a head. By May, the Raptors were out. In June, Gilchrist announced the name for his west coast team: the LA Giltinis, again, a non-existent alcoholic drink, again named for him.

Dallas, at the table since plans first formed, were finally in too. Documents seen by the Guardian confirm the expansion fee has reached $10m. A bid from Chicago is thought to be imminent.

In July, Kanaloa Hawaii Rugby announced plans to enter in 2021, with the backing of former All Blacks including Jerome Kaino, a double World Cup winning flanker. Out in the Pacific, press outlets in two huge rugby nations, Australia and New Zealand, took note.

But things did not proceed smoothly, not least when a Hawaii state senator questioned claims made by the team. One Friday in early September, MLR released a statement. The “exclusive negotiating agreement executed with Kanaloa Hawaii Rugby Ltd has expired”, it said, which meant there was no “agreement by which this team may join MLR for the 2021 season”.

Killebrew, the league said, “encouraged this potential ownership group to continue with its development plans so that it may be in a position to join MLR for a future MLR season”.

Given that Hawaii responded by questioning “the financial stability and long-term viability and sustainability of the MLR competition” in the era of Covid-19, that did not seem particularly likely. Kanaloa’s statement was withdrawn, but in an email to the Guardian, chief executive Tracy Atiga put the situation more baldly.

“At no point in time has Kanaloa Hawaii ever shown to be lacking in financial backing,” she wrote. “Any comments … in this regard [are] very much a case of smoke and mirrors to deflect reputational damage away from the true issue.

“Once the MLR can get themselves out of a circa $20m deficit for 2020 without using our capital injection ($10m) to service some of that debt, we will be in a better position to decide if WE want to consider 2022 as an option or not.”

New York’s France centre Mathieu Bastareaud breaks a tackle by Atlant’s Austin White in Marietta, Georgia in February this year.
New York’s France centre Mathieu Bastareaud breaks a tackle by Atlant’s Austin White in Marietta, Georgia in February this year. Photograph: CB Schmelter/AP

A league spokesman said: “MLR is in strong financial standing. The league is not operating with any debt and is in an enviable cash position. The current MLR owners work together cohesively in the goal of growing the sport of rugby in North America and with the united belief that MLR has unlimited potential.

“This commitment, and growing metrics across the league, means that the bar continues to be raised for our current ownership groups leading the way, as well as any new potential ownership groups.”

•••

On 11 September, USA Rugby, newly emerged from bankruptcy, announced plans to explore a bid to host the Rugby World Cup. MLR owners backed the process, seeking investment and trumpeting the benefits to North American rugby of hosting the tournament in 2027 or 2031.

Related: Eddie Jones will spend time in US with San Diego Legion – England allowing

Ryan Patterson, a co-owner of the San Diego Legion, told the Guardian it was hoped any bid would attract “investments in Major League Rugby and central platforms and services … to connect the rugby community, engage fans and develop youth pathways, club and collegiate players and aspiring coaches.”

Since then, as the fall has drawn on, MLR teams have continued to announce signings for season four. San Diego have even attracted a world-leading coach, Eddie Jones of England, to work as a paid consultant.

This is America. No one ever made it big by thinking small, or by avoiding risk. Here, as elsewhere, professional sport was ever a cut-throat world, funds often scarce, particularly in the early years of a league. MLR has experienced its share of peaks and troughs. Its founder clubs look out on a much-changed landscape.

To Paul Hourigan of Global Rugby Ventures, “there’s a notion that [MLR is] going in a different direction. I don’t think that’s the case. I think it’s an elevation to the next iteration of the league.”

To Pat Guthrie, and to others in Glendale, Colorado, the league is in danger of losing sight of its original mission.

“The next bona fide group that considers joining the league,” Guthrie insists, “should do so with their eyes wide open.”