Bill Sweeney, the chief executive of the Rugby Football Union, said the current model of English rugby was “broken” and clubs had been “living beyond their means” for too long.
The financial governance of sport has come under increasing scrutiny following the crisis in Worcester and Wasps.
Worcester was relegated and suspended while the wasps are ready to follow them in the administration in days”.
Sweeney has pledged to create a new foundation and “settle the game”.
With the Premiership already plunged into turmoil by the loss of Worcester and the likely departure of Wasps, the financial viability of the league has become very clear.
Clubs ‘must be able to at least break even’
Premiership Rugby chief executive Simon Massie-Taylor has previously called for the need for ‘greater transparency’ and warned there was no “quick fix” to the situation.
Although the circumstances in Worcester and Wasps have not been helped by the impact of the pandemic, Sweeney said warning signs have been there for several years.
“PRL clubs were losing £4-5m a year before they entered Covid and Covid exacerbated that,” he said.
“The difficult post-Covid economic environment has added further pressure in this area. Some clubs have had more precarious business models than others and I think we are seeing the result of that at the moment.
“We’ve known for some time that it’s a sport that lives well above its means and has relied on wealthy benefactors for some time.
“These benefactors are passionate about the game and they haven’t made a profitable return on their nearly £200million they pump into the Premiership every year.”
Sweeney added that he wants to see a structure in place where teams can “at least break even” and “attract new investment”.
“We’re seeing the effects of a system that’s been down for some time. I don’t think there’s a short-term solution we can impose now,” he said.
“We need to lay the foundations and set the course to really sort out the English game long term.”
Six-time Premiership winners and twice European champions, Wasps are set to confirm administration at the start of next week with debts running into the tens of millions of pounds – a move that would see them relegated under the rules of the RFU.
worcester continue to fight for their survival with their administrators about to name a preferred bidder to buy the club.
Sweeney says that although the situation at both clubs is “painful”, the RFU cannot intervene with an injection of cash.
“One of those solutions is not for the RFU to finance losses only. They are companies that are independently managed and responsible for their own finances and cost control and we cannot just step in and bail out,” he said.
“We are all committed to changing the landscape of rugby in England. To increase commercial revenue and develop a sustainable rugby model that has the right governance in place, which includes better financial transparency and improves player welfare and promotes the success of the whole game.”
Adopt elements of the French model
Sweeney said he was in favor of setting up a structure similar to that which operates in France.
There, the financial health of the game is monitored by the DNACG – a body, independent of the French Rugby Federation (FFL) and the French National Rugby League (LNR), which protects the finances of the 30 professional clubs in the Top14 and the Pro D2.
“They define themselves as there to grow and protect the interests of the French game,” Sweeney said, before outlining the criteria each of the 30 clubs must meet to obtain a “license to compete” – the right to start the season.
“They need to have a full review of their financial projections and business plan, their ticketing and hospitality assumptions – if they look askance from previous years, they are discounted,” he said. -he declares.
“They look at their projected arrival in the league – which comes with a bonus payment – and if they haven’t finished higher than ninth in the last 10 years and then say they’re going to finish third, that will be disputed. “
French clubs must also keep 15% of their annual cost projections in cash in the bank and any benefactors wishing to cover losses must provide a bank guarantee.
Sweeney said the English game “needed something like this” in place.
A smaller Premiership, a more ‘viable’ Championship
A reduction in the size of the Premiership as a way forward has already been suggested by the league, with Sweeney agreeing it was ‘viable’ and there was a ‘clear financial benefit’ around fewer teams getting a bigger large share of broadcast and commercial revenue.
“The clear intent is that we will be able to generate more value with less volume – and you will have higher quality volume which will also generate better quality value,” he said.
Sweeney also endorsed the idea of revamping the Championship to bridge the “huge” financial gap between the top two divisions and make it a “viable competition for a Premiership club” capable of supporting clubs with high-flying ambitions for grow responsibly. .
“I want to put an end to the myth that we’re anti-Championship or second tier,” Sweeney said. “I can understand why the myth grew, but the endless funding of the previous model was not the answer.”
Although the RFU’s current funding has fallen from £6.5m in 2017 to £1.5m, Sweeney says the fact that 14 of the 17 teams relegated from the Premiership at that time have returned directly shows that the model “didn’t work”. and the RFU could not justify ‘pushing money into clubs that were losing money’.
Any fundamental change to the structure of the game would also focus on the relationship between club and international schedules, with Sweeney saying it was a “major priority” to avoid any clashes, saying the overlap “is not helping anyone”.
No changes are expected before the start of the 2024-25 season, with Sweeney being clear there was a “collective will to fix the situation”.
“I believe we will come out stronger and in better shape. I don’t see it as the demise of our game in the long term.
“This next era must be about strong governance, sustainability and player welfare. It’s time to be decisive and take advantage of the opportunities that present themselves in this very difficult time.”
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