Up to £400m at stake

Warburg Dillon Read, the investment bankers, have assured the Home Unions that they will be able to raise £250 million in a bond issue and that the figure could reach £400 million.

The "securitisation" process - the issue of bonds against the unions' revenue from television, sponsorship and advertising deals - is common practice in business circles, and there is a sports precedent to assuage sceptics in rugby circles.

The structure of the proposed issue to the Six Nations is similar to recent fund raising by soccer clubs Chelsea, Newcastle United and Lazio. Bernie Ecclestone, the self-styled supremo of Formula One racing, managed to raise $1.4 billion (£870 million) through a comparable venture earlier this year.

Essentially, it will be a 10-year mortgage secured on the income from television deals, sponsorship and advertising for the Irish, English, Scottish and Welsh unions. This revenue is expected to exceed £60 million next year and will increase when current deals are renegotiated. The collective bargaining process of the unions makes their position infinitely stronger than looking for a deal individually.

That income will more than cover the interest bill: the expected interest rate of seven per cent would mean an annual cost of less than £20 million. As with an ordinary mortgage, the only pitfall is the non-payment of the interest, an unlikely scenario unless there is a complete commercial disaster.

Warburg Dillon Read boast a track record for this type of venture in a sporting context, having already secured £75 million for Chelsea FC.

The investment bank have intimated that investors will be queueing up to buy bonds, not least because of the popularity of the sport among fund managers in the City. Once it is created, Four Unions Management (FUM) will need to obtain a credit rating from one or both of the two main agencies, Moody's and Standard and Poors. The strength of the rating they give will determine how much FUM can raise and what interest rate they will have to pay.

The exact monetary bonanza will depend largely on the structure agreed by FUM. Warburg are reputed to have told the four unions that, initially, they should raise only the money needed at present.