Scarlets chairman Simon Muderack has issued a stark warning over the future of the four professional club sides as protracted talks with the Welsh Rugby Union remain at a stalemate.
Muderack and representatives from all four teams – Cardiff, Dragons, Ospreys and Scarlets – have been locked in talks with the WRU all year, attempting to reach an agreement over a long-term strategy for professional rugby in Wales to flourish.
Neither side can agree on the size of the payments that flow from the Union to the pro sides for things like advanced access to players during international windows.
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Muderack warned: “There is no doubt we’re in a perilous position as the four professional clubs across Wales. We’re working hard, we’ve made progress and there is more work to be done.
“We need to come up with a first version of a final solution that we can enact pretty quickly. We all need to get on with our seasons on the pitch. We should already be deep into planning next year. We want to be able to plan several years into the future.
“That requires a lot of time and effort but we’ve really got to get on with it.”
He added: “What we’re looking at is ideally a multi-year model where the numbers would be different.
“It’s fair to say there is a big gap in terms of the funding and it’s not just about the money. It’s about the structure, how efficient we are, how we work with the Union, how we work together and with the players.
“But it’s fair to say there is a gap at the moment.”
The longer it takes for an agreement to be reached, the greater impact it has on clubs' ability to recruit and re-contract players as they don't know how much money they have to spend. It led us to a situation last season that saw some players released by their clubs in the final week of the season, leaving them on the scrapheap.
Under normal circumstances, clubs will look to do all of their business before Christmas. When asked if he's confident that head coach Dwayne Peel will know what his budget is by October, Muderack said: “He has to. We’re going into this season with a first team squad of 43 players plus a transition and academy group beneath that. Of the 43, I believe there are 23 players out of contract this season, so there is a lot of re-contracting to be done. Dwayne needs to be able to get on with that.”
Last month, WalesOnline reported that the difference between what the four clubs want and what the WRU was willing to agree to was £6 million. It has since emerged that the Union were prepared to reach the figure - circa £30 million per year for six years - that was being demanded but in return would require the pro clubs to repay around £13 million over the first two years.
This would add to the collective £20 million CLBILS loan that was taken out to ensure the organisations survived the Covid-19 pandemic, which they are currently having to repay.
The WRU’s proposal, which ultimately results in saddling the pro sides with more debt and essentially protects the WRU from any significant financial risk, has met stiff opposition from the regions.
“Would you look at these businesses and say that in the short term more debt is a good idea? You wouldn’t,” said Muderack. “Certainly, we’ve got to look at the long-term prosperity and viability of this business as well as its immediate short-term survival.
“Ideally, we would not be burdening the business with more debt at this moment in time for sure. And we’d probably be looking to do a better job of dealing with the CLBILS loan longer term.”
Part of the WRU’s most recent proposal also called for the return of benefactors to underwrite the project, representing a significant U-turn given that they were driven out of Welsh rugby as part of Project Reset, overseen by former WRU chief executive Martyn Phillips.
This too, is opposed by Muderack.
He said: “When we did Project Reset a few years ago, the whole purpose was to get the game self-funding on a sustainable basis. Let’s thank those benefactors for their contributions in the past but let’s move beyond that.
“I don’t think any of us want to go back to that. The game should be self-funding and sustainable.”
The Scarlets boss, who is adamant that an agreement can be reached and that it must be a long-term strategy, also accepted that it is incumbent on the pro teams themselves to open up new revenue streams.
The last few years have seen major changes at the top of all four pro sides but their plans were stifled overnight by the Covid-19 pandemic. Now that we are emerging from that crisis, there is a responsibility on the shoulders of the successful businessmen who have been installed at the top of the four sides to bring their skills to the fore.
“Clearly on-field success has a big impact in terms of the money that comes through the tills and it’s also why we are here and exist.” said Muderack.
“We’ve got to do a better job of that. We are lucky we’ve got this amazing facility (Parc y Scarlets) which to be blunt is the second biggest asset in Welsh rugby second only to the Principality Stadium.
“This is an asset we want to get more revenue out of. We want to work with URC, EPCR to help those competitions generate more revenue to us, and indeed we are massively motivated to work with the WRU to help the WRU generate more revenue which ultimately will flow through to us.
“We’ve got to come up with a solution, we’ve got to look at some structural and efficiency issues. We’ve all got to do a better job of running our businesses for greater prosperity.”
It’s also a big year for Muderack’s Scarlets organisation as the club celebrates its 150th anniversary. Earlier this year it was rumoured that a rematch against the All Blacks was on the cards following their historic 9-3 victory back in 1972.
Things are yet to materialise on that front but plans to celebrate the landmark year are afoot.
“Plans will come out over the next couple of weeks. We have had a lot to deal with in the off-season,” said Muderack.
“It’s a fantastic occasion for the club and a really good opportunity to remind people of the Scarlets and r-eengage with our stakeholders and particularly the town and the region and our fans who stood by us through Covid-19.
“We are looking forward to celebrating our heritage but also looking forward to the future.”
On the season ahead, he added: “We want to reach the URC play-offs, be in European contention for the last couple of weekends of the season.
“We are in the Challenge Cup this year and have a couple of good fixtures and want to make sure we get through to the knockout stages of Europe as well and build.
“It is no secret we are not happy with our performances for the last couple of seasons.”
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