The company has entered into an exclusivity period with the WRU but a deal is expected to see the demise of the Ospreys

What do we know about Y11 Sport and Media and its plans to acquire Cardiff Rugby from the Welsh Rugby Union? The union launched a formal sales process for the Arms Park-based club last year, not long after acquiring it out of administration.

With the union attracting a healthy number of expressions of interest, bidders were whittled down to two prior to Christmas : Y11 Sport and Media, and a consortium consisting of former Cardiff Rugby board member Martyn Ryan, a number of Hollywood directors, and Greg Clark, chief executive of Rhino.

The WRU has now entered into a 60-day exclusivity period with Y11, having confirmed, with the unanimous backing of its board, the Hong Kong-based company as its preferred bidder. That doesn’t mean the proposed acquisition of the club will go unconditional. However, the focus – and there will no doubt be efforts to secure concessions on both sides – will be on getting a deal over the line.

A Y11 acquisition of Cardiff, and the cessation of the Ospreys as a professional region at the end of the 2026–27 season, would achieve the WRU’s current stated aim of reducing the number of regions from four to three. There is, though, growing opposition to a Y11 deal from rugby fans, former players and a number of politicians – and not just those in the Ospreys area. There is also a planned extraordinary general meeting of union member clubs in the offing, with a vote of no confidence in its chairman, Richard Collier-Keywood.

READ MORE: Swansea Council start legal action against the WRU and owners of the OspreysREAD MORE: Swansea RFC slam proposed Ospreys merger after being blindsided by revelation

The Y11 story

Y11 acquired a majority stake (75.1%) in the Ospreys back in 2020. The value of the deal was not disclosed, although Y11 described its investment in the club as a “multi-million deal.” The acquisition on behalf of Y11’s investors was through a special purpose vehicle, Ospreys International, registered in the tax haven of the British Virgin Islands. There is no publicly available information on the directors of Ospreys International.

When the Dragons were effectively acquired for £1 from the WRU by investors David Buttress, David Wright and Hoyoung Huh – who was at one stage also looking to acquire Newport County – the acquiring entity, Dragons International RFC, was also based in the British Virgin Islands.

Y11 was set up by its current chief executive in Pontarddulais-born James Davies-Yandle, who played hockey for Wales in the 2002 Commonwealth Games. His father, Mike, played rugby for Swansea RFC and he is a former sports agent. At the time of the investment into the Ospreys, he described it as being a “70% business and 30% emotional investment.”

As an investment company, backed by high-net-worth investors, Y11 has a diverse portfolio of assets, from rugby to mass-participation sports like running and media rights. It also has a minority stake in New Zealand rugby side the Hurricanes, as well as an interest in South African side the Toyota Cheetahs, who, as it happens, a re keen to replace any axed Welsh team in the United Rugby Championship.

In 2023, Y11 itself was majority-acquired by Kuala Lumpur-based private equity firm Navis Capital Partners. The value of that deal wasn’t publicly disclosed. Navis is a serious player with a global investment portfolio, although with a focus on Southeast Asia. It has $5bn of funds under management on behalf of investors, with stakes in companies ranging from healthcare to tech. It was founded in 1998 by Richard Foyston, Nicholas Bloy, Rodney Muse and former Boston Consulting executives.

It said at the time of its majority acquisition of Y11: “Navis have invested in James (Davies-Yandle) and the Y11 team to grow the existing portfolio, identify new opportunities, and become a success for all stakeholders involved. Their values mirror our own: teamwork, tenacity, integrity, and innovation.”

While Y11’s overall portfolio of assets is profitable, the Ospreys, like the other regions, is loss-making. Y11, no doubt would have sought the agreement of Navis before submitting a bid to the WRU. To get approval the Y11 team would have presented compelling projections of multiple times return on capital from acquiring Cardiff.

The Cardiff proposition

So, is Cardiff now going to break the mould of professional rugby, not just in Wales but in England too, where investors cannot reasonably expect a return on investment? The reality to date is that clubs have survived due to wealthy benefactors as ‘emotional investors’ due to the love of the game or a particular club. The late Tony Brown (Dragons), the late Peter Thomas (Cardiff), and others like Rob Davies at the Ospreys collectively committed and wrote off tens of millions.

Wouldn’t Y11, without any annual license fees and debt obligations, make a stronger return on investment by buying a few pubs and restaurants in Cardiff? Despite their experiences at the Ospreys, they no doubt see professional rugby as having huge potential, like football, where Premiership clubs are now seen as attractive investment opportunities, including increasingly by US investors. But they cannot create an Anglo-Welsh league or British and Irish League.

But what is the WRU expecting Y11 to pay for Cardiff – a deal they currently believe is far stronger than that put forward by the rejected rival bid consortium?

