Rugby Football Union chief executive Bill Sweeney says the current model of English rugby is “broken” and clubs have been “living beyond their means” for too long.
The sport’s financial governance is under increasing scrutiny in the wake of the crisis at Worcester and Wasps.
It has been Worcester down and punished The wasps, on the other hand, to continue in the administration “in days”.
Sweeney pledged to lay a new foundation and “sort out the game.”
With the loss of Worcester and the probable departure of the Wasps already throwing the Premiership into disarray, the financial viability of the league has come into sharp focus.
Clubs “must at least be able to pass”
Premiership Rugby chief executive Simon Massie-Taylor has already called for “greater transparency”. and he warned that there is no “quick fix” to the situation.
While the circumstances at Worcester and Wasps were not helped by the impact of the pandemic, Sweeney said the warning signs had been there for years.
“PRL clubs were losing £4m-5m a year before Covid came in and Covid has exacerbated that,” he said.
“The difficult post-Covid economic environment has put more pressure on that area. Some clubs have had more precarious business models than others and I think we’re seeing the result of that at the moment.
“We have known for a long time that sport is living beyond its means and has long relied on wealthy benefactors.
“Those benefactors are passionate about the game and haven’t made a profit on the £200m they pump into the Premiership every year.”
Sweeney added that he wants to see a structure where teams can “at least break even” as well as “attract new investment”.
“We are seeing the consequences of a system that has been broken for a long time. I don’t think we can impose a short-term solution now,” he said.
“We need to lay the groundwork and set the course for the long-term order of the English game.”
Six-time Premiership winners and two-time European champions Wasps are set to enter administration early next week with debts in the tens of millions of pounds – a move that would bring them down under RFU rules.
Worcester continue to fight for their survival that their administrators are close to naming a preferred bidder to buy the club.
Sweeney says that while the situation at both clubs is “painful”, the RFU can’t come up with the cash.
“One of those solutions is not just the loss of RFU funding. They are independently run businesses and are responsible for their own finances and cost controls and we can’t just swoop in and bail them out,” he said.
“We are all here to change the landscape of rugby in England. To grow commercial income and develop a sustainable rugby model with good governance that includes better financial transparency and improves player welfare and drives the success of the game as a whole.”
Adopting elements of the French model
Sweeney said that he is in favor of establishing a similar structure that works in France.
There, the financial health of the game is monitored by DNACG – an organization independent of the French Rugby Federation (FFL) and the French National Rugby League (LNR), which oversees the finances of 30 professional clubs in the Top14 and Pro D2.
“They define themselves as growing and protecting the interests of the game in France,” Sweeney said, before highlighting the criteria each of the 30 clubs must meet to obtain a “license to compete”: the right to start the season.
“They need to do a complete review of their financial projections and assumptions about their business plan, ticketing and hospitality; if you ignore previous years, they are reduced,” he said.
“They look at their projected finish in the league – which pays the bonuses – and if they’ve finished no higher than ninth in the last 10 years, and then they say they’re going to finish third, that makes it challenging.”
French clubs must keep 15% of their annual cost estimates in cash in the bank and beneficiaries who wish to cover losses must provide a bank guarantee.
Sweeney said the English game “needed something like this”.
Smaller Premiership, more “viable” Championship.
Downsizing the Premiership as a way forward has already been suggested by the league which Sweeney said was “feasible” and there was a “clear financial benefit” to fewer teams getting more broadcasting and commercial income.
“The clear intent here is that we’ll be able to drive more value through less volume, and you’ll have better quality volume, which will also lead to better quality value,” he said.
Sweeney also welcomed the idea of a revamped Championship capable of closing the “huge” financial gap between the two top divisions and helping top-flight clubs to responsibly grow “to make it a viable competition for a Premiership club”. .
“I want to end the myth that we’re anti-championship or second-tier,” Sweeney said. “I can understand why the myth developed, but endless funding for the previous model was not the answer.”
While the RFU’s current funding has fallen from £6.5m to £1.5m in 2017, Sweeney says the fact that 14 of the 17 teams relegated from the Premiership in that time have returned straight away shows the model “wasn’t working”. and the RFU could not justify ‘pumping money into clubs that were losing money’.
The 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 “high priority” to avoid clashes, saying the overlap “doesn’t help anyone”.
No changes are expected before the start of the 2024-25 season, with Sweeney making it clear there was a “collective will to resolve the situation”.
“I think we’re going to come out stronger and fitter. I don’t see it being a long-term demise of our game.
“This next era must be about strong governance, sustainability and player welfare. It is time to be decisive and seize the opportunities that arise in this very difficult time.”