Wasps: Collapse of clubs "stain on reputation" of rugby

The financial demise of Wasps and Worcester Warriors is a “stain on the reputation” of the Rugby Football Union (RFU) and Premiership Rugby Limited (PRL), MPs say today, in a report that concludes that poor oversight from the sport’s governing bodies contributed to the clubs’ collapses.

The DCMS Committee criticises a “lack of safeguards in place at the highest levels of the game” to prevent the issues seen at Wasps and Worcester Warriors. When Worcester Warriors collapsed, accounts had not been filed for more than a year, with reports of player salaries being paid late from May, while problems at Wasps had been mounting for years.

The report concludes that, at Wasps, debt from a disastrous and ill-though-through relocation to Coventry crippled the club financially. At Worcester Warriors, unscrupulous owners mismanaged club finances while attempting to strip the club of its assets. Neither the RFU nor the PRL intervened despite Colin Goldring being barred from working for any legal firm without the explicit permission of the Solicitors Regulation Authority.

Both clubs had annual losses of around £4 million each.

While the committee welcomes reforms aimed at preventing problems for clubs in the future, the report raises concerns about the future of Premiership finances, warning that the financial situation of Premiership teams is “clearly unsustainable” with annual losses averaging about £4 million per club. MPs are critical of the RFU and PRL’s “complacent belief” that their plans to increase revenues and improve collaboration will solve rugby’s financial problems.

DCMS Committee Acting Chair Damian Green MP said: “Club rugby at the top of the game is in disarray. Inert leadership from the RFU and PRL has allowed mismanagement to collapse two of English rugby’s top teams. Thousands of loyal fans have been deprived of their clubs and hundreds of jobs have been lost.

We welcome the raft of changes announced by the PRL and RFU. Better safeguards and a stronger owners’ and directors’ test are desperately needed. But it’s incredibly disappointing that two clubs had to collapse for the rugby governing bodies to act.

More worryingly, the root of the problem remains. Rugby clubs are still spiraling into debt and the RFU and PRL’s current revenue boosting plans haven’t done enough in the past and are unlikely to make a difference going forward. With its upcoming annual report, the RFU must demonstrate to the Committee how it will protect the rest of the league from financial ruin.”

Main conclusions and recommendations:

• The financial situation of premiership clubs in unsustainable. Further growth in club revenues is unlikely to solve these problems.
• The demise of two premiership clubs is a stain on the reputation of the RFU and PRL. The planned reforms are welcome, but such alarming circumstances should not have been necessary for the RFU and PRL to act.
• It is vital that player welfare becomes the central concern of the authorities going forward, with the introduction of a form of benevolent fund a pressing need.
• When the annual report is published that the RFU must write to the DCMS Committee with a detailed commentary of its financial position and what steps it will be taking to ensure that other clubs don't face similar crises.

The committee took evidence from the RFU, Premiership Rugby and others in November.

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