England rugby can thank its club owners and the government for escaping a financial cliff during Covid – but with collective losses of £100million expected there are bumps in the road.
On Wednesday, the Premiership kicks off its first ‘back-to-normal’ season with a sold-out crowd at Ashton Gate ahead of Saracens’ return to Bristol.
After a season and a half of restrictions that ravaged club finances, those who pull the wallet are determined to do better for a hellish 18 months with no fans, ticket sales or notable revenue, but costs are still high.
English rugby can thank its club owners and the government for escaping a cliff
Whether sustainable for the game or not, there is no doubt among the top executives that several Premiership clubs could have shut down without the 13 private owners and a £59m bailout loan from the government as Covid crippled the game’s funds .
‘Rugby is not financially sustainable, not solvent, it is supported by the owners. If I’m being honest, and this may not be popular, I have a hell of a lot of respect for them for doing that,” Bath CEO Tarquin McDonald told Sportsmail.
“They’ve kept the game going, which is great and they don’t get a thank you for it.”
Gloucester general manager Lance Bradley explains how important rugby’s part of the government’s winter survival package has been.
“Without that money, we would certainly not have existed as a club, and we are certainly not in the worst financial situation,” he said. “It saved a number of clubs.”
Cumulative losses across the league are likely to be around £100 million, when the two financial years hit by Covid are combined.
The Premiership kicks off its first ‘back-to-normal’ season since the pandemic on Wednesday
In Bath, for example, they expect a £7-8 million hit over that period, and Exeter – formerly the league’s only profitable organisation, don’t expect another profitable year to be hit for a while more than others taking their lucrative meeting spaces in Sandy Park.
But there are green shoots of recovery. Gloucester has signed seven ‘six-figure’ sponsorship deals in lockdown – ‘a game-changer’ – noted Bradley.
Clubs have taken the time to reassess everything they do.
“We’ve installed a new ticketing system, PA system, a new website, we’ve cut quite a bit of costs out of the commercial side of the business, it’s starting to move back in, got our catering in-house like we thought we could do better.” and make more money from it,” Gloucester’s Bradley explained.
“We think that will bring us to a break-even position this year.”
Aided by private equity investment of £13million per club by league partners CVC – part of which has yet to be released for accounts – Exeter have gone on to build a £35million hotel on their site and a new grandstand to expand their capacity. take to 16,000 later this season.
Saracens will also fit a 3,000-capacity grandstand, funded by a £22.9 million loan from Barnet Municipality.
“Now we have to hope that those gambles and investments pay off,” said Exeter boss Rob Baxter, warning that difficult times could be ahead.
“You could see some clubs in a financial position that you can’t possibly get out of, I don’t know, but what we need to do is work together to produce something that people want to look at and be involved in.”
It is clear that major changes have taken place. Most clubs have cut their players’ wages by around 25 per cent in 2020, with several high-earning players leaving, and it’s clear that around half of the league will now not pay the league’s salary cap, which was lowered from £ 6.4 million to £5m this season.
The Premiership also expanded to 13 teams, with Saracens re-entering last season and not a single team relegated, with a possible one more to exit the Championship in 2022 if they meet the criteria of ‘minimum standards’.
That break on relegation of at least two years was seen as crucial.
“If you went through Covid and then relegated, that would have been more than the straw that breaks the camel’s back – the big anvil perhaps!” McDonald in Bath said.
‘That stability is extremely important. The moratorium on degradation is a fundamental part of the recovery from Covid.’
In the future, there could be discussions about adding quarter-finals to a 14-team league, to add drama at the end of the season – one of many ideas to be discussed when expected new league director Simon Massie-Taylor joining soon.
The clubs are emerging from Covid and feel the clubs are more streamlined, more collaborative and better equipped for the post-pandemic future of rugby – as long as the fans really return.
“We’re coming out of Covid comfortable and confident,” McDonald said.
Bradley added: “We’re through the tough part. As long as it’s a normal season, we’ll be back on schedule.’