BB - Administrator Confident

[Neils]

https://www.coventrytelegraph.net/sport/rugby/wasps-administrator-gives-confident-update-25291946

[Neils]

Actually saw part of an interview with Administrator on BBC News Channel and seemed to say someone (identified) could be put by him to the RFU quickly BUT he felt that the RFU would have to do due diligence and that would take time.

[NellyWellyWaspy]

I just can't see the RFU NOT relegating Wasps and NOT taking the P share, after all they have said so far.

It would appear he has no buyers in that scenario.

He is also handling the ACL sale, who are not in administration. He cannot say with certainty that will go through quickly enough to prevent them going under. He suggests they would welcome Wasps as a tenant, but as what, a Premiership side or lower (== lower gates and revenues). Income it would be, but not profit if the marginal costs of opening up the ground, converting it from CCFC use each time, amount to more than the income.

He sounds way too positive for me.

[Westy68]

RFU are not interested in helping Wasps as it doesn't meet their current agenda, which I'm sure will change in 6 months time. The administrator was saying similar thinks about Worcester and still nothing 2 weeks later and 50% of the squad are gone.

[MarleyWasp]

From The Telegraph

Exclusive: Leading consortium pulls out of Wasps takeover bid due to 'hammer blow'

Former chief executive David Armstrong had been regarded as one of the favourites to take over the stricken club

By Charles Richardson, RUGBY REPORTER and
Charlie Morgan, SENIOR RUGBY WRITER
18 October 2022 • 3:34pm

The leading consortium to buy Wasps have pulled out of their bid in a devastating blow to the crisis club, Telegraph Sport can reveal.

David Armstrong, the former chief executive of Wasps, had been regarded as one of the favourites to take over the stricken club with backing from South African millionaire Richard Bottger, part of Terminum Capital.

The group had been eager to assume control of the club, the Coventry Building Society Arena plus on-site hotel and casino, with £12 million of working capital ready for rugby and £50m for the stadium. However, the deal was contingent on the entire package and it is now thought to be dead in the water.

Last week, Telegraph Sport also broke the news that Armstrong’s bid – which was in conjunction with Oakwell Sports Advisory – had been dependent on retaining the P share. 

A high-placed source told Telegraph Sport: "Gutted – lost for words. Terminum Capital and the consortium consistently tried to find clarity as to the position of the P share in the event of administration and relegation for Wasps RFC.

"Securing the P share was critical to the bid and the returns the investors would hope to make. It is with regret that they have not received any answer.

"The recent press reports, including those last Saturday from the chairman of Premiership Rugby, leave no doubt, however, what the real position of the PRL and its stakeholders is. Financially, this is a hammer blow."

Last week, Premiership Rugby executives played down the importance of the P share and detailed their reasons against allowing Worcester Warriors and Wasps to keep their P shares – which entitle clubs to a percentage of the league’s income – saying that "we have to be strong on this and we will be strong".

On Monday, joint administrator Andrew Sheridan seemed to harbour faint hope that Wasps could feature in the Premiership later this season, and was "reasonably confident" of introducing a preferred party to the Rugby Football Union at some stage on Tuesday.

He warned, though, that the process of establishing new ownership could take time – especially given the plight of Worcester.

"Things can happen quickly and they need to happen quickly," he added. "For Wasps to have any prospect of staying in the Gallagher Premiership this year, it would have to happen remarkably quickly. I just don’t think the people who run the competition would allow them to miss too many more fixtures.

"The other thing that makes this difficult is that there is a process to go through with both the Rugby Football Union and PRL [Premiership Rugby Limited], depending on which entity takes it forward. That isn’t a quick process.

"First of all, we have to find someone who wants to take the business forward and then when we have that preferred entity, we have to make sure they are introduced to the RFU to begin their fit and proper process.

"Given the scrutiny they’ve had recently over that process, I'm sure that's going to be a more robust, longer process that will take time and, unfortunately, time is what we don't have."

[Neils]

Buggered

[NellyWellyWaspy]

... and there you go ...

Wasps WILL be sold, for a relatively small sum. Because, with what will be remaining in a month, that will be all it will be worth.

