Heineken, sponsor of the European Cup, is expected to sign a new deal with ERC - the tournament organisers - this afternoon. The new deal with the Dutch brewing giant, which starts from the end of next season, is believed to be worth €5.5 million a year.

A number of potential new sponsors had been linked to Europe's premier rugby club competition, most notable, Fiat, and Lions shirt sponsor Zurich. The value of the new contract compares well to other major international rugby sponsorships, for example RBS pays about €7 million a year to sponsor the Six Nations tournament.

One of the main sticking points in the talks was thought to be the decision by ERC to sell the live television rights to the tournament exclusively to subscription-based television in the key commercial market of Britain and to other pay platforms in France and Italy. This reduces the value to the sponsor because of the limit it places on audience numbers.

Last year's final between Wasps and Toulouse drew a television audience of 205,000 viewers on Sky Television, the first year the event has been exclusively televised on pay-TV. Another problem for Heineken is that in France, the country's loi evin law, which bans the promotion of alcohol on television, means the sponsor's name is removed from the title and the event is marketed as the H Cup.

The new deal follows an extended period of brinkmanship between sponsor and rights holder. Recently, an ERC spokesman told The Irish Times that the governing body had commissioned the services of three international sports marketing agencies, IMG, iSe and TEAM Marketing, to find a potential replacement sponsor.

The agencies were chosen for their well-established relationships with many of the biggest spenders in the sports sponsorship market. However, this move to employ third party help can now be read in one of two ways. Either, ERC was using the agencies as a stalking horse, creating competition for the title and attempting to protect its price, or, it was sufficiently concerned Heineken would walk away from the negotiation table that they were forced to prepare a contingency plan.

Heineken's renewed interest represents good business for ERC, and by definition the rugby unions that make up the Six Nations. The revenue generated goes to the clubs via the Six Nations unions to develop the game in England, France, Ireland, Scotland, Wales and Italy. The last set of accounts published, for the year 2003, showed the unions shared €27.5 million in donations, but the accounts do not give a breakdown on what each country received from the ERC. The overall donation figure was an increase on the €26.2 million paid out in 2002.

The tournament has created substantial media and fan interest. According to figures released by ERC, the competition has set new attendance records in this season's pool stages. In all, 630,810 fans went through the turnstiles, 40,000 more than the mark set last season. Nearly 120,000 people attended the final round of matches, while the game between Munster and NEC Harlequins at Twickenham broke the previous best attendance for a pool match, 33,883 saw the Irish side win 18-10 to secure a quarter-final place. That was over 10,000 more than those who turned out last season for Leinster's game against Cardiff Blues at Lansdowne Road.

ERC suffered a loss of €874,978 last year, with accounts for European Rugby Cup (ERC) Limited, filed recently at the Companies Registration Office in Ireland, showed the company had made a profit of almost this amount the previous year.

The accounts list its primary activity as the promotion of rugby union and, as a sporting activity, it is exempt from paying corporation tax in Ireland. No reason was given to explain the loss, although the company's overall cost base for the year to end June 2003 increased by €1.6 million to €33.4 million. Annual turnover was down slightly at €32.48 million. The expenses for company's directors fell from ... €273,140 to €210,748. The ERC employees 11 people in its Dublin office apart from the directors. Even with the 2003 loss, the company remains profitable, with retained profits of €2.05 million and cash balances of €1.09 million.

A breakdown of the income figures shows the company, which is owned by the rugby federations of Ireland, England, Wales, Scotland, France and Italy, derives the bulk of its turnover from TV rights agreements, which grew year-on year from €21.09 million to €22.5 million. Sponsorship turnover decreased by 5.5 per cent to €8.9 million.