The new league will be created next season and will be open to offers for new clubs in the next three years in a bid to solve rugby’s financial instability struggles of the last several years.
Prem Rugby will operate as a closed, franchise-based league from 2026/27 onwards after the Rugby Football Union (RFU) confirmed the expansion of the league on 27 February.
The Gallagher Prem, as well as Champ Rugby, will scrap promotion and relegation between the two rugby union leagues in favour of a “criteria-based expansion and demotion model”, according to the RFU.
From the start of the 2026/27 season, 12 teams will be part of both leagues and will open up in 2029/30 for expansion teams to join. The proposed expansion teams will be subject to RFU readiness assessments.
A closed league, akin to the NFL and NBA, was agreed upon after months of discussion amongst key stakeholders from the RFU, Prem Rugby, Champ Rugby, Premiership Women’s Rugby and Rugby Players Association.
The cause for the new closed league and expansion model is due to several years of financial instability. Many Prem Rugby clubs have been subject to financial turmoil, which has resulted in the collapse or entered administration of clubs such as London Wasps, London Irish and Worcester Warriors.
The RFU stated it intends for the new league to drive new investment opportunities, scale globally as a commercially attractive competitive league, and maintain financial security and stability.
Simon Massie-Taylor, Prem Rugby CEO, said: “We are now firmly on the path to a more prosperous and brighter future for Prem Rugby. Our vision is to become the best league in the world – for fans, players and investors in current and future Gallagher Prem clubs – and these important changes throughout the game will help us achieve this.
“The changes agreed today show unity across the game and will allow current and future club investors to confidently invest in our new growth plan and the wider English club rugby
eco-system.
“We are extremely proud of what the Prem has achieved in the last few years and we are unbelievably excited about the opportunities that are now in front of us.”
Expansion model already gaining interest?
The new expansion model, when introduced in 2029/30, is designed to provide a “clear, transparent pathway with defined criteria giving ambitious Champ clubs and other potential new entrants something concrete to build toward and something investors can back with confidence,” said the RFU in a statement.
A newly established body will assess league readiness, investor appetite and club preparedness for expansion. It will also have oversight and input into the demotion and replacement process.
Clubs must submit a formal ‘Expression of Interest’ and become part of a tender process to be assessed against the new body’s mandatory criteria: rugby excellence, operating standards, financial sustainability and investment capacity.
If an expansion club is successful in its assessment, it must serve at least one season in the Champ Rugby league. For existing Prem or Champ Rugby clubs underperforming its regular assessments, it could be penalised by being demoted or being removed from either league entirely.
One investor who is already reportedly interested in launching a new franchise is Knighthead Capital, the majority owner of Birmingham City.
The Times reported Knighthead are looking to launch a new rugby union club in Birmingham under the new assessment criteria. The report also revealed if an entirely new club is not created, Knighthead could opt to acquire third-tier rugby union club Birmingham Moseley.
What can a closed league deliver?
A closed league, a league composed of a certain number of teams which remain in the league with no promotion or relegation involved, is the model preferred in the US.
The NFL, NBA, MLB, NHL and MLS all operate under this model, which allows for predictive outlooks year-on-year of broadcast rights revenue and a hard salary cap for franchises to operate under, penalised if they do exceed the cap.
As broadcast revenue is divided equally amongst US franchises, this provides greater parity and competitiveness from the top and bottom of each league.
This financial security has enabled 28 out of the 30 NBA franchises to make a profit in the 2024/25 season, with only the Milwaukee Bucks and Los Angeles Clippers recording a loss.
The accumulative growth of the NBA over the last decade has seen it acquire a new 11-year, $76bn media rights deal which in turn, has seen league-wide franchise valuations surge. Some of the most notable NBA team sales involve the Los Angeles Lakers – sold for $10bn – and the Boston Celtics – sold for $6.1bn.
If Prem and Champ Rugby can operate in a similar vein, diving broadcast and media rights deals evenly, while promoting financial sustainability rules, it could result in the high-growth profiting era the RFU and rugby have been clambering for.
