Gloucester Rugby’s chief executive has said he expects the club to continue to turnover a profit despite the cost-of-living crisis and the financial reverberations of Wasps and Worcester Warriors entering administration. Lance Bradley said while it was “very sad” for the fans, players and staff of both beleaguered clubs, which have entered administration and been relegated from the English Premiership, the situation had presented “other opportunities”.
Speaking at a business club meeting of local firms and sponsors at the Cherry and Whites’ ground Kingsholm, Mr Bradley said their demise had prompted conversations between the league’s remaining teams over the need for greater financial transparency from clubs, plus the future structure and governance of English rugby’s elite division.
Mr Bradley, a former UK managing director of Mitsubishi, said the possibility of reducing the Premiership further to 10 teams was being explored, to avoid league fixtures clashing with with international windows when top players join up with their national sides.
He added that another proposal was for a new cup tournament, potentially including teams from the second tier championship division, to be played during the international breaks, to allow for the continued development of players.
Mr Bradley said a reduction in the number of teams in the competition would lead to a greater share of central distributions income from the league for each team. He added this potentially “transformational” reform would represent “a seven-figure difference” for Gloucester, and could allow it to invest further in its stadium.
According to Mr Bradley, if clubs were obliged to provide financial proof they were able to fulfil all of their fixtures ahead of the start of a season, it could help to prevent the possibility of the type of disruption seen this year being repeated.
He revealed a cancelled home game against Worcester had cost the club £400,000. While a consortium led by its former chief executive Jim O’Toole is interested in buying the Warriors and its ground, Mr Bradley said it was “likely” at this stage Gloucester would not see any of the money it had lost from the game.
In its most recent set of accounts for the year to June 30, 2021, Gloucester Rugby scored a a pre-tax profit of £1.04m, compared to a loss before tax of just over £980,000 in 2020, with a net profit for the 2021 financial year of £141,500.
Mr Bradley said the club was one of only three in the league to do better than break even, after it previously faced going out of business as a result of the Covid-19 pandemic. He added the club was hopeful it could also make an operating profit, “not next year but the year after.”
Mr Bradley said there were “big differences” to consider when comparing Gloucester’s turnaround with the demise of Wasps and Worcester, which he said had run up huge debts as a result of “not being managed very well”.
“If you take the case of Worcester, they have been around a long time but don't have the support base that we do,2 he told BusinessLive. "You will all have read stories in the press about what the owners did and didn’t do, and I’m not sure that helped the situation. We are fortunate we have an owner and a management team who are very committed to the club.
“Wasps was always going to be challenging. Historically they have always been in London, they moved 100 hundred miles away from their fanbase, they took on quite a big loan to pay for the stadium, that always puts you on the back foot and from that moment it was always going to be challenging for them.”
During the first national Covid lockdown in March 2020, all staff at the club, including first team players, took a 25% pay cut to help with the loss of income generated by matchdays and tickets.
Mr Bradley said: “That was quite tough, six months into the job stood in front of people saying that. From the playing side we got a half a dozen of them in and showed them the numbers. I don't want to burden players with numbers, I want them to focus on the game. But we were facing going out of business.
"We didn’t know where our income was coming from with no matches, there may have been no central distribution income from PRL, we didn’t know what going to happen with sponsors, we could have gone out of business in July. The players all said 'yes, that's what we need to do, this is our club, what do we need to do to save it'?'”
As well as reducing its cost base, Mr Bradley attributed the club’s strong financial position to an improvement in “basic business measurement processes”. He said the club was manging ticket sales data more effectively, which had a knock-on effect on match-day budgeting on staffing, food and drink, plus on fan experience, and driving further ticket sales.
The chief executive added that the club had increased its sponsorship revenue from about £1.5m to £3m over the last three years. An introduction of a minimum spend of £100,000 has been established for a sponsor to have their branding emblazoned on Gloucester’s iconic Cherry and White shirt. Mr Bradley said such moves had “added value” to sponsorship of the team, which has established a tiered club of more than 250 businesses it hopes will continue to provide sustainable support for Gloucester Rugby.
Mr Bradley revealed the club’s energy bill had more than doubled and it was “very aware” of the potential knock-on impact of the current cost-of-living crisis on its fans and sponsors.
“We are fortunate that we are one of three clubs whose ticket sales are up this year, our season ticket sales are up 9% so far this season. So far this season we are one of three clubs who’s match day attendances are up," he said. “Part of that is we have looked at ticket pricing to make sure we remain at really good value. We’re very aware of the cost-of-living issues, and that people don't have to come to rugby games.
“We sold out against Exeter and our sales are generally running ahead of where we thought they would. This is very positive but we are not complacent about it at all.”
Gloucester City Council recently gave the club the green light for its plans for a multi-function venue at a forthcoming training facility, intended to be built at a warehouse next door to Kingsholm. The club was granted a new premises licence for the St Catherines Street site, enabling it to host concerts, conferences and sporting events as well as serve alcohol and food late into the night.
However, some residents living close to the ground had objected to the proposals and a petition against the plans was submitted to the council. Mr Bradley insisted the club, which has played it matches at Kingsholm since 1891, was not about to turn into “bad neighbours.”
“The vast majority of the events we will put on will be match day events, which will not have any more impact than a normal match day does. On a match day people are in the street drinking at local pubs, drinking in our bars; this will be another bar for them to drink in. The impact of that is going to be very small indeed.
“There is a possibility that we could put some concerts on there but historically we have always run concerts at the stadium so that's not really any great difference. It’s another string to our bow. There isn't currently a venue in Gloucester that can seat 500 to 1,000 people, so that provides that opportunity which should be of benefit to the whole community and we have already been talking to the council about how we can make the most of that.”
There is currently no timetable for the multi-million pound project, with Mr Bradley saying funding was required before work could start, which was “not imminent”.
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