Bill Sweeney, chief executive of Rugby Football Union, says prospective owners will be subject to “ongoing reviews” regarding their ability to manage clubs.
Sweeney said to a Digital, Culture, Media and Sport selection committee that the current owners test was “not enough.”
However, he denied the suggestion by the RFU that they had been “asleep in the job” in the wake of the Worcester and Wasps crisis.
Following the collapse of both clubs, the governing bodies of each sport were interrogated at a parliamentary inquiry.
MPs scrutinized Premiership Rugby and the RFU over how they handled the financial meltdown that enveloped the clubs and led them to administration.
Julian Knight MP (chair of the committee) called the demise of two teams from the top flight “a failure in the game on an enormous scale”.
Premiership co-founders Wasps went into administration on 17 October, with debts of more than £100m.
Worcester Warriors called insolvency specialists 13 days before the club’s arm that paid staff and players was closed. wound up in the High Court.
Since then, the club’s debts were revealed. total more than £30m• Including millions of unpaid tax
Sweeney claimed that the owners test that allowed Warriors owners Jason Whittingham & Colin Goldring to assume control of the Sixways club wasn’t robust enough.
He said that they had passed a “fit and proper persons” test in 2018. This involved background checks to determine their suitability for being owners, and the formation of business plans.
“They passed the tests, but their performance was not up to their potential.”
Sweeney was asked why the RFU hadn’t taken action earlier to investigate the running of the club. He replied that the true extent of the problem at Worcester “wasn’t obvious at the moment”.
Sweeney assured the committee that there have been no prior discussions at the RFU regarding owners ongoing performances.
“One of the lessons we have learned from this very unfortunate episode is that a binary once-off owners and directors test does not suffice to prevent bad behaviour or poor management,” he stated.
“It is important to have regular, ongoing conditional reviews of their performance as well as suitability.”
Knight said he would write the Serious Fraud Office as well as the West Mercia Police Complaints Commission, asking them to investigate Goldring’s claim that he had reported to the RFU about being barred from working in the capacity of a solicitor.
Goldring issued a statement through Morecambe FC in July, stating that both the EFL & RFU were made aware about the tribunal against him and that “all regulatory bodies” considered him fit and proper for the role of director of a sporting club.
Sweeney claimed that the RFU was aware of Goldring’s subsequent sanctioning. He wrote to Sweeney, but that their plans to investigate were “superseded” by “trying save the club”.
Worcester and Wasps to Lose Right to ‘P Share’
Following Wasps and Worcester’s relegation from the Premiership, attention has focused on the club’s rights to hold on to their allocation of revenue generated from the league – the so called ‘P share’ – worth about £2.5m per club, and about 10% of each club’s income.
Carol Hart, head of Worcester Warriors Community Foundation said that the club “will likely not survive under any ownership”. Robin Walker, Worcester MP, said that there was a strong moral case for the club to keep their share.
Premiership Rugby chief Executive Simon Massie Taylor, however, refused to answer a question from the committee about whether the clubs that were hit by financial difficulties would keep their P shares’. He stated that they were not a perpetual right.
He said: “When you are relegated or fail to make it up after a year, those P shares can be purchased off you.” All clubs signed up to pre-emption rights as part of their shareholder agreements. This means that if a club goes under administration, the ‘P share’ can be bought off them by other clubs.
Massie Taylor stated that Worcester and Wasps “knowingly signed up for this” and that he didn’t believe that was a strong message to send to other clubs. That essentially, you can go into administration to retain assets and get rid of your liabilities while also keeping them in good standing.
France model has a lot to be proud of
Sweeney was the original model in England. “broken” Reiterating his intent for “greater fiscal transparency and management” as well as improving the “alignment”, between the Premiership, Championship, and the possible introduction of central contracts that could help clubs reduce the cost of international player salaries.
He also stressed the RFU’s willingness to adopt elements of the French game. There, the financial dealings for all professional clubs are overseen by an independent regulator, the DNACG. This is in a more “robust.” way.
Massie Taylor agreed, saying that there was “a lot to be said for the French approach to financial management. However, it wasn’t a “cut-and-paste” model. An independent review would be done to improve “financial sustainability”.
Players “keep on the fringe” of crisis
All staff and players were immediately made redundant when Worcester and Wasps collapsed. Wasps alone had 167 job openings.
This triggered players scrambling to find other clubs, with 21 Warriors managing to secure deals elsewhere.
According to Judith Batchelar (chief executive of the Rugby Players Association), players felt “kept atthe periphery” by the absence of financial support.
She said that the hearing had had a “massive effect” on the players, and that there was no safety net.
She said, “We lived with Premiership clubs losing money for so many years that we forgot it was an actual risk.”
She said that the RPA wants to see more “diversity” in decision-making, with equal weight given the future of women’s sport over governance and areas of sports science.
Sweeney said the RFU are investing £220m into the women’s game over the next decade saying it was a “major priority” to make it “the envy of the rest of the globe”.
Analysis – BBC Hereford and Worcester Political Reporter James Pearson
A fit and proper persons test is required in order to purchase a sports club.
That was something that both Jason Whittingham & Colin Goldring had to do. Today, however, we learned that the RFU does not regularly check their owners once they have become their owners.
Today’s Worcester MP claimed that Mr Goldring was prohibited from working as a solicitor in the earlier part of this year. Julian Knight who is the chairperson of the committee said that the matter should be investigated.
The BBC attempted to reach Colin Goldring this week. While he has not yet commented on the hearings, he stated that he was “cleared” of any allegations of dishonesty during his ban from practicing as a solicitor.