Under the proposed 10-year franchise licence, the WRU would be looking for Y11 to pay around £1m annually to run the commercial side of the club. Additionally, Y11 would take on around £6m owned to the union, the majority of which was part of a Covid loan it had negotiated on behalf of the four regions with NatWest. That debt was subsequently refinanced with the Welsh Government. Last week that debt, along with the union’s debt facility with NatWest, was refinanced into a new £60m deal with both HSBC and Goldman Sachs.

Under the new franchise model for Cardiff, the union, who would finance all player related costs, have convinced Y11 that there would be a profit in running the commercial side of the club. While the WRU see it as a collaboration, some of the clubs view the union’s plans as unnecessary control of all rugby matters. However, starting with Cardiff, getting an agreement should be achievable.

The WRU is also looking for some upfront payment, no doubt with the aim of recouping the £3m in debt it converted into equity in Cardiff after acquiring it out of administration. It is not clear what Y11 has tabled, but it could around that level or higher.

Are the WRU and Y11 right to conclude that Cardiff can become a profitable business? Former investors Helford Capital, set up by Phil Kempe and Neal Griffith, failed to deliver on a legal agreement with the union to fund losses, that pushed Cardiff into administration.

The joint administrators from PwC, Rob Lewis and Ross Connock, quickly gave up on pursuing Jersey-based Helford in the interest of Cardiff creditors, as it was solely set up to acquire Cardiff and had no assets. While the Helford directors might have had funds and assets to fund the club’s losses – around £2m a year – when it came to the crunch they weren’t willing to commit.

It’s all water under the bridge now, but if the board of Cardiff had found better investors after the death of Peter Thomas – and there were discussions with Y11 – it could have remained solvent. Without control of Cardiff, would the WRU now be in a position to reduce the number of professional clubs?

To get a deal approved with Y11, and then franchise agreements for east Wales and west Wales, perhaps the WRU could offer a further reduction in the debt liabilities of the club, or take it on completely. Servicing £60m of debt would cost the union nearly £4m in interest. What the WRU and Y11 would also have to agree on is the treatment the current debt passed through to the union into the Ospreys, at around £3m. While loss-making the Ospreys are far less in indebted that the Scarlets and Cardiff.

Y11 is also fully aware – unlike the Dragons, which owns the freehold to its grounds and has space for potential commercial development but with an overage position on any development profit for the WRU – that ownership of Cardiff Arms Park sits with Cardiff Athletic Club (CAC). A short-term lease for Cardiff Rugby with CAC was recently agreed to 2028.

Any development around the ground could happen only after the hosting of games at the adjoining Principality Stadium for the men’s Euro 28 football tournament. It is understood that the union and the CAC remain in dialogue. Could this potentially finally lead to – nearly a decade after a similar offer was rejected – the WRU acquiring the freehold or a long-term lease with development rights from CAC? It is not clear if Y11, or its majority owner in Navis, has indicated any intention to invest in any possible commercial developments at the ground, under a WRU lease or potentially a new agreement directly with CAC.

CAC did set up a special purpose company to look at development opportunities around the ground, which could include apartments at the River Taff end and a hotel integrated into a new stand, with modern banqueting and hospitality facilities replacing the existing smaller north stand. There are opportunities to redevelop the ground, for what is a prime site in the centre of Cardiff, but that will have to be for another day, so cannot form part of any current trading projections for the club if a deal is concluded with Y11.

The WRU chairman and former managing partner of PwC UK, Collier-Keywood, believes that the game is at a crossroads, where investors like Y11 – and their majority owners Navis – see investment no longer as an emotional affair, but as offering the prospect of a return on investment.

Quizzed by cross-party MPs at the Welsh Affairs Committee last week in Westminster, the WRU chair said: “We are trying, with Y11 and Ospreys, to create a different model. The importance of all that is that rugby clubs can be valued on the basis of their turnover, if you are thinking about other forms of sport.

“So it is very handy to have a private equity player in that market to help us understand that, support us, and work with us as we think about how best to create an environment over the next five to 10 years that will attract investment for investment’s sake.”

That would be a great outcome, although the last 20 years of professional regional rugby in Wales does not inspire huge confidence even with one less professional side.

Rugby could really learn a great deal from cricket and in particular the huge investment into the game from the successful auction of equity stakes in the Hundred franchises – including of course Welsh Fire and the £40m investment for a 50% stake by IT entrepreneur Sanjay Govil. Rugby should also look at the marketing of the Hundred and its ability to attract a new and younger audience than other longer formats of the game.

But the WRU, without any indication it will bow to public pressure and keep four regions, firstly needs to get a deal signed off with Y11. If that fails to materialise it should reopen talks with the rejected consortium bid.