The four "home" rugby football unions the bodies that govern rugby union in England, Wales, Ireland and Scotland have joined together to mandate Warburg Dillon Read (WDR) to look into the possibility of securitizing future television, sponsorship and advertising income, a WDR official confirmed.

WDR has started to examine how a deal could be structured and precisely what assets would back it, but, while discussions are still in the early stages, the bank considers such a transaction perfectly possible, the official said. Any deal could be for as much as GBP500 million ($803 million).

Allan Hosie, chairman of the Six Nations committee (the body that runs the game for the home nations plus France and Italy) said that a sub-committee had been formed which will have until January 31, 2000 to decide whether to proceed. WDR said that if they are given the go-ahead a deal could be launched as early as March.

The possible deal came at the prompting of Tony O'Reilly, former head of H.J. Heinz and ex-Irish and British Lions rugby international. It comes against a background of turmoil in British and Irish rugby, with suggestions that many club sides are on the verge of bankruptcy England's top 12 clubs, for instance, lost GBP20 million between them last season and several of the home unions are desperate for cash.

However, while this may make for a motivated issuer, it is also likely to mean investors need some convincing that the sport is stable enough for cashflows to be certain over several years, particularly given the regular infighting between the representatives of the home nations and the constant disputes between the game at club level and the international game.

There have also been disputes in the recent past about how television income is divided between the four home nations.

On the plus side, there is no doubting the demand for television rights, with satellite and terrestrial broadcasters competing feverishly for them last time they were available. Demand for sponsorship opportunities is also high.

WDR bankers were certainly bullish. "We are confident there would be strong demand in the international capital markets for an orderly and well-structured offer based on a united approach from the four home unions," said Ken Costa, a WDR vice-chairman.

If a deal is successful it will be the latest transaction in a growing sector of the market. While securitizations backed by future ticket receivables are common in the U.S., they are less so in Europe, with only Newcastle United closing a true ticket-backed securitization in the U.K. However, the rugby deal is likely to more closely resemble the transaction launched earlier this year by Morgan Stanley Dean Witter for Bernie Ecclestone's Formula One motor racing business, which securitized future television and other income.

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