Gallagher Premiership Sides In Financial Turmoil

Gallagher Premiership Sides In Financial Turmoil

As the season zooms into focus, two Premiership sides find themselves in financial trouble.

Aug 18, 2022 by RugbyPass
Gallagher Premiership Sides In Financial Turmoil

Just three weeks remain until the kick-off of the 2022/23 Gallagher Premiership, England’s premier rugby competition.

Midlands club Leicester Tigers will be looking to defend their title following their magical run to Twickenham last season.

Joining them will be the other twelve clubs scattered around the country, all of whom will be welcoming a season of normality following two COVID-19 affected seasons.

Just two months removed from the first publicly published financial report of the league following the financial misconduct of several clubs over a number of seasons, two clubs now appear to be in significant financial hot water before a whistle has even been blown.

Worcester Warriors and Wasps are both under the spotlight with two very different financial issues that could derail their respective futures.

Wasps who are currently in a war of words with Coventry City Football Club, who are their tenants at the Coventry Building Society Arena, have recently defaulted on £35 million ($42m) bonds.

The retail bond itself relates to Wasps purchase of the Coventry Building Society Arena back in 2015 as they relocated the club from London in search of greener pastures.

Wasps dispute with Coventry City FC centers around the club allowing the Commonwealth games to stage the Rugby 7s competition at the ground. 

Coventry City FC have subsequently accused Wasps of allowing the playing surface to fall into an unplayable state following the significant number of matches which took place throughout the tournament. 

The owner of Coventry City FC has now stated that they are open to offers from a buyer with the clout to capitalize on the financial difficulties at Wasps. 

In the meantime, Wasps has stated it has “been pursuing different refinancing options in addition to making progress with a number of key initiatives to increase both the profitability and asset value of the group.”

The club has already applied for $15.6 million from the West Midlands Combined Authority to try and stay afloat.

From a strictly Rugby perspective, Wasps financial difficulties has seen head coach Lee Blackett have to significantly cut down his squad as they have lost a reported $1.2 million worth of star players.

Blackett now faces the tough task of managing a depleted squad through what looks set to be a highly competitive premiership season.

Joining Wasps in the financial doldrums are the Worcester Warriors, who have been issued with a winding up petition by Her Majesty’s Revenue and Customs.

The club released the following statement: 

“Worcester Warriors, along with many other businesses and most sports clubs have found the past two years extremely challenging owing to the COVID-19 pandemic and the rise in the cost of living. We retained our staff but lost income during the various lockdowns during which the overwhelming majority of matches were played behind closed doors.“We returned to normal operations twelve months ago carrying a tax liability to HMRC. From the outset, we have worked closely and openly with HMRC on a plan to clear these liabilities and a time-to-pay (TTP) arrangement has been in place.

The club owners and board are fully committed to preserving top-flight professional rugby in Worcester and have been working on solutions to secure the financial future of Worcester Warriors and to pay the outstanding tax owed to HMRC.

A solution, which would secure the long-term future of the club, has been approved. Unfortunately, there have been unavoidable delays beyond the club’s control to the final tasks required to complete the funding. Having kept HMRC fully apprised of the situation we are disappointed that they have taken the decision to issue a winding-up petition. The club’s directors are in continuing dialogue with HMRC in an attempt to find a speedy and satisfactory resolution.

We have also been in communication with the Department for Digital, Culture, Media and Sport, Sport England, Premiership Rugby and the RFU (Rugby Football Union) regarding this matter.”

Continuing on further, the club later released a separate statement saying, “The RFU and Premiership Rugby have been made aware that a winding up petition has been filed by HMRC against Worcester Warriors. Premiership Rugby and the RFU have been in regular contact with Worcester Warriors’ shareholders and management.

"Both parties have supported the club through the financial challenges of the last few years. We appreciate that this is unsettling for the players, the employees, the fans, and the community in Worcester and we will continue to work with all stakeholders to establish the appropriate next steps.”

In what is certainly an unsettling time for all at the club, in particular the players, the Rugby Players Association released a short statement on the matter.

“The RPA are aware of reports surrounding Worcester Warriors and are monitoring the situation closely. We are in contact with Worcester Warriors, the RFU and Premiership Rugby to ensure we are informed about any further developments.

“The wellbeing of our members is at the forefront of our minds and we are in contact with the players about this. We will continue to be there to offer advice and support to them as and when more information becomes available, and matters develop.”

As the financial turmoil engulfs the two clubs, the debate surrounding “Ring fencing” the league by removing the promotion and relegation element of the league has been a major talking point once again.

Adding his weight to the conversation is former Harlequins CEO Mark Evans, who is perhaps one of the most well-placed individuals to speak on the matter.

In what started as a tweet from rugby fan @spkeene as he debated the financial situation with which Worcester find themselves in, the fan would go on to say, “It strengthens the case for a robust system of promotion and relegation so that there is always another club ready to step up. Insolvencies are inevitable in the wider sense, will always happen somewhere and sometime whatever system you use.”

Evans in clear disagreement, fired back with “Complete nonsense. Economically illiterate from someone who talks a lot of sense in many other rugby areas.” 

The former Quins boss then elaborated on his point by tweeting “Get in Ealing – What, with their enormous fan base and close proximity with three established Premiership teams? Are you completely unhinged?” referencing the West London club’s ambition to join the topflight following several years of dominating the second flight Championship competition. 

Premiership clubs outside of Exeter Chiefs have notoriously struggled financially for several years, relying on the financial backing of wealthy owners. Thus, the difficulties the two clubs find themselves in are not entirely shocking.

As the new season zooms into focus, the uncertainty surrounding the two clubs is a worrying development.

Written by Philip Bendon