Post by Steve@Mose on Dec 22, 2022 10:30:23 GMT
Premiership clubs ‘heading for disaster’ having amassed £300m in net debt
Gallagher Premiership clubs are at risk of “heading for disaster”, having collectively amassed £300 million in net debt over the past six years, Telegraph Sport can disclose.
The figure, which excludes investment in the competition from CVC Capital Partners in 2018, highlights the fact that after Worcester Warriors and Wasps were placed into administration, other clubs are under threat.
An investigation shared by Mike Ryan, a private equities director who has produced reports on the finances of Rugby Australia and New Zealand Rugby, shows that:
CVC, which bought a minority shareholding of 27 per cent of the Premiership for £200 million four years ago, took out a £27.5 million dividend across the previous two financial years from the league’s holding company, Premier Rugby Limited, with PRL’s net debt now £29 million, having been nil before the takeover
London Irish are considered “high risk” due to low turnover of, at best, £10 million, while Harlequins are “concerning” due to their high borrowing of £48 million in the 2021 financial year
Wasps borrowed £62 million before the end of the 2021 financial year, months before the club were placed into administration
Worcester Warriors wrote off £30 million of borrowings prior to going into administration
Sharing detailed analysis of both the clubs’ and PRL’s financial figures dating back to the start of the financial year in 2016, Ryan believes that the structure of finances and player payments must be addressed as a priority for the league’s long-term financial health.
“The club structure has historically been on an unsustainable footing. It has never made a profit. The combined losses for the clubs over the last six years, excluding the payment from CVC, has been £300 million,” Ryan explained.
“At the moment, this is heading for disaster. I would like to see the fiscal-year 2022 numbers to be more comfortable with the call, but I would be surprised if they were any better than FY19 [financial year 2019]. The overall competition is still losing money.
“It is professional on the field and semi-professional at best off the field. That is the biggest problem that rugby is facing globally, in my view.”
The figure, which excludes investment in the competition from CVC Capital Partners in 2018, highlights the fact that after Worcester Warriors and Wasps were placed into administration, other clubs are under threat.
An investigation shared by Mike Ryan, a private equities director who has produced reports on the finances of Rugby Australia and New Zealand Rugby, shows that:
CVC, which bought a minority shareholding of 27 per cent of the Premiership for £200 million four years ago, took out a £27.5 million dividend across the previous two financial years from the league’s holding company, Premier Rugby Limited, with PRL’s net debt now £29 million, having been nil before the takeover
London Irish are considered “high risk” due to low turnover of, at best, £10 million, while Harlequins are “concerning” due to their high borrowing of £48 million in the 2021 financial year
Wasps borrowed £62 million before the end of the 2021 financial year, months before the club were placed into administration
Worcester Warriors wrote off £30 million of borrowings prior to going into administration
Sharing detailed analysis of both the clubs’ and PRL’s financial figures dating back to the start of the financial year in 2016, Ryan believes that the structure of finances and player payments must be addressed as a priority for the league’s long-term financial health.
“The club structure has historically been on an unsustainable footing. It has never made a profit. The combined losses for the clubs over the last six years, excluding the payment from CVC, has been £300 million,” Ryan explained.
“At the moment, this is heading for disaster. I would like to see the fiscal-year 2022 numbers to be more comfortable with the call, but I would be surprised if they were any better than FY19 [financial year 2019]. The overall competition is still losing money.
“It is professional on the field and semi-professional at best off the field. That is the biggest problem that rugby is facing globally, in my view.”
