£ 50 0 M IN DEBT!

Huge liabilities leave English clubs facing an uncertain future

THE financial crisis facing English rugby has been laid bare after a Mail on Sunday investigation found that Premiership clubs have racked up debts of more than £500million.

With Worcester Warriors’ future in grave doubt just five days out from the new league season, it can also be revealed that London Irish, Newcastle and Wasps have also all admitted fears over whether they can continue to operate as viable businesses.

Detailed analysis of the clubs’ most recent financial accounts found that Premiership clubs owed more than £36m in tax, with only two of the 13 clubs in credit with HMRC.

The top flight also lost a combined £24m in the most recent accounting year despite receiving substantial Government Covid loans to cope with the financial setback of postponed games and a temporary ban on crowds.

Such measures hit the domestic game hard but sports finance experts say that problems predate the pandemic and warned that more club could go under.

‘That’s a real possibility,’ said Dan Plumley, principal lecturer in sports finance at Sheffield Hallam University who studied Premiership rugby’s finances before Covid.

‘The pandemic has accelerated the situation, but these figures chime with what the numbers were telling us a few years ago.

‘And what we’ve found during our research is if you just keep doing the same things, this situation becomes the status quo.

‘The product is still attractive enough to survive, and the fans will still continue to watch it. But unless you make serious changes in the governance practices, at Premiership Rugby level, and introduce cost-control measures beyond the salary cap, then things will just continue as they are.’

The MoS examined the 13 Premiership clubs’ accounts for the year ending June 30, 2021, with the exception of Worcester, who are yet to publish that year’s figures and are facing a winding-up petition over an unpaid £6m tax bill. We used their accounts for the previous financial year.

The club’s combined total debt is £509m, with a combined net debt of £105m after assets were taken into account. Wasps have the biggest gross debt at £112.3m, followed by Bristol’s £51.2m and Newcastle at £39m.

Eight clubs made an annual loss in their most recent set of accounts, with Exeter and Wasps both posting operating losses of £8m, while Saracens recorded £4.6m and Worcester £4m.

Newcastle posted the biggest profit, of £3.4m, but they had factored a ‘substantial’ Government Covid loan into the calculation.

Wasps also recorded the largest amount of deferred tax, at £9.5m, with Leicester next at £8.4m.

Further to this, in May, Wasps defaulted on 6.5 per cent interest payments to investors who lent the club a total of £35m via a retail bond, which was linked to the purchase of a 32,000-seater stadium in Coventry. Reports this week said the club had received a refinancing offer that would enable them to repay the bondholders.

A statement on the club’s accounts said: ‘(Owner) Derek Richardson is to provide financial assistance for the foreseeable future. However, the directors have concluded the existence of a material uncertainty that may cast doubt on the group’s and parent company’s ability to continue as a going concern.’

Only five clubs made a profit last year — and several only after receiving the Sport Winter Survival Package loans from the Department of Culture, Media and Sport. But they have left a number of clubs facing repayments of up to £800,000 a year.