Bristol Bears owner Steve Lansdown admits Premiership clubs are in the midst of a fight for survival as the league faces an increasingly uncertain financial future highlighted by the situations at Worcester Warriors and Wasps.
According to the Daily Mail, the Premiership’s 13 clubs hold a collective debt of £509million, with around £35m owed to HM Revenue & Customs. Wasps’ liabilities stand at a staggering £112.3m, with the stricken club having filed a notice to appoint an administrator and facing automatic relegation as a result, while Worcester have until Monday to prove they have the necessary funds to continue the season.
Worcester’s fixtures are effectively being arranged on a week-to-week basis, as they struggle to meet costs and it seems inevitable that more clubs will soon be in a similar position as the financial impact of the pandemic really takes hold.
Speaking to the Today programme on BBC Radio 4, Bears chief Lansdown admits there simply isn’t enough money in the game to meet the loss of revenue caused by Covid-19, coupled with rising debt levels through the league.
Lansdown has also described CVC Capital Partners’ investment as “disappointing” with the Luxembourg-based investment fund purchasing a 27 per cent stake in the Premiership in 2018 - hailed, at the time, by the league as a “new era” - but with little evidence so far it’s helped the overall growth of the competition.
“Covid has obviously been a major factor in recent times, exacerbating the problem,” Lansdown told the BBC. “There’s just not enough money in the game, is the answer. Clubs get their revenue mainly through ticket sales, central revenue and commercial revenue.
“Central revenue has been on a decline in recent years because of Covid and lack of playing, matchday revenue obviously dropped off a cliff and commercial revenue hasn’t picked up. We had the deal with CVC but to date that, to be honest, that’s been a little bit disappointing but hopefully we’ll see that improve in the future."
“They are, like a lot of businesses across the UK and the world after the pandemic,” Lansdown added, when asked if the elite tier of English club rugby faces a 'fight for survival'. “Rugby is, in a way, its own worst enemy - it’s a fabulous game, it attracts great fans but it’s a question of getting the revenue into the business.
“For people to invest into it, it’s a passion, it’s not one you can point to and say, ‘if you invest, you can make a return on your money’. So you have to go into with your eyes open that it’s going to be a bit of a black hole for a time and that’s a difficulty.”
Bears actually possess the second-largest debt in the league, standing at £51.2m - albeit well below the nine figure sum Wasps have accumulated - although they are in credit in terms of tax liabilities.
However, as Lansdown has pointed out - and to ease any potential tension around Ashton Gate - that money is owed to him, personally. And, as his ownership of Bristol City is evidence of, the Guernsey-based billionaire has consistently converted debts of the Championship club into equity.
“The real difference is that debt is to me, personally, so it’s in my hands what happens to it,” Lansdown added. “I’ve done the same with the football club, the record speaks for itself. That money is invested in the club to get it where it is, to get the infrastructure and the High Performance Centre in place, to build a team that can compete at the highest level.
“We have a plan to decrease the amount of contributions that I have to make over the years ahead in order for the club to become sustainable moving forward.”
As for solutions, there are no quick fixes to the problem but clearly as revenue streams for clubs have failed to reach desired levels, the onus is on Premiership Rugby to find fresh investment into the league otherwise the problem isn’t going to go away.
As while the pandemic reduced money into each of the clubs, it also saddled them with further debt due to the Sport Winter Survival Package loan from the Department of Culture, Media and Sport, which enabled them to operate through the 2020/21 season where the majority of the campaign was played behind closed doors but has led to repayments of around £800,000 a year.
“I think the thing is, we had the funding through the pandemic but, of course, it was in the form of loans which is one of the problems for, say, Worcester,” Lansdown said. “When you borrow money, you do have to have the ability to repay it, or the ability to know it’s going to be removed or converted into equity.
“In reality, if the funding is free, it’s more than welcome but you shouldn’t spend anything for nothing in this life. What the PRL needs to do is focus on commercial revenue or generating new revenue and improving the offering we get out there to attract other investors into the sport.”
