Telegraph exclusive -
Exclusive: Prospective Wasps owners will stomach relegation if lucrative 'P share' retained
The P share, which entitles the 13 Premiership clubs to annual payouts as well as voting rights, is seen as a vital asset by front-runners
By
Charles Richardson,
RUGBY REPORTER
10 October 2022 • 10:00pm
The leading bidders to take over Wasps would reluctantly accept relegation in the event of administration - as long as the stricken club is able to retain its lucrative P share.
Telegraph Sport has learnt that Premiership clubs and the Rugby Football Union met on Monday afternoon to decide whether Wasps would be automatically relegated under regulation 5, should the West Midlands club fall into administration.
Premiership clubs and the English governing body also voted on whether Wasps would be able to retain their P share - owned by each of the 13 Premiership clubs, entitling them to annual payouts from central funding as well as voting rights on league matters - which is seen as a vital asset by the front-runners to take over the club, a consortium being led by former chief executive, David Armstrong, alongside investment firm, Terminum Capital and advisors, Oakwell Sport.
Armstrong's bid incorporates both the rugby club and its Coventry Building Society Arena, keeping them as one entity, and while it is understood that the consortium would prefer Wasps to retain their Premiership status, it is not integral to their takeover bid. Despite Mike Ashley also making a bid for the club, Armstrong's is the only viable offer to keep the rugby and stadium business whole.
The outcome of the clubs’ vote on Monday is unknown but the expectation, with several of them also in debt to HM Revenue and Customs, is that they would vote against allowing Wasps to retain their P share, which is worth in excess of £9 million. Making matters gloomier for the West Midlands side is that only a six-club majority would be required in any ballot, with both Worcester and Wasps unable to vote.
Telegraph Sport understands that a number of Premiership clubs are keen to see the league reduced to 10 sides and would not hold back from condemning Wasps to both relegation and a surrendering of their P share in the event of administration.
A well-placed source told Telegraph Sport: "We need to know the position of the Premiership clubs. Do the majority of owners want Wasps to remain as a Premiership club? Does the RFU want a wider playing pool? Is there any sympathy for a club that has come through Covid?”
Should the clubs vote to strip Wasps of their P share, however, all might not be lost. If the West Midlands side could prove that their financial complications have come about due to the impact of the Covid-19 pandemic, then a "no-fault insolvency" clause in the RFU's regulations would come into play and potentially spare the club from relegation or see them preserve their P share depending on the governing body’s judgment.
The RFU's "no-fault insolvency" clause states: "[The RFU] in its absolute discretion may reduce or waive in its entirety any sanction... where it is satisfied that the insolvency event would not have occurred but for...any epidemic or pandemic as categorised as such by the UK Government and/or the World Health Organisation".
Even if relegation to the Championship were forced upon Wasps, the club proving a "no-fault insolvency" - which is not a far-fetched conclusion considering how brutally the revenues of Premiership clubs were ravaged during the Covid pandemic - and retaining their P share by way of force majeure would still keep Armstrong's consortium interested.
If Wasps could not prove a "no-fault insolvency" then any potential takeover might have the option to repurchase the P share at a later date, but it would cost £9m to do so.
Telegraph Sport understands, too, that Wasps' £35m worth of debt to bondholders would be fully repaid by the consortium fronted by Armstrong.
Always a Wasp