Rory Hamilton – 21st October
The chaos unfurling in Westminster this week is just another layer on the cake for many people across the country. What with the cost of living crisis, energy bills soaring, the sight of oncoming austerity cuts and what will likely be increased poverty and more division, not to mention the climate anxiety in the knowledge that if we don’t fix everything wrong with the planet in the next 3-4 years then we are well and truly done for.
Now it seems we can’t even enjoy our pastimes without onset stress and strife. For those of you who are long-suffering Scotland rugby fans like I am, it will come as no surprise to you that sport is a love-hate game, and you accept the stress that comes with the joy. But in recent weeks it has been devastating to see the catastrophe unfurling in the English premiership, with both Worcester Warriors and Wasps RFC going bust and the league reduced from 13 to 11 teams. In a sorry tale of bad governance and financial mismanagement, which quite frankly everyone saw coming but did nothing about, two of the country’s most reputable clubs have disappeared… gone just like that!
To briefly bring others up to speed, Worcester Warriors, founded in 1871, had its accounts frozen after a winding up petition was issued by HMRC in August, before the WRFC Trading company which owns the club and pays the wages of the players and staff was wound up in court. Worcester ended up in trouble after being “saddled with more than £25m of debt”, including at least £6m in unpaid tax, said PA Sport. Players and staff “had not received their full wages” and a lack of funds led to “major operational shortcomings” (Reported in The Week).
Meanwhile, four-time English champions and two-time European Cup winners, Wasps also went into insolvency, making 167 players and staff redundant, after years of well-publicised financial problems. As the same The Week report observed, the Coventry-based club had been hopeful of “securing new funding to help with a £35m debt owed to bond holders following their relocation from London in 2014”. But despite talks “ongoing” with interested parties, the club “have been forced to take action”.
Now undoubtedly Covid exacerbated the financial problems many clubs were having, but it cannot be entirely blamed for a mismanaged situation that many foresaw coming and could have been solved.
The governance of the league for a start: Premiership Rugby Limited is the body which runs the Premiership and is made up 73% of the clubs themselves, and 27% by private equity firm CVC who injected £200m into the league four years ago. Given PRL monitors the finances of the clubs themselves, this is hardly transparent. English rugby is effectively at the whim of self-regulation, and the lack of an independent body to highlight struggling clubs hinders the ability of a central resource to administer support and ensure clubs do not go under.
Former England international, British and Irish Lion, and Sky Sports Pundit, Will Greenwood said, “The English Championship, which is our second division, is run by the RFU, the Premiership is run by Premiership Rugby – two different governing bodies – it’s not aligned.” This lack of alignment is a real problem, and contrasts directly with the running of other nearby leagues which are unified.
Chief Executive of the Rugby Football Union (England’s governing body), Bill Sweeney, made this very observation: “We know that consolidated losses for PRL were exceeding £40m in 2017 and £50m in 2018. PRL clubs were losing between four and five million a year prior to Covid and Covid has exacerbated that. Post-Covid, this very challenging economic environment has added further pressure.”
“Under the French model of greater financial transparency, we would have known about a situation like Worcester or Wasps before the season starts. In France they will force a reduced salary cap on one club alone, so we need greater governance and regulatory control allow you to make changes.”
However, owing to the squeeze of the salary cap, for many clubs (especially those at the bottom of the table who likely have smaller operating budgets anyway), a large squad is not a viable option if they want to maintain enough high-quality players to win matches and push for titles – titles which come with financial reward. Thus, in recent years we have seen mid-level players not on large salaries but whose salaries are too big to justify, and academy players offloaded if they don’t make a substantial breakthrough. This leaves many rugby players in a precarious position, especially those younger academy players who may not have yet developed an alternative career path to professional sport.
Infamously, five-time English Premiership and three-time European Cup winners Saracens were found to be in breach of the salary cap in 2019/2020 and so were deducted 70 points (effectively relegating them from the Premiership to the Championship) and fined £5.3 million for failing to disclose player payments, which totalled an overspend of roughly £1m in each of the in seasons between 2016 and 2019, as well as the club’s chairman having invested in companies alongside a number of high profile players as a means of meeting high salaries.
While this was effectively a case of financial doping, and many might question whether the club deserve to keep their trophies from those seasons, the club was noted during this period for the incredible club set-up which took care of players and their families and created a large ‘family culture’ at the club, with a relaxed and supportive atmosphere that appeared to produce winning results. The trade off is much of this culture was achieved illegally, but the example does also demonstrate the importance of looking after employees with strong and comprehensive packages that reward good performance. We can and should 100% fault the club for going about it illegally, but we should also appreciate the ambition to create a community which empowered players and understood the importance of personal life in addition to professional performance.
The salary cap is clearly not the only challenge which clubs have struggled with in the professional era. Greenwood again said, “Professional rugby has been going for 26 years and in that time, we have seen Orrell, London Scottish, London Welsh, Richmond, clubs having a go, dabbling with professionalism and coming unstuck.” Indeed, Richmond have a rich history, particularly during the amateur era when it supported a large number of players in the England team, however struggled in the professional era post-1996, and following financial embarrassment vowed never to return to full professionalism some years ago.
This neoliberal, debt-based system of running a professional rugby competition directly contrasts with the neighbouring United Rugby Championship (consisting of clubs and franchises from Scotland, Wales, Ireland, Italy and South Africa). Clubs in the Celtic regions are owned by the unions (the national governing body of rugby in each country) and many of the ‘home-grown’ players at clubs in these countries are on central contracts with the governing body which means that their salaries are effectively guaranteed by the union and players are not paid two separate salaries, as internationals in England are. The league is also well known for its better player welfare, with players in Ireland and Scotland looked after with adequate rest periods and not as high demands on their physical and mental wellbeing.
