English rugby is anticipating the prospect of losing two sides from the Guinness Premiership as clubs struggle to remain afloat in the economic downturn.
Paul Ackford writes for the Telegraph that at a meeting involving club owners and chairmen, which took place two weeks ago, a number of scenarios, including a 10-team league to begin as early as next season, were discussed.
Bristol, currently bottom of the Premiership, are most at risk, and face having to find an additional £1 million to pay players’ wages by early January.
Earlier this season, Richard Hill, Bristol’s director of rugby, admitted publicly that he did not have the funds to spend up to the salary cap. That situation has now worsened appreciably because a number of Bristol’s directors, some of whose wealth is directly linked to the property markets, have indicated that they are no longer able to provide further funding.
Newcastle are also strapped for cash. Chairman Dave Thompson recently brokered a deal which saw ownership of Kingston Park, Newcastle’s ground, pass from Northern Rock to Northumbria University, but many senior figures inside the sport are convinced that Newcastle’s dismal attendances, an average of just over 5,000 per home game, are not enough to sustain the continued existence of the club.
“Everything is very much up in the air,” confirmed Tony Copsey, Wasps’ chief executive. “It is no secret that Bristol are struggling and there are lots of rumours about Newcastle. The fact is that the vast majority of rugby clubs are reliant on shareholder capital for cash flow and that is not the ideal way to run a business.”
Even the successful clubs are finding the current trading conditions difficult.
Wasps, the Premiership champions, declared a loss of £2.8 million during their last financial cycle and will shortly announce a further shortfall of around £2 million. Bath are another club to post a deficit. “We lost £375,000 in the last financial year, but we are committed to spend up to the salary cap next year,” said chief executive Bob Calleja. “The good news for us is that we have managed to keep attendances up. That has been crucial. I know some clubs are struggling with their attendances and that has a knock-on effect on sponsorship and corporate hospitality revenue.”
Despite bullish talk by Premier Rugby, the umbrella organisation which represents England’s 12 senior clubs, the picture at Premiership matches is mixed. While Harlequins are hoping to attract a record 50,000 fans for their league game with Leicester at Twickenham on Dec 27, attendances across the board fell by 14 per cent for the last round of Premiership fixtures, and only six of the teams in the league are averaging more than 10,000 supporters per game. Newcastle are the least well supported, attracting on average 5,298 to their home games, with Bristol coaxing a disappointing 7,776 through the turnstiles.
“It’s fairly common knowledge that one or two clubs are finding it difficult,” said Mark Evans, Harlequins’ chief executive. “Rugby union cannot expect to be immune from what is happening in the wider world and new models tend to be discussed in changing circumstances. We’re at the stage where we don’t know the extent of the downturn. I’m not at all surprised that we’re starting to have some chatter about a 10-man league. When financial pressure comes, there’s always talk of reorganisation.”
The worsening economic situation is even affecting Leicester, the most financially robust club in the league with regular attendances topping 17,000. The Tigers have seen the company which prints their match programmes go bust and Caterpillar, a prominent sponsor, is also shedding jobs. “If I were a player and somebody offered me a new contract, I wouldn’t go around saying, ‘You’ve got to pay me an extra £20,000.’ I’d sign it like a shot tomorrow because I suspect we’ve seen salaries hit their peak,” said Leicester chairman Peter Tom.
Ironically, Martin Johnson’s England may be a beneficiary of the present troubles. One initiative doing the rounds proposes that Premier Rugby and the Rugby Football Union renegotiate the eight-year agreement which only came into force on July 1. In exchange for a 10-team league which would ease fixture congestion and prevent player burn-out, the RFU would dispense with relegation and promotion to the top flight. This would save clubs the collective cost of the parachute payment paid to the relegated team, as well as enabling them to develop cheaper home-grown talent rather than buying in expensive imports to avoid the drop. Johnson would also eventually benefit from having more England-qualified players to choose from, a factor, according to some in the RFU, which is behind England’s precipitous decline.Tweet