The England club rugby scene has seen some big financial losses over the last decade with the likes of Wasps which had been around since 1867 went into administration back in 2022. Wasps were not the only club to disappear without a trace with Worcester Warriors joining them also in 2022.
The lockdowns can be blamed for most of these clubs who were already under pressure financially. Wasps was slightly different as the owners were not rugby people and sold the grounds to developers thinking they could cash in and moved the North London club to Coventry abandoning not only the history of the club, but also the fan base. This was a suicidal move and the club had no chance of surviving.
London Irish (2023), Jersey Reds (2023), Orrell RUFC, Mounts Bay RFC and Rossington Hornets RUFC were clubs not necessarily in the top tier, but vanished due to poor administration.
The current format of the English Premiership rugby and the Championship (tier2) is not great as the promotion relegation has been placed on hold. The English Rugby Football Union is moving the clubs to a franchise system and increasing the Premiership teams from 10 to 12.
The average losses per club in the Rugby Premiership is £3.4m per club and with the new franchise system that would be reduced by £1.9m per club leaving them short of £1.5m per season.
Changes have to happen as the sport of rugby has been professional for 30 years and the current business model is clearly not working. Over the last couple of seasons attendances are on the increase along with tv viewership's so there is new life being shown.
The idea is that the leagues will move to a franchise system similar to the American model where the leagues are closed (no relegation or promotion), revenue is shared and there are salary caps in place. This should lead to long term stability and is somewhat similar to what the Ireland Rugby Football Union has done by owning the professional clubs controlling the players and the club spending which has delivered success to the national team.
Last year in August we saw Newcastle Falcons being bought out by Red Bull and in March this year Bath Rugby Club having Dyson purchase 50% share. Dyson has been a long term sponsor of the club and this guarantees them financial stability long term.
This month we have Exeter Chiefs being purchased by Black Knight Sports and Entertainment who also own the English Premiership Bournemouth Football club. Exeter Rugby Club also own the Sandy Park hotel and conference center so the investment is more than just a rugby club.
The Cornish pirates which is a second tier rugby team has also been purchased by Pittsburgh-based Stonewood Capital Management which shows interest by US investors not only in the Premiership teams, but also the clubs outside. The new franchise model is the right call and it should secure financial stability and finally profitability.
What is quite telling is these investment firms are successful in whatever business they invest into. Being total outsiders not knowing the sport of rugby they see as an advantage as they see everything differently and like most businesses there are common denominators that can be applied. With an outside eye they should be able to spot opportunities those who have been around for decades have missed and it is far easier to turn things around.