Premiership Rugby’s boss has admitted that the status quo must change and outlined his plans for preventing other clubs from suffering a similar fate as the Worcester Warriors.
The Rugby Football Union (RFU), which was financially strapped, suspended the club from all competitions and placed it into administration Monday.
The threat of HMRC action means that Wasps, a fellow Premiership side, are under increasing pressure to raise urgent funds.
Premiership Rugby’s chief executive Simon Massie Taylor told BBC Sport that “financial visibility and viability is a major theme” moving forward. He also said that he had asked all clubs for a “really clear view” of their financial situation.
Lance Bradley, chief executive for Gloucester, denied that there would be a domino effect on the situation facing Worcester or Wasps.
BBC Sport examines the main issues facing rugby’s financial health.
What happened?
Worcester Warriors failed Monday to meet a funding deadline set by the RFU. This resulted in the governing body removing the club from all competitions.
Later, the Department for Digital, Culture, Media and Sport accepted the request of the club’s directors to place Worcester in administration.
Administrators were appointed Tuesday to work in a “high level of urgency” to find a buyer for the club. Two consortiums are known to be interested.
Worcester is still in the Premiership table despite being suspended. However, a buyer could be found and the suspension could be lifted. This would allow them to re-join later in the season.
However, Saturday’s match against Gloucester was already canceled.
Elsewhere in the High Court, Wasps gave notice last week that they plan to appoint administrators “to protect the club’s interest”.
Wasps Holdings Limited (which includes Arena Coventry Limited and the Premiership club) took the action amid an “impending danger of action by HMRC” but said that it didn’t mean the business was in administration.
How did we get here?
Many Worcester fans blame financial mismanagement by Jason Whittingham (co-owner) and Colin Goldring for the current situation, claiming that the club was “run into the ground”.
Players were late paid, with some players receiving 65% of their salaries while others received no pay at all.
The club faced an unpaid £6m tax bill, which led to HMRC issuing a winding-up petition, and owed a further £14m in Covid sports survival loan payments.
Meanwhile, the Wasps situation is related to an unpaid tax bill and the repayment of £35m in bonds which helped finance their relocation from London in 2014.
Covid undoubtedly contributed to the problems that Premiership rugby teams were already facing. A former club chief executive stated that the current situation was an indication of the “real aftereffects of Covid biting”.
However, most clubs were losing money before the pandemic. There were also concerns about how sustainable the clubs’ spending on player wages relative to their incomes.
BBC Sport was contacted by a club owner on condition of anonymity. He said: “I don’t believe there’s one owner who would tell you that the model works.” It’s totally flawed.
Gloucester chief Bradley also criticised a recent vote by a small number of Premiership clubs to go ahead with plans to raise the salary cap from £5m to £6.4m from the 2024-25 season, with his side one of a number of clubs “unhappy” at this decision.
What happens to other clubs?
Clubs are dealing with their own problems, but they will be affected by the situation at the ailing club. George Skivington, Gloucester’s director for rugby, said Saturday’s cancellation against Worcester was financially devastating. “very big to the club”.
RFU rules state that any club in administration will automatically be relegated to the next season unless it can show they were not at fault.
As Championship clubs have struggled recently to meet the Minimum Standards Criteria that allow promotion to Premiership, any relegation by Worcester or Wasps could result in a shrinking the league.
Sources claim this could have a knock on effect for media rights.
ITV agreed a new deal Premiership Rugby partnered with us to broadcast several matches, including the Twickenham final on free-to air television.
Stephen Lansdown, Bristol Bears owner, recently stated that there is not enough money in the sport. He also suggested that the league should generate more revenue to attract investors.
Bradley stated that while all clubs face challenges, the issues facing Worcester and Wasps should not be seen as contagious.
What do the governing bodies do?
Ted Hill, Worcester’s captain, has stated that the structure of Premiership Rugby must be rethought.
He said that people who are interested in buying clubs need to be examined more closely because it is not something people want to repeat.
They want their clubs to be safe so they can be the best that they can.
Massie Taylor stated that he had made a “call to clubs that need a really clear view of things” via BBC Radio 5 Live’s Rugby Union Weekly podcast.
RFU stated, in a remark, that while it was the responsibility of every business owner to manage their finances, they will be looking at lessons from this situation to determine how regulation can be made to make financial transparency more accessible to all.
What will this mean for rugby’s future?
Although there are no Worcester players currently in England’s men’s team, two University of Worcester Warriors players, Lydia Thompson, and Laura Keates will be traveling to the World Cup in New Zealand. There may not be a club that they can return to.
A lack of insurance means that Worcester’s players can’t train at the club right now.
Massie Taylor believes that moving clubs would be difficult even if they did.
“There will not be all options for every player, but there will be some options for certain players,” is the stark message.
The clubs are generally in agreement that the Premiership Rugby product does not pose a problem, but the financial model must be examined. Bradley stated that changing the league match schedule to avoid international windows would help draw new fans.
Massie Taylor added that there are two aspects to financial success. The first is the general plan for growth for the sport. The second is laying the foundations of future investment as well as new ownership for clubs and fresh capital.
