London Irish became the third Premiership club to be suspended from competition in just eight months due to financial issues; Worcester Warriors and Wasps entered into administration and enforced relegation in October 2022
Wednesday 7 June 2023 16:11, UK
Tuesday brought news that London Irish had been suspended from the Premiership for the 2023/24 season due to financial issues - an outcome which sees a third club from 13 professional outfits to hit the rocks in the space of eight months.
After a campaign in which two Premiership clubs in Worcester Warriors and Wasps experienced administration, enforced relegation and continue to face the threat of extinction, London Irish - who finished fifth in the table, just missing out on the play-offs - have now followed suit, while each and every remaining club sits in differing levels of debt.
Indeed, such was the disruption during the season, the fact the Exiles could not provide evidence they would be able to adequately fund themselves through the 2023/24 campaign saw the RFU bar the club from any league next season.
We detail below what has happened, when it has, how it has, and what the outlook appears to be...
After persistent rumours of a potential takeover by an American consortium over the last six months, and in the wake of owner Mick Crossan saying last year he would sell the club for £1 if he could, alarm bells really started ringing in April, when players and staff received pay late.
Eventually, the club covered the salaries, with payments coming through a week late and two days prior to their final match of the Premiership season against Exeter Chiefs.
The players also demanded proof their insurance premiums had been covered before taking to the field for that game.
The RFU responded by giving London Irish a deadline of May 30 for a takeover to be completed or risk suspension.
The club were then given a one-week extension to get the takeover completed by 4pm on June 6, the main reason for which - it turned out - was the hope players and staff would receive the rest of the money owed for May, having been paid just half of their salary amounts for the month.
Seeking assurances the club would be in a position to take its place in the Premiership for 2023/24 - and would be able to complete the season - the RFU sought one of the following resolutions:
Irish are in debt to the tune of £30m, and on Friday June 2, the club were also served three winding-up petitions from the Government's tax authority HMRC, due to unpaid taxes of £1m.
The Brentford-based club concluded their campaign with a 17-14 win over Exeter and afterwards, director of rugby Declan Kidney struck an optimistic tone, but the lack of progress was troubling.
With talk of the takeover seeming less and less credible, Irish's only hope rested on whether Crossan would finance them for another campaign, but the 63-year-old owner continued to tell players and staff the American consortium would come through, right until the deadline on Tuesday.
When it inevitably failed to do so, the RFU suspended the Exiles - a club with 125 years of history and one of the best talent-producing academies in the country - from all leagues after failing to meet their commitments to pay staff and players in full for May.
The RFU, Premiership Rugby and the RPA also launched a hardship fund for players and staff who are most in need of financial support, which will also be available to those in need following the Wasps and Worcester insolvencies earlier in the season.
"This is desperately sad news for everyone who is part of the London Irish community as well as all the players, fans, staff and volunteers for whom this club means so much," Bill Sweeney, CEO of the RFU, said.
In terms of what's next, the issue of insolvency now edges closer and closer, such are the debt levels at London Irish, coupled with the winding-up petitions. The club have now filed for administration, a fate which fell the way of Worcester and Wasps, and one which has plunged their entire future into doubt.
And for the Premiership? After losing three professional clubs in just eight months, talk is they will adopt a 10-team league from next season, but it is clear the financial model for clubs within the competition is not fit for purpose, and this, quite conceivably, may not be the end of the turmoil.
Amid a general climate of Premiership rugby clubs plunged into millions of pounds of debt, August 2022 saw Worcester served a winding-up order by HMRC for unpaid tax.
Warriors played their opening game of the season vs London Irish on September 10, losing heavily 45-14, before releasing a statement on September 13, seeking to counter administration rumours, saying the club were in the final stages of being purchased by a new buyer and were at the last contract-signing phase.
However, no takeover was ever completed, and on September 15, the RFU issued an ultimatum to Worcester for 12pm the following day to confirm compliance for their Round 2 fixture at home to Exeter Chiefs. This was confirmed and the match went ahead on September 18, before the RFU issued the same ultimatum ahead of Worcester's Round 3 clash at home to Newcastle Falcons - which once again saw compliance confirmed in time for their fixture on September 24.
Losing patience and with growing concern for the long-term situation of players and employees at the club, the RFU then requested Worcester provide evidence of long-term viability by 5pm on September 26.
This deadline was missed, and so Worcester - along with their women's side - were suspended from the Premiership. Within hours, Worcester confirmed they were seeking to enter into administration.
On October 6, confirmation arrived that Worcester were relegated from the Premiership after their entry into administration, with results for their three fixtures in the 2022/23 season expunged from the record. At this point, notification arrived from the RFU that Worcester would play in the 2023/24 Championship season, subject to finding a new buyer.
New buyers arrived in the form of the Atlas consortium led by former chief executive Jim O'Toole and James Sandford, but there has been no happy ending as yet for Worcester, as on December 16, the RFU rejected the club's plans for a return to England's second-tier Championship, due to the "buyers selected by the administrators being unable to fulfil given conditions".
