Details of Wasps' cash crunch revealed
SPOTLIGHT: Chris Jones interviewed Wasps deputy chairman Nick Eastwood about the rumours of a looming player exodus as a result of the club’s cash crunch.
Eastwood denied Wasps are the sick man of English rugby, weighed down by more than £50m of debt after their ground breaking move to the Ricoh Arena in Coventry and insisted they will compete for big name signings after next year’s World Cup in Japan.
A £35m bond issue makes up the bulk of the debt and that is due to be repaid in 2020 while their Irish millionaire owner Derek Richardson’s personal commitment to the former English and European champions is now heading towards £20m.
The Wasps Holdings group made a total loss before tax of £9.7m in the last financial year compared to £4.7m in the previous year and as RugbyPass reported last week there are real concerns about the club’s ability to keep top players and compete for leading talent when it comes onto the market.
However, against the backdrop of those figures Eastwood, the Wasps deputy chairman, has made it clear the club is not on the brink of financial disaster and with Premiership Rugby Ltd set to bank £240m from CVC Capital Partners for a 25 percent stake in the business, there are reasons to be optimistic with each club set to receive around £20m as their share of the windfall.
Eastwood is even predicting an end to annual cumulative losses of around £30m in the Premiership stating: “The fact that some significant private investors are looking to get involved shows the game is at a tipping point, possibly similar to football in the 1990s. We are entering a new growth phase and while there will be challenges, the game is in great shape to move forward to where you can get a significant number of clubs breaking even.”
With England’s top clubs operating with a salary cap that is currently set in stone – with two marquee players allowed to be signed outside he £7m limit – to bring in new faces, clubs have to offload talent. That is why there is speculation swirling around Wasps with England fullback Elliot Daly a possible target for Saracens. However, Dai Young, the Wasps director of rugby insists his prized possession is under contract. Young said: “There are players out of contract at the end of the year, Elliot is not one of them. By the nature of them being out of contract, teams are going to be interested, there are going to be rumours.”
Amongst those rumours is Springbok fullback Willie le Roux who could be heading back to South Africa or Japan after the World Cup while Bristol are understood to be interested in taking England No.8 Nathan Hughes away from Wasps with a lucrative deal.
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Eastwood said: “We are not the sick man of English rugby and we are in phase when we have to invest in the business. There is a realistic possibility that in three years the game will look very different financially than it does now.
“The owners like Derek, Nigel Wray, at Saracens and Bath’s Bruce Craig didn’t get to where they are accumulating the wealth they have achieved by throwing bad money after bad – they know what they are doing. They have learnt through their business careers that you have to invest heavily but you reap the benefit further down the line. People are picking up on words used by our auditors which say that if in the event that shareholder support was not forthcoming there would be doubt over the company’s ability to continue. Derek is committed to the club and his support is rock solid.
“The reality is we are still losing money and it means we are dependent on shareholder support and that puts us in exactly the same position as every other Premiership club.
“The key aspect of this is the cost of the playing squad and the salary cap is flat for the next two years which means you can keep the costs flat while hopefully generating more revenue. We hope to get into profit in a few years rather than many years. There is genuine optimism that if we all act sensibly as a group in the Premiership revenues can keep growing.
“We have had three full seasons at Coventry and nobody said it would be easy and it is still very early in the whole endeavour and we are effectively a start-up and any business requires significant investment in the early years. We are perfectly happy where we are and now it is about phase two; growing the fan base and getting the fundamentals solid and Derek has always known that will be the case. Many aspects of the business model; the hotel and concert business are key and are going very well.”
Eastwood accepts bringing in more big names will require departures and added: “Dai is always planning 18 months in advance and we are well ahead in our thinking about how to divvy up the money for players going forward.
“Essentially, you have the salary cap and two marquee players so if there are an influx of Southern Hemisphere stars post-World Cup then the only way you could get them would be to replace one marquee player with another or get rid of enough salary under the cap to afford whatever the player is asking for. It is as simple as that.
“There are probably half the Premiership clubs who are around the cap figure, two or three relatively close and the others have a got a bit of room.”
Eastwood could not give a start date for the club’s ambitious new training facility outside Coventry, due to on-going negotiations but insisted the project was on track.
By Chris Jones, RugbyPass
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