 Many potential sources of funding are now impossible |
Premiership rugby clubs in Wales are facing a financial crisis because of millions of pounds worth of inherited debts which they have little chance of repaying. That is the view of accountancy firm Grant Thornton which has studied the books of eight of the biggest clubs.
The organisation's Cardiff office has completed a study of the reports and accounts filed at Companies House by eight of the teams which used to make up the old Premier League - and who now compete in a semi-professional league.
The teams looked at were Cardiff, Swansea, Llanelli, Neath, Pontypridd, Newport, Bridgend, and Caerphilly.
No accounts have so far been filed by Caerphilly Rugby Football Club Limited, which did not incorporate until March 2002.
The survey found that the clubs shared combined losses from 2002 amounting to nearly �4m and there is �6m owing from 2001.
Furthermore, the introduction of regional rugby meant that potential income sources like television rights, advertising, and cup matches had been closed off.
 Pontypridd RFC entered administration last year with debts of �670,000 |
The accountancy firm is advising club directors to seek urgent financial advice but is warning them against going into administration. According to Grant Thornton's specialist financial services partner, Richard Hawes, the results will make difficult reading for clubs and fans alike.
He warns that while the national team's fortunes on the pitch appear to be improving after an encouraging World Cup performance in Australia, the financial situation facing Wales' leading Premier League rugby clubs is decidedly less optimistic.
Among the findings of the investigation were:
The eight clubs reviewed had combined losses (excluding write-off of loans) of some �3.8m in relation to accounts filed for the year ending 2002, and �6m in relation to accounts filed for the year ending 2001; The creation of the new regional tier has removed much of the earning potential in the way of gate receipts available to the Premier League club companies whose places in the lucrative Celtic Cup, Celtic League and Heineken Cup competitions have been taken by the regional entities; Reduced income has left the companies with little chance of ever being able to recover their historic accumulated losses; Grant Thornton has advised that many directors of the Premier League clubs involved should be seeking urgent financial advice to ensure they are acting within their responsibilities under the Companies and Insolvency Acts.
The firm said typical creditors in a situation like this would be the Inland Revenue, HM Customs & Excise, breweries, as well as individuals who had given loans to the club.
Financial future
Employees and suppliers also quite often found themselves in the position of being creditors, it said.
The accountants are warning directors of clubs not to pursue the administration route taken by Pontypridd Rugby Football Club Ltd and Swansea Rugby Football Club Ltd in the last two seasons, without first seeking appropriate professional advice.
Many of the clubs concerned have sizeable assets and still enjoy income streams which can provide them with a means to run a business, the accountants said.
What was crucial, they added, was that the clubs ran their businesses within their means.
Whilst the analysis highlights the financial problems associated with the Premiership game, Grant Thornton believes that the club rugby structure in Wales offers the prospect of a much-improved financial future for the game in Wales overall.
Earlier this season Richard Hawes and David Thomas, both of Grant Thornton, were appointed to run Pontypridd Rugby Football Club Ltd after its directors were forced to place the financially-troubled Sardis Road club into administration.
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