By Harry Mottram: Firms that supply top flight rugby union clubs with anything from beer to beefburgers and from coach transport to printed programmes need to be cautious said Somerset based ICSM’s Ian Carrotte. The CEO of the business membership group dedicated to cautioning against late payers and fighting bad debt has viewed the near financial collapse of the elite rugby structure with growing concern.
He said: “The latest report from the administrators of Worcester Warriors reveal the new owners have failed to pay the full amount of the agreed fee with more than a million pounds unpaid. This comes after Jersey Reds, Wasps and London Irish all went bust. If you look at the league table of premiership clubs and what they owe – most are technically insolvent. Suppliers must not allow their hearts as supporters of a club to rule when they do business with them. When Worcester went bust suppliers such as food and beverage companies, printers, maintenance firms etc, were owed tens of thousands of pounds causing them major difficulties.”
Worcester’s joint administrators Julie Palmer, Julian Pitts and Andrew Hook of Begbies Traynor published a report this month showing that £1.2 million still owing by Atlas – the group set to take over the club as reported by Insolvency Insider. When the club crashed they owed around £30 million pounds. Wasps went bust owing more than £110 million, London Irish owed north of £35 million and Jersey Reds were in hock to around £3 million. All the top clubs have huge debts to service with Saracens in debt by around £40m, Exeter £10m, Quins £35m, while Newcastle, Bath, Sale, Leicester, Saints and the Cherries all owing around the same amount of £30m. The loans taken out by some clubs are aimed at increasing capacity such as Bath with their enlarged stadium plans or to increase revenue through hospitality such as Exeter’s Sandy Park Hotel.
The problems for the remaining top flight clubs just keep mounting up – not helped by having two organisations in the Premiership and the RFU who run the sport – one a domestic league and the other in charge of the rest of the pyramid structure and internationals. Those internationals are a problem for the clubs as the competitions take place during the season meaning many club players are taken out of action to play for their country. Rugby Union clubs have more players to pay than football teams and the players sustain more injuries.
Cash comes from broadcasting – a tiny amount compared to football as well as ticket sales which are hit by too few matches which also impacts on hospitality. Ground capacity at rugby stadiums are smaller than their equivalents in football with an average in the top flight of around 16,000 – and often in the Championship gates are far smaller. To be promoted from the Championship to the Premiership clubs must have a capacity of 10,000 which means expensive ground improvements which are often beyond their finances. And finally there is the legacy issue of Covid debt. Loans taken out to pay for the lockdowns and lack of games are now overdue – and they simply add to the pain. Finally poor management by owners – sometimes more interested in either asset stripping or using the clubs to boost their private businesses are a problem – as was revealed at Worcester. There Parliament’s Digital, Culture, Media and Sport Committee grilled the owners and rugby officials and exposed some dodgy practices as well as incompetence.
Ian Carrotte said it wasn’t just a problem for rugby as the football league has the same struggles as frequently the egos of the owners get carried away once in charge – buying players they can’t afford and hiking ticket prices that then drive away fans. He said: “In the past there is a long list of football clubs that have gone bust and, in most cases, have done a phoenix and reformed – and in some cases dumping the debts that caused their demise. Most people remember Accrington Stanley in the 60s but actually the list includes many of the clubs still in the league from Charlton Athletic to Newport County in the 80s amongst many others while in Scotland Glasgow Rangers went bust owing £168 million. And where are they now? Back in the top league north of the border. While their suppliers which memorably included a face painter owed £40 – were left unpaid.”
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ICSM CREDIT
For information on ICSM visit www.icsmcredit.com or call 0844 854 1850.
ICSM, The Exchange, Express Park, Bristol Road, Bridgwater, Somerset TA6 4RR. Tel: 0844 854 1850. www.icsmcredit.com. Ian.carrotte@icsmcredit.com