Although talking about sustainability in this context is different it would seem as the league has undergone several iterations since its original inception; key to its sustainability is the adaptability of its structure and the willingness to bend to new solutions where needed, including the recent introduction of the South African teams who have brought money and competition to the league.
Lucy Wray, CEO of Saracens, has even said that “the financial model of rugby doesn’t work and clubs are losing far too much money”. It’s a problem that has been clear for a while, and with the financial difficulties of the Rugby Football Union itself, its clear that the financialisation of English rugby has been its ruin.
The collapse of these clubs will have a knock on effect, as clubs with scheduled fixtures against them lose out on the match-day revenue from around 13,000 people (based on average attendances for the 2021/22 season), spending money on match shirts, food, drink etc., let alone ticket prices.
So what next?
This could easily be a story about money, bad governance, and financial structures, but what does all that mean without understanding the impact? Ultimately rugby is a community – people value being part of the community because of the sense of togetherness it brings and the camaraderie we get out of taking part in sport as a spectator or as a participant. We are emotionally invested in its because of the joys it can bring, and we put ourselves through the sorrow because we form a strong attachment to the identity of a club, or a nation. So when a club goes under its not just a bunch of money going down the drain, it’s a whole community too.
Spare a thought for the players, the back room staff, the coaches, the cleaners, the security, and everyone involved in the operations at the clubs facing problems. As the players’ trade union, the Rugby Players’ Association (RPA) has said, “there is a need for fundamental change. There was a reference of the need to “provide stronger foundations for the game” by consulting with all stakeholders. It is clear to us that the central stakeholder in these considerations must be the players. They are the driving force behind the game. They are the role models and connection to the game’s brilliant and committed supporters. What makes a club are its players, staff and supporters.”
“Without players being formally recognised partners in defining the future of English rugby, it is difficult to envisage the game moving forward in the way it needs to, be that through central governance, player welfare, contracts and rights, or financial sustainability. In this moment we are also setting a way forward which, if well-chosen, can positively inform and influence the exciting growth of the women’s game, which is at a pivotal time in its history.”
As mentioned earlier, mid-level and academy players don’t earn huge amounts and don’t necessarily have the capacity to finance themselves if they lose their club, and while support is there from the RPA to help, they should not have to be put in that situation. High earners are already at a greater advantage owing to the likelihood that they will find a new club thanks to their skill. But there is a big hole through which players can sink into financial trouble, and more should be done to protect those who wont necessarily make the cut.
And what about injuries? On a recent podcast appearance, England and formerly Worcester’s Ollie Lawrence told Jim Hamilton and Andy Goode that before Worcester went under, players knew they had insurance that if they got injured in a match they would be provided for and support for rehab would be offered (from somewhere), but conversations didn’t manage to go much further, leaving players in doubt about their immediate options. Not to mention already injured players who would go from having access to fantastic facilities for treatment to being cut off and unable to earn owing to their injury.
It’s clear that bad governance has so many knock on effects beyond that of financial insolvency, and in planning for futures the answers should look at how we can implement good governance: clear transparency of club finances, independent regulators, central contracts for players, a strong player voice which leads the calls for good working conditions and financial stability at clubs to support that. If it has to go further it has to: a smaller league, which might even benefit the connection to the grassroots game which supporters crave and would boost the growth of rugby as a sport for all (moving it away from the image of an elite, white man’s sport). There needs to be clearer understanding of what a ‘club’ is so that teams don’t get themselves into situations like at Worcester where people didn’t know whether the liquidation of the club would be different to the ownership of the land on which the stadium stands.
Rugby cannot rely on the investment of private equity and the willingness of ‘rugby-mad’ millionaires to foot the bill for bonds that will come back to bite the club. Indeed, Jason Whittingham and Colin Goldring, the former co-owners of Worcester, have been disqualified from acting as directors of a company for 12 months. The pair were also fined £660 and ordered to pay £100 costs at Cardiff magistrates’ court for failing to deliver a copy of Worcester Sport Limited’s accounts for the financial year ending February 28, 2021 to Companies House. And in their departure statement, they even appeared to blame the players for not producing enough quality or giving their all to the club, as well as the fans for not turning out in great numbers to save the club.
But there is a faint poignance to the demise of two long-standing fixtures of English rugby just as the pound, interest rates, mortgages, and the UK economy more generally (let alone UK politics as Wednesday night showed) absolutely tanks itself. Commentators often say not to compare the government’s finances to a household credit card because the two are completely different – I agree. We can, however, see similarities between the spending of rugby clubs and the state: “In the race to be the best, win European Cups, compete at the highest level, clubs [in England] have leveraged and taken on debt. Eventually debt needs to be paid back and when debt becomes really expensive people come calling on your door for it.” In the political world the people knocking on your door might be the IMF, in the rugby world it’s the death-knell of the administrators.
The other parallels that this catastrophe highlights is that neoliberalism simply doesn’t work. Self-regulation is a sure fire way to lead to mismanagement, and prevents accountability. It also proves the importance of the unions, as the RPA has always been at the forefront of leading a strong response to the needs of players and supporting their welfare, including with pathway programmes to life after rugby. Just because sport is different doesn’t mean that the voices of those in our entertainment should not have a say over the way the sport is governed, because, in fact, there might be some absolute gems of ideas in there.
Apart from anything else, it proves that too much responsibility left in the hands of too few people with little to no scrutiny and/or accountability leaves players in the lurch, fans devastated, and the structure of something that is meant to provide leisure, entertainment, inspiration and joy in tatters.