Ring-fence and cut wage bills to attract state aid
During the week, Premiership Rugby, issued a statement confirming that they had met with Oliver Dowden, the Secretary of State for Culture, Media and Sport, to seek a rescue package to help the clubs survive. Since then, in a concerted PR effort, a number of clubs have gone public on how dire the situation is.
With little likelihood of crowds returning for at least another six months, Worcester’s owners issued a stark statement, Peter Toms, Leicester Tigers’ chairman, said he expected clubs would go out of business, Exeter chipped in, and Lance Bradley, Gloucester’s chief executive said that no fans for a further six months would be devastating.
Bradley had previously said Gloucester were in better shape than some of their rivals – they own their ground, and they have a decent level of support – so how bad must things be for some of the others?
As a huge fan of the Premiership, I struggle to imagine life without it, so I desperately hope a support package can be put together, but it needs to be on commercial terms. First, it has to be a loan and not a hand-out, because it’s our – the tax-payers’ – money that the government is doling out, and it needs to be on commercial terms. So any loan has to come with conditions.
The first of those is that there has to be a realistic expectation it will be paid back – it might take a while, and the interest rates might be very low or even zero, but eventually we need to get our money back.
Bearing in mind the systemic losses run up by the clubs in better times, what prospect is there that they could ever afford to pay back any loan with their current business model? Whenever any individual or business seeks a distress loan, they’re in no position to argue about the terms, and that’s where we are today. This is a golden opportunity for Premiership rugby in England to press the reset button, and I very much hope a rescue loan can be put together, and that it comes with serious strings attached.
Any package offered should be accepted or declined by a simple majority of clubs – with 13 we’re sure of a decision, not a tie! The days of the richer clubs holding out and preventing unanimity need to disappear forever – they all need to demonstrate they can act as a responsible group. Next, the government should demand that the clubs can show that once crowds return they all have a business model that allows them to at the very least break even, or even better generate some level of profit, because it’s that which will give a realistic prospect of us getting our money back.
There is only one way that can be done, and it’s by reducing the wage bills. There needs to be a salary cap – a proper one properly audited – and it needs to be at a flat level for every club, without any nonsense about marquee players outside that cap. That would cause immense problems for the clubs, but so would going out of business!
My hunch is that a flat £5m would probably be affordable for any club once the crowds return, and while it might not be achieved without the employment lawyers having a field day, and some compensation payments would be inevitable, what other option is there?
Some players would walk and others might decide to call it a day and try their luck outside of rugby. Some very rich owners might decide that a totally level playing field doesn’t suit their purposes, although they have all at various times declared their loyalty to the clubs they own – again, if that happens, so be it.
This is horrible stuff, and like most of us I never thought I would see such a situation, although we all knew the Premiership’s finances were unsustainable, and had been for a long time. It has been hard to see a way the logjam could be broken and English rugby could be put on a proper footing, but the wretched pandemic has brought matters to a head, and in the longer term might even have helped the game sort itself out.
Alongside all of this, the Premiership must be ringfenced immediately – can we really countenance any of the 13 being relegated in the new rugby world order, and with the Championship looking more and more like a dead duck, where are the realistic promotion candidates? If a realistic salary cap is put in place, and every club commits to follow it, there might just be a case for a state loan to save the Premiership.