Nobody will buy it until the CBS is sorted one way or the other, and I expect that to take weeks. In any case, what's the rush? We can't play any pro matches now until next season.

Find a new owner is task #1. It will have to be cheap, and the new owner will have to have deep pockets even for a team to play in the Championship. If the CBS Arena isn't available to us, and I doubt it will be, it will take quite a few years to find/build a new home, so I am not sure we could even play in the Championship. We may end up a long way down, giving the club plenty of time to grow and build.

From a lion to a mouse.

[MarleyWasp]

Meanwhile from The Times:

RUGBY UNION
Premiership accused of treating Wasps more harshly than ‘blatant cheats’ Saracens
Claim comes as Terminum Capital withdraws takeover bid

Alex Lowe, Rugby Correspondent
Tuesday October 18 2022, 1.30pm, The Times

Premiership Rugby has been accused of punishing Wasps and Worcester Warriors more harshly for going into administration than Saracens, who were relegated and fined £5.4 million for “blatant cheating over a long period of time”.

The claim was made after one of the parties interested in buying Wasps withdrew their takeover bid on Tuesday, saying Premiership Rugby’s P-share policy had “spooked” the investors.

The decision to walk away made by Terminum Capital, which was being advised by David Armstrong, a former Wasps chief executive, is a blow to the club’s hopes of securing a quick sale and coming out of suspension to play again this season.

Wasps went into administration on Monday and 167 employees were immediately made redundant, including all players and coaches from the rugby teams and the netball team. The men’s team are now expected to join Worcester in being relegated to the Championship under RFU insolvency rules.

The Premiership is expected to activate its right to buy back Wasps’ and Worcester’s P shares, which secure clubs access to a percentage of central funding and voting rights. The rate of about £9.8 million is based on an agreed formula, with the money used to pay off creditors.

If the clubs win promotion back to the Premiership, the new owners could then buy back the P share at a market rate. The book value is approximately £17 million, although Premiership Rugby argues that it has depreciated in recent weeks.

Terminum Capital was not prepared to proceed on those terms, citing a lack of support from Premiership Rugby. It had tabled a reported bid of £50 million for Wasps and the company that owns the club’s home ground, Coventry Building Society Arena.

A source with knowledge of the situation said: “Saracens can get relegated for blatant cheating over a long period of time and they are allowed to keep their P share, they get a parachute payment and they come back as if nothing has happened.

“Wasps and Worcester, whether you say it is through their own fault or not, have ended up being relegated for financial implosion. Is that worse, better, [or] the same as a club being relegated for flagrant cheating? That really is what is annoying a lot of people".

Saracens were relegated and fined in 2020 for breaching the salary cap over several years. After spending a season in the Championship, they returned to the Premiership for the 2021-22 campaign. The club apologised and promised to “learn from its mistakes”.

Martyn Phillips, the chairman of Premiership Rugby (PRL), explained last week that the league could not endorse a situation where clubs were able to shed debt in administration but retain full access to central funding, arguing it would create inequality and act as a bad precedent.

Premiership Rugby executives emphasised that no final decision had yet been made by the clubs over the P shares. They also felt the issue had become overblown, given the P share is not the only route to central funding.

Owning a P share is not a participation requirement to be in the Premiership but without one the central funding is only about £159,000, making it almost impossible for a team to compete. For Terminum Capital it was a critical factor.

Armstrong said: “Our investors are financial investors and they want to see a pathway to making a return in due course. One of the most important things for that is owning a P share.

“A club in the Championship builds a strong enough squad to get back up but has to invest quite a bit of money to survive through that period, and then is asked to write a cheque for £17 million to buy back the P share you used to own.

“That is what spooked our investors, the lack of clarity on the P share and how they could make a return for their investments. We asked PRL to change the rules or make an exception for us and Worcester but we got no support for that. Our investors made it a red line that if they didn’t receive the P share clean then they couldn’t move forward.”

The crisis has also exposed flaws in Premiership Rugby’s governance. The decision on whether the league should buy back the P shares from Wasps and Worcester is taken by the other 11 clubs, who would materially benefit from a larger percentage of the funding.

