A Premiership rugby club’s finances are “clearly unsustainable”, a damning parliamentary report has concluded.
A report by the Digital, Culture, Media and Sport (DCMS) committee said the recent demise of Wasps and Worcester Warriors put a “tarnish on the reputation” of sports authorities.
The committee heard from leading rugby figures after the two clubs entered administration in the autumn.
MP Damian Green said elite club rugby was “in shambles”.
Green, who is acting chairman of the board, added: “Inert leadership from the Rugby Football Union [RFU] and Premiership Rugby [PRL] has allowed mismanagement to bring down the two best teams in English rugby.
“Thousands of loyal fans have been deprived of their clubs and hundreds of jobs have been lost.”
The committee was told annual losses averaged £4m per Premiership club and its report pointed to a “lack of safeguards” at the highest level.
A joint statement from the RFU and PRL in response to the report states that the organizations are “working hard” to “create a sustainable league”.
The DCMS panel added that “the unscrupulous owners of Worcester Warriors mismanaged the club’s finances while attempting to strip the club of its assets”, and that they had gone more than a year without submitting an account, with players several months in arrears.
The board said that “one of the most striking aspects of the problems at Worcester Warriors was the lack of due diligence undertaken in relation to the owners, particularly Colin Goldring”.
Last May, the club’s co-owner Goldring was banned from practicing law without the permission of the Bar Office.
“This appears to have been insufficient for the Rugby Football Union (RFU) to intervene and terminate Mr Goldring’s ownership of Worcester Warriors,” the DCMS board added.
At the time, the club issued a statement which said: “All regulatory bodies have expressed to Goldring that they are satisfied that he is fit and proper to be the owner and director of a sports club.”
Goldring, who was a trainee solicitor at the time of the incident, said at the time that he was cleared of “any allegations of dishonesty or lack of integrity”.
In response to the DCMS report, which Goldring said he had not seen, he denied claims of asset theft.
Goldring added that the board “wasted an opportunity to have a constructive assessment of what really drove the Warriors into administration and to understand and respond to the challenges that other clubs still face”.
Meanwhile, the committee said Wasps had been struggling for a number of years with mounting debt related to what it called a “disastrous and ill-advised move to Coventry”.
The report concludes that the “debacle” in both clubs could have been avoided with “better management structures, financial supervision and proactive intervention by the RFU and PRL”.
While Green welcomed the planned reforms, including a “new and more complete” owner and director test, he said “the root of the problem remains”.
Both RFU chief executive Bill Sweeney and PRL chief executive Simon Massie-Taylor have spoken of their ambitions to boost revenue within English domestic club rugby.
However, this did not appear to allay the concerns of the board, which said it had seen “precious little evidence” that increased collaboration between PRL, the RFU and other key stakeholders would significantly increase revenues.
“The financial situation of Premiership clubs is clearly unsustainable and we are surprised by the very complacent belief of Bill Sweeney and Simon Massie-Taylor that further growth in club revenues will solve these problems,” the report said.
“The collapse of two Premiership clubs during the playing season is a stain on the reputation of the RFU and PRL. It does not indicate a healthy professional set-up.”
After the annual report was published, the RFU was asked to provide “detailed commentary on its financial position and the steps it will take to prevent further club collapse, with consequential damage to players, staff and local communities”.
A “lack of attention” to the welfare of Worcester Warriors and Wasps players was another area criticized by the board.
The report states “the introduction of a form of benevolent fund [is] urgent need” and recommended that the RFU should adopt measures “to give players a stronger say in all matters relating to their welfare”.
The RFU and PRL said player welfare was an “absolute priority” and added there were plans for a financial oversight panel that would include a third-party financial review of all clubs.