The financial death of Championship Rugby - TRU investigates

On the 7^th December 2016, London Welsh, a 132-year-old club with multiple spells in the Premiership and a long, illustrious pre-professionalism history announced they were to go into voluntary liquidation having received two winding-up petitions from HM Revenue and Customs for an unpaid tax bill of over £90,000.

Two weeks later, The Exiles, having been forced to make the entirety of their playing squad redundant, were granted a temporary license to play their next two Championship games and moved quickly to re-sign their entire squad (minus a handful of players who had since been snapped up by other clubs). As of today (11^th January) there has yet to be a ruling on whether London Welsh will see out the season as a professional club.

Earlier that year, Welsh’s Championship rivals Jersey, the only professional sporting club on the Channel Islands, were forced to sell their St Peter home ground, clubhouse and pitches to a third party to raise the £1.5million they required to continue operating as a professional rugby club. Jersey chairman Mark Morgan cited the “costs of the playing squad itself, satisfying the criteria to play in the Championship in terms of maintaining quality playing surfaces, coaching team, medical facilities, spectator facilities, floodlights and administrative support” as the cause of the club’s ‘significant losses’ since 2013, necessitating the sale of the club’s assets.

That not one, but two members of the twelve-team Championship – the second-highest domestic league in the entire country - are in dire straits financially is a glaring indictment of the current hierarchal infrastructure in place in English rugby. The RFU’s status as the world’s richest union is hardly a secret, so why, according to Morgan, does the £530,000 RFU grant paid out to each Championship club only cover a quarter of their annual running costs?

Furthermore, said running costs and the lack of top-down assistance has led to significant concerns regarding player welfare for those plying their trade in the second division. Last year, former Doncaster and Bristol scrum-half Brad Field revealed to The Telegraph that an absence of medical insurance, pay reductions for incurring injury and salaries as low as £6,000 per annum were, whilst not the norm, known-of occurrences for Championship players. That a not-insubstantial amount of players are forced to supplement their club salary with additional jobs each season runs counter to the RFU’s ostensible commitment to a fully professional Championship division. London Welsh’s liquidation, which has since forced a further group of players to seek part-time to cover their living expenses, is the latest marker that there is a dramatic disconnect between the RFU’s rhetoric and the reality for Championship clubs, management and players.

Unfortunately union help does not appear to be forthcoming for Championship clubs. The lack of provision for the English second-tier in the £225million deal struck between the RFU and the twelve Premiership clubs in July of last year has stimulated accusations the deal will plunge the Championship into financial jeopardy. The Daily Telegraph reported that as part of the new negotiation between the RFU and the top-level professional clubs which kicked in this season, the RFU will pay a collective £112million to the twelve Premiership sides each year - £9.3million a team. Erstwhile, Championship clubs were frozen out of the deal having being offered an incremental increase to £1million per team per year only if the league’s governing board agreed to dispense with the current play-off format for promotion, one of the few lucrative avenues remaining for Championship rugby. The Championship’s governing body subsequently rejected the offer.

With both the Premiership salary cap and union funding continuing to escalate, it is of little surprise that the gulf between English rugby’s top-two tiers is threatening to turn into an ocean. Over the previous two years, less than 3% of Championship players have made the jump to Premiership clubs and the Premiership’s current bottom-two – Worcester and Bristol – despite heavy investment, are the previous two Championship winners.

Whilst a number of solutions have been tabled, including ‘ring-fencing’ the Premiership (thus eliminating promotion/relegation from/to the Championship) and, more recently, RFU director Nigel Melville’s baseball-esque ‘farm team’ system which would see each Premiership side loan eight academy players to Championship clubs with subsidised wages, a clear solution is not in sight. Whilst the latter plan would allow Championship clubs to reduce their operating budgets, this would further dilute the individuality of clubs in the Championship and further heighten the difference in playing budgets between Premiership and Championship teams thus making a promoted club’s retention of their Premiership place the following season exponentially harder.

That reform to Championship and lower-league rugby has at least been tabled is encouraging but the RFU can no longer straddle the fence. If it is serious about having two competitive, inter-connected professional leagues at the top of its domestic league structure it must offer Championship clubs the same increased material benefits and funding it did to Premiership clubs last year. If it isn’t, then ring-fencing the Premiership is but one possible solution to ensure that clubs with the financial means to comfortably compete at the professional level can do so, whilst exploring the provision of a support network and a pipeline of younger players for teams who wish to compete at a semi-professional level.

What is imperative, however, is that something has to change. Without significant reform, London Welsh, for all of its 132-year history, will be remembered most significantly as the beginning of the demise of professional, lower-league rugby.