After 13 years of Welsh regions, I think it’s fair to say that they have been of mixed success. Are they financially viable in the modern pro era though?
Welsh Regions Financial Viability
In the year ending June 2015 the Cardiff Blues made a loss of almost £240,000.
The Blues’ loss was better than the previous year, with the £238,552 in the red an improvement on the £259,450 from 2013. The region’s main creditor is Peter Thomas with a non-interest loan of £6.12m owed to him, plus a further interest-bearing loan of £1.9m owed to Atlantic Properties Developments PLC – a company under the control of Thomas. The region however did see a 6% rise in turnover thanks to their return to the welsh rugby home that is the (BT sport) Cardiff Arms Park.
In a statement, Blues chairman Richard Holland also noted the difficulties the region had faced during the dispute with the WRU. “It placed enormous pressure on the business and restricted our ability to plan with any certainty for the future,” Holland wrote. So perhaps before fans judge and say how Wilson is doing a poor job, just remember how difficult it has been for them in recent years financially. Time is bliss and very much the key with no insight of a huge money deal anywhere close, with the next TV deal set to be in 2018.
Even with financial trouble a key investment made by the Blues was their synthetic pitch that cost £400,000 and this has improved pitch quality to 100% with it never being sodden, snowed off or too sandy as the Arms Park was prior to the modern instalment.
Progress wise it hasn’t been great for the capital side with them sitting in 9th place, 21 points off the peak of table at current moment and just after the hardest year in recent memory they managed a 10th-place finish in the Pro12. This saw the Blues finish lowest of the Welsh regions and miss out on a place in the Champions Cup, instead having to settle for the Challenge Cup for a second season.
They did reach the quarter-finals of the second-tier European competition last season, where they were beaten by Dragons.
Also losing money in the year ending June 2015 was the Scarlets who made a loss of £1m, partly due to the two-year dispute with the Welsh Rugby Union that ended in a £60m rugby services agreement.
Chairman Nigel Short, in his statement, said “The long and protracted negotiations with the WRU not only had a significant and negative impact on our financial performance but also directly cost in the region of £200,000 in legal and professional fees necessary to reach a satisfactory conclusion.”
Other sources of the money costs include the Creditors £2.6m owed to Carmarthenshire County Council, with interest paid at 7% per annum, and due for repayment in 2023.
The Llanelli-based region also says it “invested an additional £500,000 directly into our rugby playing budget and backroom coaching group“.
Positional wise it hasn’t seemed to harm them short term as Scarlets qualified for the 2014-15 European Champions Cup and again secured a place in the top-tier competition next season after finishing sixth in the Pro12 league. They currently lie third, on 49 points (5 points behind leaders Connacht).
So is their relative successful period after the large loss a good example to follow of, that money doesn’t necessarily mean success?
NEWPORT GWENT DRAGONS
The board of the Newport Gwent Dragons applied to put part of the loans made to the company by A.C. Brown, F.C. Brown, M.J.S. Hazell, W.A. Godfrey and R. Price into equity. This sum comes to the amount of £5,605,813.
They claimed via a letter to the shareholders that…
‘‘In order to facilitate the capitalisation, it is proposed that:
-the authorised share capital limit of the company is removed (which is in line with the companies act 2006, which abolishes the requirement for a company to have an authorised share capital); and
-the directors of the company are given authority to allot shares up to an aggregate nominal amount of £8,000,936”
This shows that there isn’t a worry or a need to pay back any money owed and the Newport Gwent Dragons are not going bust any time soon, so it’s not a time to panic you will be happy to know if you’re a fan. The dragons since their implementation into pro rugby in Wales haven’t had huge success and have often been the lowest finishers of the welsh regions. They currently lie in 10th place and are the bottom Welsh regions yet again, with only the league’s Italian contingency below them.
Of course with Newport RFC and the Newport Gwent Dragons being owned by the same company/people more money will be turned into equity or shares in the future it would seem. Overall their pitch costs and stadium costs are balanced out a tiny bit by Newport County AFC, and so this aids some relief to a business that is leaking money and so perhaps that is a bonus.
Perhaps the best marketed and driven side as just the other day the Ospreys announced that they have made a profit for the first time since 2007.
Off-field progress, with increased funding and revenue, helped the regional rugby side record a profit before exceptional items and interest charges of £143,498 in 2014/15.
The net profit of £128,403 is a turnaround of £251,963 on the previous year when the business declared a net loss of £123,560.
The Ospreys have always had the best marketing and branding out of any Welsh side and most northern hemisphere sides, claim on their website that ”Boasting a sponsorship value of £650,000, the largest in the northern hemisphere domestic game, the Kooga manufactured shirt will be emblazoned with the logo of headline sponsor npower renewables for a third season, along with secondary sponsors, Persimmon Homes, Worthington, John West, Taylors Regional Foods, Trade Centre Wales, Trade Depot, Cuddy Group, and Solo Service Group, along with Stadium Motors on the shorts.”
Which does just prove that success at the highest level of pro rugby isn’t always a pull factor as undoubtedly many of these shirt owners are not rugby fans at all. This wider market has helped them push to this profit gain; the first since 07.
The extra funding has pushed this yes, but any profit is a good profit, especially considering the other financial status’ of the Welsh regions.
The money that is being pushed into each ”region” is just a giant loan the company cannot pay back, hence why it is subject to reminder however that all this ”loaned” money will not be paid back, due to it either being put into equity or it being done as an investment that isn’t legally bound to pay back the cash.
Our Welsh regions are not in a state of financial worry and they will not be going bust. They are being run as businesses and businesses do take losses, whilst the matter of losing money is not one I’d like to lean towards, if the ”regions” stay up and remain separate from the semi-professional clubs then that is the option I would say is most viable.
Wait until 2018 when the new TV deal comes around and see if we can get BT sport or SKY to buy into a product that can be a good one to watch if we get rid of the Italians.
The other options we have for financial viability is to join the RFU pyramid, even at a lower level so we can work our way, meaning that we have extra funding and better TV deals.