English rugby clubs ‘heading for disaster’ after mounting £300m in debts

[AlRums]

English rugby clubs ‘heading for disaster’ after mounting £300m in debts

Harlequins and London Irish are two clubs noted as being particularly concerning

www.independent.co.uk

 

[Vieux Talonneur]

Summarising a story from the Times:

In 2020 the salary cap was dropped from £6.4m to £5m to be held for 3 years before reverting to £6.4m in 2024/5.

Apparently, at the start of this season the 13 shareholding clubs voted on whether to continue with that plan or extend the £5m freeze. Change needed 10 clubs to vote for it, only 9 did so the increase in salary cap will happen with the backing of just 4 clubs understood to include Exeter and Bristol.

You just can't help wondering who's next.

 

[TRF_Olyy]

understood to include Exeter and Bristol

Guessing the other two are Saracens and Bath (or maybe Gloucester)

 

[BPM]

Summarising a story from the Times:

In 2020 the salary cap was dropped from £6.4m to £5m to be held for 3 years before reverting to £6.4m in 2024/5.

Apparently, at the start of this season the 13 shareholding clubs voted on whether to continue with that plan or extend the £5m freeze. Change needed 10 clubs to vote for it, only 9 did so the increase in salary cap will happen with the backing of just 4 clubs understood to include Exeter and Bristol.

You just can't help wondering who's next.

Great … those with the richest owners screwing the rest of the league

 

[Don't Skip Leg Day]

It's hard because I'm sure the rich English clubs feel hard done by competing in Europe with salary limitations but at the same time I want the league to still be competitive and not die off.

I still think either, the world league is the only long term option or rich clubs have players who only play in Europe and are therefore outside of the salary cap?

Somethings got to give!

 

[TRF_Olyy]

The rich clubs aren't even rich though, they're all losing money year on year

 

[McTallshort]

The rich clubs aren't even rich though, they're all losing money year on year

What about the big spending French clubs? Are they losing money or do they have a more sustainable business model.

 

[TRF_Olyy]

No idea,
Their TV deals and attendances are bigger and their shirts look like NASCAR ones with how many sponsors are on there so I'd guess so

 

[Vieux Talonneur]

Snippet from Times article on Sanderson / Sale. As they don't own the stadium:

"It means that Sale take 10-15% of revenue made on their match days - no cash from food, drink or anything other than their ticket sales".

 

[TRF_Olyy]

Yup, it's why we've been desperate to buy or leave for years - but the council wouldn't sell to us and the nimbys stopped us building our own

 

[BPM]

The rich clubs aren't even rich though, they're all losing money year on year

Yes, but the clubs with the richest owners have some ability to absorb the debt, which the other clubs don't. Most of the clubs are living hand to mouth - reinvesting whatever money they make back in to the club. The rich guys are putting the money in, as well as any income which makes for a complete mismatch.

If it carries on this way, there won't be a domestic competition.

 

[McTallshort]

Yes, but the clubs with the richest owners have some ability to absorb the debt, which the other clubs don't. Most of the clubs are living hand to mouth - reinvesting whatever money they make back in to the club. The rich guys are putting the money in, as well as any income which makes for a complete mismatch.

If it carries on this way, there won't be a domestic competition.

Can the rich guys also write off any debts as profit loss and deduct it from their tax? Pretty sure a while back some famous types were investing their money in crap films for the same reason.

 

[stus768]

Yup, it's why we've been desperate to buy or leave for years - but the council wouldn't sell to us and the nimbys stopped us building our own

Feels like in France they have a lot more support from local government especially around stadiums. Bordeaux's massive stadium is an eg I've seen. Would be interesting to know if they charge much less than Uk councils do. Maybe because they get better funding from central government they don't need it.

 

[Ragey Erasmus]

I can't understand why wealthy clubs would actively choose to harm the league as a whole, in the end the destruction of the league will be their destruction too.

 

[Leonormous Boozer]

What about the big spending French clubs? Are they losing money or do they have a more sustainable business model.

They average about 2.5k more in attendance and have the biggest TV deal in rugby, they all own their own stadium as well if I'm not mistaken (don't knowif this is the case with prem clubs). Rugby is the South of France's most popular sport which is a huge advantage.

I couldn't tell you if these clubs are sustainable, some definitely seem to be billionaire's playthings, but considering France have had a fully professional second division for years I'd guess that they are for the most part.

 

[McTallshort]

They average about 2.5k more in attendance and have the biggest TV deal in rugby, they all own their own stadium as well if I'm not mistaken (don't knowif this is the case with prem clubs). Rugby is the South of France's most popular sport which is a huge advantage.

I couldn't tell you if these clubs are sustainable, some definitely seem to be billionaire's playthings, but considering France have had a fully professional second division for years I'd guess that they are for the most part.

So they have a better foundation. Makes sense now why they are more successful and can spend a bit more than everyone else.

 

[Leonormous Boozer]

So they have a better foundation. Makes sense now why they are more successful and can spend a bit more than everyone else.

Pretty much, the competition has existed since 1892 and most clubs gave existed for over 100 years, apart from Montpellier and Bordeaux who are amalgamations of clubs that old.

Tbh I think a 10 team premiership and championship wouldn't be the worst thing for English clubs to explore. You won't have to pay players the same wages as the French if you can promise 8 less games per season.

 

[BPM]

I can't understand why wealthy clubs would actively choose to harm the league as a whole, in the end the destruction of the league will be their destruction too.

Well yeah, that's pretty much the point I was making.

 

[die_mole]

They average about 2.5k more in attendance and have the biggest TV deal in rugby, they all own their own stadium as well if I'm not mistaken (don't knowif this is the case with prem clubs). Rugby is the South of France's most popular sport which is a huge advantage.

I couldn't tell you if these clubs are sustainable, some definitely seem to be billionaire's playthings, but considering France have had a fully professional second division for years I'd guess that they are for the most part.

Clubs owning stadiums is the exception (Toulouse/Clermont). Clermont is on property owned by Michelin as a fun fact of corporate asset allocation (as is the whole Clermont structure). Most are municipality owned. Even in Ligue 1 about half the teams play in publicly owned stadiums.

I believe FFR made statements about wanting Nationale (and possibly Nationale 2) to be fully professional at some point.

 

[Reiser99]

Simple fact is that there aren't the crowd or tv numbers to sustain the English game at the moment. It's all well and good selling out Twickenham 6/7 times a year, but that does diddly squat for the clubs. The TV is aimed at making as much money from fans as possible, though having a small amount on free tv does show some intent to grow the game. However, it doesn't change the fact that club support is not enough for the majority of clubs to survive without outside help. Sarries certainly wouldn't get by with only their 2 fans.