English rugby can thank club owners and the Government for escaping from a financial cliff-edge during Covid — but with £100million collective losses expected there are bumps in the road ahead.
On Friday night the Premiership began its first ‘back-to-normal’ season with a big crowd at Ashton Gate for Saracens’ return at Bristol.
After one-and-a-half seasons of restrictions which savaged club finances, those who hold the purse strings are determined to be better for a hellish 18 months with no fans, ticket sales or notable revenue but with costs still high.
Bath expect to absorb a £7m-8m hit from one-and-a-half seasons of Covid restrictions
Whether sustainable for the game or not, there is no question among chief executives that several Premiership clubs could have folded if it were not for the 13 private owners and a £59m Government bail-out loan as Covid crippled the game’s funds.
‘Rugby in pure financial terms is not sustainable, not solvent, it is being supported by the owners. If I’m honest, and this may not be popular, bloody credit to them for doing that,’ Tarquin McDonald, the Bath CEO, told Sportsmail.
‘They’ve kept the game going, which is amazing and don’t get any thanks for it.’
Lance Bradley, Gloucester’s chief executive, spells out how vital rugby’s slice of the Government’s Winter Survival Package was. ‘We would definitely not have existed as a club if it wasn’t for that money and we’re by no means in the worst financial state,’ he said. ‘It saved a number of clubs.’
Cumulative losses across the league will likely amount to around £100m when the two financial years Covid affected are combined.
The Gallagher Premiership began its first ‘back-to-normal’ season on Friday night
At Bath, for example, they expect a £7m-8m hit over that period and Exeter, previously the league’s only profitable organisation, are not expecting another profit-making year for a while, having suffered more than others by being unable to use their lucrative conference areas at Sandy Park.
But there are green shoots of recovery. Gloucester have signed seven ‘six-figure’ sponsorship deals in lockdown — ‘a game-changer’ — commented Bradley.
Clubs have taken the time to re-assess everything they do.
‘We’ve installed a new ticketing system, PA system, a new website, we took quite a lot of cost out of the commercial side of the business, which is starting to go back in, brought our catering in-house as we thought we could do it better and make more money on it,’ Bradley explained.
‘We think that’ll get us to a break-even position for this year.’
Helped by private equity investment of £13m per club by league partners CVC — some of which is still to be released to accounts — Exeter have pressed on with building a £35m hotel at their ground and a new grandstand to take their capacity to 16,000 later this season.
Clubs have survived despite no fans, ticket sales or notable revenue but with costs still high
Saracens will also erect a 3,000-capacity stand financed by a £22.9m loan from Barnet council.
‘Now we’ve got to hope those gambles and investments pay off,’ said Exeter boss Rob Baxter, who warned there could be tricky times ahead.
‘You could see some clubs in a financial position that is impossible to get out of, I don’t know, but what we’ve got to do is work together to produce something that people want to watch and be involved in.’
Clearly, there have been big changes. Most clubs reduced their players’ wages by around 25 per cent in 2020, with several big-earning players leaving, and it is understood around half the league will not now pay up to the competition’s salary cap which was reduced from £6.4m to £5m this season.
The Premiership also expanded to 13 teams, with Saracens re-joining and no side demoted last season, with one more possibly to join in 2022 from the Championship if they meet ‘minimum standards’ criteria.
That pause on relegation for at least two years was seen as vital.
Gloucester are hopeful they will break even this year despite the pandemic
‘If you were to go through Covid and then be relegated it would have been more than the straw that breaks the camel’s back — the big anvil maybe!’ McDonald said.
‘That stability is hugely important. The moratorium on relegation is a fundamental part of the recovery from Covid.’
In future, there could be discussions on adding quarter-finals to a 14-team league, to add end-of-season drama — one of many ideas to be discussed when expected new league CEO Simon Massie-Taylor takes over.
Emerging from Covid, there is a sense that the clubs are more streamlined, collaborating more, and are better equipped for the post-pandemic future of rugby — as long as fans really do return in force.
‘We’re coming out of Covid comfortable and confident in our own skin,’ said McDonald.
Bradley added: ‘We’re through the difficult bit. As long as it is a normal season we’re back on track.’