Another Premiership club in danger of financial ruin
NEWS: Wasps are the latest English Premiership club in danger of financial ruin after revealing their intention to appoint an administrator.
The cash crisis at Wasps was sparked by their failure to meet a May deadline to repay £35 million ($40 million) in bonds, which helped finance their relocation to Coventry from London in 2014.
Although Wasps have filed notice in the High Court of their intention to appoint an administrator, the club say that does not mean they are actually in administration.
Instead, the club said they had secured “a crucial period of grace” as they fight to secure their long-term future amid the threat of action from British Revenue and Customs.
While the two-time European champions are confident they will secure the finance needed to prevent administration, failure to do so could result in automatic relegation from the Premiership.
The Rugby Football Union has the discretion to reduce or waive any sanction if the insolvency was deemed to be beyond the control of the club, including in the event of a pandemic.
“Due to the impending threat of action from HMRC, Wasps Holdings Limited, the ultimate holding company of the group including Wasps Rugby Football Club and Arena Coventry Limited, have taken the difficult decision to file a notice of intention to appoint administrators in order to protect its interests,” a statement from Wasps Holdings Limited read.
“This measure does not mean the business is in administration but provides a crucial period of grace to continue negotiations with a number of interested parties to secure the long-term future of the group.”
The RFU issued a statement saying they were “in dialogue with Wasps”.
“We will work with them to understand the current action, their sustainability plans and what the next steps will be,” the statement added.
— rugby365.com (@rugby365com) September 21, 2022
Wasps, who were last crowned Premiership champions in 2008, are not alone in facing serious financial problems.
Worcester have been set two deadlines, with a warning from the RFU that they will be suspended from all competitions on Monday if they are unable to fulfil three criteria.
The Warriors have until 16.00 GMT on September 26 to provide evidence that they have the required insurance cover in place, the funds to meet payroll needs and a meaningful plan to end the crisis.
Worcester are fighting for their future, burdened by debts totalling more than £25 million as anger grows towards owners Colin Goldring and Jason Whittingham, who have been accused of asset stripping the club.
In addition, Worcester must prove by 11.00 GMT on Thursday their capability to stage Saturday’s Premiership match against Newcastle.
Last Sunday’s first home game of the season, a 21-36 defeat to Exeter, only took place because of the efforts of staff, many of whom have not been paid their full salaries for August.
If Worcester fail to provide the assurances over financing and insurance sought by the RFU, they have been told that suspension could lead to full removal from all leagues.
Goldring and Whittingham have yet to sell the club despite repeated claims that a deal is imminent.