The RFU has painted a clear picture that unless Worcester find alternative buyers, they will not be able to operate as a professional rugby club. In May, fresh long-term doubts came to light when it emerged Worcester's owners took a 21-day £1.15m loan from new Wasps owner Chris Holland - more on them in a moment - in order to meet the RFU's deadline and complete purchase.
Such a situation arose from the potential for Wasps to compete at Worcester's home stadium, Sixways, but with this looking more and more unlikely, and the loan repayment due, Sixways may yet be sold for land redevelopment and Worcester's takeover by Atlas will have been, essentially, for nothing. Extinction for a 152-year-old English rugby club established in 1871 may well, sadly, be next.
By the end of last season, on May 13, 2022, Wasps were due to pay a £35m finance bond they had taken out in 2015 to facilitate their move to Coventry's CBS Arena.
Back in 2014, bondholders raised millions of pounds for Wasps to relocate to the West Midlands and purchase the CBS Arena in a first-of-its-kind scheme.
At £2,000 per bond, plus 6.5 per cent interest over a fixed seven-year period, money was secured to allow Wasps to move and own the stadium, but the date to repay bondholders came and went in May 2022.
Rather than repayment, Wasps Finance PLC released a statement to the London Stock Exchange titled 'Notice of Refinancing and Delay to Repayment', where it was said the bonds were being refinanced by bank HSBC, and a new date of June 30, 2022 was given.
This came after approved amendments in November 2020 due to the fall in revenue caused by Covid-19.
June 30 came and went without bondholders being repaid too, as Wasps Finance PLC confirmed further delays to refinancing and a new date of August 12, 2022.
In late July 2022, a statement released then confirmed Wasps were now "pursuing different refinancing options" parallel to discussions with HSBC.
By August 13, Wasps failed to refinance the bond, but owner Derek Richardson was bullish in response to media reports of an impending issue, commenting: "We are not in administration and we are not going to be."
Yet, with assurances sought by the RFU unsatisfied, Wasps Holdings announced their intention to enter into administration due to financial difficulties on September 21, and after a second notice filed on October 4 and four games into the season, the RFU suspended Wasps from all competitions on October 12.
Wasps Holdings were formally entered into administration on October 17, with WRFC Players Ltd, the company responsible for payroll, entered into liquidation, immediately making all playing, coaching and employment staff redundant.
All results for the season were expunged, and Wasps' formal relegation was confirmed with debts revealed at the club of some £95m.
An offer to purchase the club was accepted by administrators on October 30, and on December 16, the club was successfully sold and moved out of administration, with confirmation from the club coming that they would play in the 2023/24 Championship campaign, and rumours of a groundshare agreed with Solihull Moors Football Club.
On February 14, the RFU announced Wasps would be playing in the Championship next season after an application had been received following an extended deadline. But on May 18, this was revoked by the RFU, which stated certain agreed conditions had not been met.
The result of which, the RFU says, means Wasps will now move to the bottom of the rugby union playing pyramid in England.
Worcester's plight came in large part due to financial mismanagement from the top, while Wasps were severely hamstrung by the original financial deal which saw them relocate to Coventry.
Both had unpaid taxes, were sought after by HMRC, and larger financial cracks were exposed, resigning the clubs to administration.
Like most sports, the Covid-19 pandemic hit rugby hard, with most unions and domestic leagues still in recovery mode from the revenue lost.
Yet, it is a head-scratcher all the same that during a period in which two of England's 13 professional clubs entered into administration and were relegated from the Premiership, the RFU was able and willing to pay Eddie Jones a reported £800,000 in order to remove him, and then pay £1m to Leicester to appoint Steve Borthwick.
It is a disconnect, in clear terms, between the club and international game: Jones was the highest-paid coach in the whole of world rugby while Worcester Warriors and Wasps - the latter four-time Premiership winners and two-time European champions - were crippled with debts and nearing the end.
Over 200 professional rugby players and staff in England were made redundant overnight. A truly dreadful situation and look for the sport in the country. Indeed, one MP later accused Sweeney of being "asleep on the job" while such a crisis was occurring.
"A failure of the game on an epic scale," was another comment to come out from Julian Knight MP at the Digital, Culture, Media and Sport Select Committee.
Premiership clubs throughout the country, irrespective of success or otherwise, are riddled with debts.
As authors Michael Aylwin and Mark Evans wrote in their 2019 book Unholy Union, "football was not a solvent industry until it became so big it could not fail to make money". Rugby union, commercially, is nowhere near the stratospheric numbers football is, and never will be.
The Premiership, as Aylwin and Evans have posited, has found itself in a circumstance where its clubs were and are "daring each other to ever greater heights of expenditure".
In a persistent and constant battle between wages and revenue, wages have almost always been shown to have accelerated and increased.
The cumulative losses of Premiership clubs in the first 25 years of the competition stand at more than half a billion pounds. A staggering statistic.
Clubs have seen wage bills of £9m per year, but an average of just £4m brought in per club from match ticket sales.
In response to the pandemic and with sustainability in mind, the Premiership reduced its yearly player salary cap per club to £5m from £6.4m for the start of the 2021/22 season. But for three clubs, it came too late.
The cap, in original plans, is set to return to £6.4m in 2024, though clubs are thought to be in discussions to keep it at £5m. And this, in terms of long-term health, would appear a necessity.
