The Worcester Warriors were placed under administration on Monday
The Premiership Rugby boss has acknowledged the “status quo” needs to change as he outlined his plans to prevent other clubs from suffering a similar fate to the Worcester Warriors.
The financially strapped club was suspended from all competitions by the Rugby Football Union (RFU) and placed under administration on Monday.
The other Wasps of the Premiership are also under pressure to raise urgent funds amid threats of action from HMRC.
Premiership Rugby chief executive Simon Massie-Taylor told ` Sport that “financial viability and visibility is a big issue” and said he had asked all clubs to provide a “really clear picture” of their current financial position.
But Gloucester chief executive Lance Bradley said he doesn’t think there will be a “domino effect” to Worcester and Wasps’ plight.
` Sport takes a look at the key issues affecting rugby finances.
What happened?
On Monday, the Worcester Warriors failed to meet a funding deadline set by the RFU, resulting in the board suspending the club from all competitions.
Later that day, the Department for Digital, Culture, Media and Sport approved the club director’s request to place Worcester in administration.
Administrators were appointed on Tuesday to try and find a suitable buyer for the club with “higher urgency”. Two consortia are known to be interested in tendering.
Despite the suspension, Worcester remain in the Premiership table and there is a chance that the suspension will be lifted if a buyer is found, meaning they could rejoin the league later in the season.
But Saturday’s game against Gloucester has already been cancelled.
Elsewhere, Wasps filed a notice with the High Court last week that they intend to appoint administrators to “protect the interests of the club”.
Wasps Holdings Limited, which owns the Premiership club and Arena Coventry Limited, took the action amid a “looming threat of action from HMRC” and said it did not mean the company was in administration.
how did we get here
Many Worcester fans have blamed the situation on the financial mismanagement of co-owners Jason Whittingham and Colin Goldring, saying the club “had hit the ground running”.
Players have faced late pay, with some staff receiving 65% of their salary and others not at all.
The club faced an unpaid £6million tax billresulting in HMRC filing for liquidation and owing a further £14m in Covid sports loan payments.
In the meantime, the wasp situation is linked to an unpaid tax bill and £35million in bond repayments that helped fund her move from London in 2014.
Covid undoubtedly exacerbated the challenges Premiership rugby clubs were already facing and a former club boss said the current situation was symptomatic of the “real aftermath of Covid bite”.
However, most clubs were making losses before the pandemic and there were already concerns about the sustainability of clubs’ spending on players’ salaries compared to their revenues.
A club owner, who spoke on condition of anonymity, told ` Sport: “I don’t think there is one owner who would tell you the model works. It’s totally flawed.”
Gloucester boss Bradley also criticized a recent vote by a small number of Premiership clubs to back plans to raise the £5m salary cap “in this decision.
How are other clubs affected?
As clubs grapple with their own problems, they will also be affected by the situation at struggling clubs. Gloucester rugby director George Skivington said the cost of canceling Saturday’s game against Worcester was high “very big for the club”.
Under RFU rules, any club that enters administration is automatically relegated the next season unless they can prove it was through no fault of their own.
With Championship clubs recently struggling to meet the minimum standard criteria to allow promotion to the Premiership, any relegation of Worcester and perhaps Wasps could mean a shrinking of the league.
Sources say this could have media rights implications.
itv agreed a new deal with Premiership Rugby to broadcast a number of matches, including the Twickenham final, on free-to-air television earlier this year.
Bristol Bears owner Stephen Lansdown recently said there was “just not enough money in the game”, adding the league needs to generate more revenue to attract other investors.
Bradley, meanwhile, said all clubs have challenges but the issues affecting Worcester and Wasps are “specific” and should not be seen as “contagious”.
What do the governing bodies do?
Worcester captain Ted Hill said Premiership Rugby’s structure needed to be reviewed.
“People who want to buy clubs need to be looked at more closely because people don’t want to do that again,” he told Radio 4’s Today program.
“They want their clubs, which are a big part of their communities, to be safe and able to be as good as they can be.”
Massie-Taylor told ` Radio 5 Live’s Rugby Union Weekly podcast he had “phoned the clubs that we need a really clear picture of things”.
The RFU, meanwhile, said: “While it is the responsibility of every business owner to manage their individual finances, we will be reviewing the lessons learned from this situation to see what regulations can be put in place to provide greater financial transparency for all parties.”
How will this affect the future of rugby?
There are currently no Worcester players in the England men’s team, but two University of Worcester Warriors players, Lydia Thompson and Laura Keates, will travel to New Zealand for the upcoming World Cup without a potential club return.
Worcester’s players are unable to train at the club at this time due to a lack of insurance.
Even if they wanted to change clubs, Massie-Taylor expects that to be difficult, saying: “We’ve started a season, the recruitment of people has been done, the salary cap is what it is.
“There will be options for some players, but not for all – that’s the brutal message here.”
There is a general consensus among clubs that the Premiership rugby product is not the problem and that the financial model requires particular attention. Bradley said one improvement to attract new fans would be changing the schedule so league games are not played during international windows.
Massie-Taylor added: “There are two things you need to address in terms of financial success, one is the overall growth plan for the sport and the other is laying the groundwork for future investment and for new club owners and fresh capital .”
Comments are closed.