WRU make major announcement as £35m problem could spark seismic decision in months

-Credit: (Image: Huw Evans Picture Agency)
-Credit: (Image: Huw Evans Picture Agency)

The Welsh Rugby Union has confirmed it will consider cutting the number of regions later this year if it can't bridge a £35m funding gap over the next five years in the professional game.

As the WRU announced its headline five-year strategy to get the game back on track, it described its financial position as stable but with an overall debt of £24m, with a £15m annual deficit and overall £35m funding gap over five years to be able to service the professional game to a successful level.

The WRU will look to bridge that gap this summer, and the current intention is to try and keep four regions. But if it can't, it will consider activating the two-year notice clause in the Professional Rugby Agreement which will allow them to go down to three sides.

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Another radical proposal which could be considered is an aggressive tiered funding model where one or two sides are funded considerably higher than the other two.

"Having done the work (in forming the strategy) the level of investment, when you've heard the financial position, is significant," said WRU CEO Abi Tierney. "If we are going to be successful we have a significant gap to close.

"There's two ways to address that. One is we identify ways to grow our income, ways regions can grow their income, look at debt restructuring and we can look at how we can utilise our balance sheet. If we can't close that gap then the way we will be able to achieve that goal is by having a different structure for the regions.

"You could cut the number of regions so that you've got less to invest in, to have two regions who get more money.

"It could be 2+2, or even the Irish model of 3+1, but the first priority is trying to close the gap. That is what we are working towards doing so we can invest in the regions to the level we need to.

"This is all about trying to prevent all our regions going bust. When you look at the pathway for players it's very much based on having four regions.

"We have given them all KPIs and minimum standards to reach. We will be discussing the way forward collectively in September. We can't survive if we keep on going in the way we are and spending too much money against the money we are bringing in."

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A headline strategy for the whole of Welsh rugby was announced today with the five key targets over the next five years - the men's and women's national side consistently ranked in the top five in the world, the regions challenging in play-offs, growing the number of active participants, financial sustainability at all levels and to increase the percentage of the Welsh public feeling positive about Welsh rugby.

The WRU will then publish its final in-depth strategy in October, where all the big decisions will be made. The key one clearly focusses on funding the professional game in a way that it can be successful. How that looks will depend on the Union and regions' ability to grow income and reduce debt. If it can't do that to a significant level, Welsh rugby will be set for a seismic change of some sort.

WRU chair Richard Collier-Keywood has admitted the governing body face steep financial challenges as a result of the Covid-19 pandemic.

“The WRU was running a financial deficit of around £15m per year which was funded by the disposal of WRU assets, reducing our income potential for the future," he said.

“We will shortly publish the final version of our accounts for the year ended 30 June 2023 which will include some substantial changes, but which now give us a sustainable financial starting point.

“Covid had been a major cost for the professional and community game in Wales and despite the £13m of grants from the Welsh Government in total, to the four regions and the WRU, we have been struggling to recover from the approximately £20m of debt incurred by rugby in Wales."

Announcing the strategy, CEO Tierney said: “We have created something that we can all be really proud of, something which will see us rise sustainably to new heights by 2029.

“We have challenged ourselves to be ambitious, but also realistic and rigorous in our decision making.

“One exciting aspect at the heart of the strategy is a commitment across all elements of the professional game to share resources and expertise, meaning we, across the regional clubs and the WRU, will collaborate much more closely on and off the pitch.

“This will include the new ‘head of growth’, who will help us to grow our revenues and bridge the shortfall in the funding required for our teams to thrive and compete at the highest levels.

“Above anything, we will ensure this strategy is achievable in every aspect, with the ability to show the scope and range of our commitments and to cost them accordingly. We will be completely transparent in this process and announce more detail in the months ahead.

“An increase in financial discipline, process and rigour is an immediate focus for us, as we know we have been spending more than we have been bringing in in recent years. This strategy is about professionalising all aspects of how we operate and govern the WRU.

“Together with these plans to right-size the organisation and ensure our spending is in line with our income, we must also grow in core areas, to reinvest in all aspects of the game.”

As part of the wide-ranging plan, the WRU will assess options for growth in income through a review of every facet of the professional game over the coming months, with the ambition to make progressive choices which will challenge all that has gone before. The five-year plan will then be published in full in October.