Rugby clubs struggle to make money, and maybe always will

·4 min read
Sixways Stadium, Worcester, England; Aviva Premiership Rugby, Worcester Warriors versus Exeter; Dark clouds over the ground one hour before kick off - GETTY IMAGES
Sixways Stadium, Worcester, England; Aviva Premiership Rugby, Worcester Warriors versus Exeter; Dark clouds over the ground one hour before kick off - GETTY IMAGES

How do you make a small fortune? You start with a large one and buy a rugby club.

The joke is usually reserved for the round-ball game, probably because it feels less cruel in that context and football is thought to be big and ugly enough to stand up for itself.

Indeed, with two of 13 Premiership sides in seemingly sticky financial situations, you would be forgiven for worrying about the future of rugby union in England. And this is before you consider the sport’s existential concerns regarding concussion.

There is a glass half-full perspective, which would suggest that these are two separate and circumstantial issues of varying seriousness depending on who you speak to. First, Worcester Warriors. Although jarring, a winding-up petition from HMRC is far from terminal.

Club figureheads seem hopeful of meeting their outstanding tax bill with “a speedy and satisfactory resolution”. In his exclusive interview with Telegraph Sport this week, the inimitable Steve Diamond suggested that “HMRC are giving all sports clubs a tough time at the moment and Worcester are no different”.

Wasps have been less forthcoming with their communication of late, although owner Derek Richardson gave some similarly defiant quotes to The Times last week. HMRC are also pursuing Wasps, as revealed by Telegraph Sport on Thursday. Compounding this headache is their delay in repaying those who invested in a £35 million bond scheme, which helped acquire the lease of the Coventry Building Society Arena upon the club’s move to the West Midlands from High Wycombe in 2014.

While this relocation was made with the club’s long-term viability in mind, and has been credited with saving Wasps from oblivion, there were always numerous risks involved – not least the question of whether a new city would embrace them. Then Covid crashed into a fragile economic landscape, causing pay-cuts, redundancies in various organisations and a significant dip in revenues.

These problems have been felt across the country. Tony Rowe, the chairman of Exeter Chiefs, claimed this summer that the pandemic has cost him around £16 million over the past two years. He seemed phlegmatic about that figure and his manner spoke volumes.

Unholy Union, written by Michael Aylwin and Mark Evans, was published in 2019 just before Covid chaos changed everything. Still, the book is a fantastic resource that bears revisiting whenever rugby union hits administrative turbulence, which just happens to be quite often.

Its chapter on English clubs is called “How not to do it” and reminds us that football was not a solvent industry until it became “so big it could not fail to make money”. Rugby union is not at this stage. Aylwin and Evans confront this in a poignant, prescient passage.

“One person’s debt is another’s investment in the business,” they write. “As long as there is someone, or some corporation, prepared to cover any short-falls, a club is a viable proposition. Even when there is not, there are creative options available for survival or rebirth.”

The system, say Aylwin and Evans, was one in which clubs were lured into “daring each other to ever greater heights of expenditure” as they waited for revenues to catch up with wages. Only that wages tended to accelerate away again once that did happen.

One explicit economic response to the pandemic was for Premiership clubs to reduce the competition’s salary cap from £6.4 million to £5 million in a bid for sustainability. Intentions were noble but a number of players – often, ironically, the grafters whose wages have been squeezed to accommodate rock-stars – are accumulating more matches over a bigger league campaign in smaller squads for less money. Outlays remain lop-sided anyway.

Freddie Burns of Leicester Tigers celebrate as they lift the Gallagher Premiership Trophy - GETTY IMAGES
Freddie Burns of Leicester Tigers celebrate as they lift the Gallagher Premiership Trophy - GETTY IMAGES

Some clubs, those that have retained two marquee players while spending up to the new cap and earning all their credits, will be operating with a squad budget around twice that of the lowest spenders. To add another spinning plate, there are still some active, long-term contracts that carry a discount against the cap because they were signed before a Covid cut-off date.

The hope, obviously, is that Worcester and Wasps somehow escape their respective predicaments. Either way, a disconcerting summer has reinforced the feeling that something has to give. That could be the league’s structure, so as to avoid international clashes, or the cap itself. And, come September, the games need to be compelling.