The Premiership Rugby boss has acknowledged the ‘status quo’ needs to change as he outlines his plans to prevent other clubs from suffering a similar fate to the Worcester Warriors.
The financially-struggling club were suspended from all competitions by the Rugby Football Union (RFU) and placed into administration on Monday.
The Premiership side Wasps are also under pressure to raise urgent funds amid a threat of action from HMRC.
Premiership Rugby chief executive Simon Massie-Taylor told BBC Sport that “financial sustainability and visibility is an important theme” going forward and said he had asked all clubs to provide a ” very clear picture” of their current financial situation.
However, Gloucester chief executive Lance Bradley said he did not believe there would be a “domino effect” on Worcester and Wasps’ fortunes.
BBC Sport takes a look at the major issues facing rugby finances.
Worcester Warriors failed to meet a funding ultimatum set by the RFU on Monday, leading to the governing body suspending the club from all competitions.
Later that day, the Department for Digital, Culture, Media and Sport agreed to the club directors’ request to place Worcester in administration.
Administrators were appointed on Tuesday to work with a “high degree of urgency” to try to find a suitable buyer for the club. There are two consortia known to be interested in bidding.
Although he has been suspended, Worcester remain in the Premiership table and it is possible the suspension could be lifted if a buyer is found, meaning he could join the league later in the season.
But Saturday’s game against Gloucester has already been called off.
Elsewhere, Wasps filed notice last week in the High Court that they intend to appoint administrators to ‘protect the interests of the club’.
Wasps Holdings Limited, which includes the Premiership club and Arena Coventry Limited, took action amid an ‘imminent threat of action from HMRC’ and said this did not mean the business was in administration .
How did we come here?
Many Worcester fans blamed the situation on co-owners Jason Whittingham and Colin Goldring’s financial mismanagement, saying the club had been “turned upside down”.
Players have faced delayed payments, with some staff receiving 65% of their salaries and others not at all.
The club faces an unpaid £6m tax billwhich led HMRC to issue a liquidation petition, and owed a further £14million in Covid Sports Survival loan payments.
Meanwhile, the wasp situation is linked to an unpaid tax bill and the repayment of £35million in bonds that helped fund their move from London in 2014.
Covid has undoubtedly exacerbated the challenges Premiership rugby clubs were already facing and a former club chief executive said the current situation was symptomatic of the “real aftermath of the Covid bite”.
However, most clubs were making losses before the pandemic and there were already concerns about the sustainability of what clubs were spending on player wages relative to their income.
A club owner, who spoke on condition of anonymity, told BBC Sport: “I don’t think there’s a single owner telling you the model works. It’s completely flawed.”
Gloucester chief Bradley has also slammed 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 sterling from the 2024-25 season, with his side one of many “disgruntled” clubs. to this decision.
How are other clubs affected?
As clubs deal with their own issues, they will also be impacted by the situation of struggling clubs. Gloucester director of rugby George Skivington has said the cost of Saturday’s game against Worcester being canceled was “very big for the club”.
Under RFU rules, any club that goes into administration is automatically relegated next season unless they can prove it was no-fault insolvency.
With Championship clubs having recently struggled to meet the minimum standards criteria to allow promotion to the Premiership, any relegation of Worcester, and possibly Wasps, could mean the league shrinking.
Sources say this could have a ripple effect on media rights.
TVI agreed to a new agreement with Premiership Rugby to show a number of matches, including the Twickenham final, on free-to-air TV earlier this year.
Bristol Bears owner Stephen Lansdown recently said there “just isn’t enough money in the game”, adding that the league needs to generate more revenue to attract other investors.
Bradley, meanwhile, said all clubs have challenges but the issues affecting Worcester and Wasps are “specific” and should not be seen as “contagious”.
What are the governing bodies doing?
Worcester captain Ted Hill has said the structure of Premiership Rugby needs to be looked at.
“You have to look more closely at people who want to buy clubs because it’s not something people will want to replicate,” he told Radio 4’s Today programme.
“They want their clubs, which are an integral part of their communities, to be safe and able to perform at their best.”
Massie-Taylor told BBC Radio 5 Live’s Rugby Union Weekly podcast that he had “called the clubs we need a very clear picture of things”.
The RFU, meanwhile, said: “While it is the responsibility of each business owner to manage their individual finances, we will be looking at the lessons of this situation to see what regulations can be put in place to provide all parties more financial transparency.”
What impact will this have on the future of rugby?
There are currently no Worcester players in the England men’s roster, but two University of Worcester Warriors players, Lydia Thompson and Laura Keates, will travel to the next World Cup in New Zealand with potentially none club to return to.
Worcester players cannot train at the club during the current term due to lack of insurance.
Even if they wanted to change clubs, Massie-Taylor expects it to be difficult, saying: “We started a season, the recruitment of people was done, the salary cap is what it is.
“There will be options for some players but not for all – that’s the blunt message here.”
There is a general consensus among clubs that the Premiership Rugby product is not the problem, but the financial model needs attention. Bradley said one improvement to help attract new fans would be to change the schedule so that league games are not played during international windows.
Massie-Taylor added: “There are two things you need to address around financial success, one is the overall growth plan for the sport and the other is laying the foundation for future investment and new club owners and new capital.”
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