With two professional clubs out of business, Premiership Rugby and the RFU have been summoned to appear before the digital, culture, media and sport (DCMS) select committee as part of a parliamentary inquiry into the financial crisis. Bill Sweeney, the RFU chief executive, reiterated the need for a leadership overhaul. “There is a real need for better, more open governance and the current situation presents an opportunity to drive forward change,” he said. “We look forward to providing updates to the committee on our work.”

Worcester have already declared their intention to appeal against relegation as a punishment for going into administration on the grounds that it was a “no fault insolvency”. Wasps are expected to do the same, although both clubs have received indications they are unlikely to be successful.

Armstrong was chief executive of Wasps for three years until 2017 and a non-executive director until the summer of 2021. He believes the club would have survived had it not been for the pandemic, even though they were carrying a £35 million bond which should have been repaid in May.

“We did have a repayment plan, which in this case was to roll it over into another bond,” he said. “As interest rates had come down we would have got it down to a lower interest rate [than 6.5 per cent] and we would have been fine.

“Coming into the Covid period was the problem. The business model had significant fixed costs in terms of running the arena and the playing squad. That is fine if the revenue model is strong. But when all your revenue stops, you are much more vulnerable to your high fixed costs.”

Wasps began with crowds in excess of 20,000 when they first moved to Coventry, a controversial relocation undertaken because the club would have gone bust if it had stayed in London with games in High Wycombe. Their most recent game before suspension drew just over half that. Armstrong puts that down, in part, to cutting the budget for delivering an enhanced match-day experience, which led to the fan zone being shut. That in turn tied people’s motivation for attending much more tightly to results.

“Weaving yourself into the community takes a long time,” Armstrong said. “We were disappointed by the crowd levels compared to pre-Covid and it takes more than four years to build a lifestyle pattern so people are wedded to it. That is a lesson.”

Premiership Rugby has been contacted for comment.

[wasps]

My new favourite journalist

[InBetweenWasp]

My new favourite journalist

...i'm sure he mentioned in one of his articles over the past couple of days that he is (or was) a Wasps fan.

[DGP Wasp]

"Martyn Phillips, the chairman of Premiership Rugby (PRL), explained last week that the league could not endorse a situation where clubs were able to shed debt in administration but retain full access to central funding, arguing it would create inequality and act as a bad precedent."

Whereas persistent cheating and largely getting away with it creates no inequality and acts as an excellent precedent of course.  All clubs are equal, but some are more equal than others.

[Bloke in North Dorset]

... and there you go ...

Wasps WILL be sold, for a relatively small sum. Because, with what will be remaining in a month, that will be all it will be worth.

Nobody will buy it until the CBS is sorted one way or the other, and I expect that to take weeks. In any case, what's the rush? We can't play any pro matches now until next season.

Find a new owner is task #1. It will have to be cheap, and the new owner will have to have deep pockets even for a team to play in the Championship. If the CBS Arena isn't available to us, and I doubt it will be, it will take quite a few years to find/build a new home, so I am not sure we could even play in the Championship. We may end up a long way down, giving the club plenty of time to grow and build.

From a lion to a mouse.

Serious question, what's being sold? I can't think of any serious assets other than the name and I'm not convinced that has any brand value at the moment. Maybe there's some kit and other stuff and that might have some memorabilia value but I don't understand what's for sale if there's no P share.

[Andywasp50]

Good to see some honest reporting. It’s a disgrace that we have been forced into administration because of both a lack of response from PRL and RFU to Armstrong’s bid and the rules being bent in favour of the Cheats. Makes you wonder if it was only players who benefitted from the Cheats financial sleight of hand..

The only reason they are being tough with us and Worcs is because we haven’t got the funds to make a legal challenge.

The game is rotten and it very much starts at the top.

[Shugs]

My reading of the administrators interview was that he’d confirmed the withdrawal of Armstrong and co but had someone else he was confident of presenting to the RFU tomorrow. Tomorrow and Thursday will be key. If no-one emerges we’re toast. And then we’ve got to get it all past the RFU etc in a timely way if someone does emerge…….Looking like next season at best to me.

[mike909]

So Premier Rugby have demonstrated that they don't want to help Wasps. They had the ability, but it's clearly more important who you know rather than what you do.....

Cheating is fine then....but trying to maintain the thread that's held a club together for nearly 150 years.....you can get lost.