Premiership Rugby losses double to ?36m due to 'CVC investment'
There has been no explanation from Premiership Rugby about why the losses scaled up so dramatically in the space of a year
By
Daniel Schofield,
DEPUTY RUGBY UNION CORRESPONDENT
4 April 2023 ? 6:18pm
Premiership Rugby?s losses nearly doubled to ?36 million last year, Telegraph Sport can reveal, in another sign of the economic turbulence in English rugby.
Accounts published by Companies House show that Premier Rugby Ltd lost ?36.11 million in the year through to June 2022, up from ?19.03 million the previous year. The total equity in the company also fell nearly by more than half from more than ?96 million to ?43 million.
This season Premiership Rugby has seen two of its clubs, Worcester Warriors and Wasps, go under, which a Department for Digital, Culture, Media and Sport Committee labelled a ?stain on the reputation? of the sport?s stakeholders. MPs also lambasted Premiership Rugby?s ?complacent belief? that rugby?s calamitous finances can be solved by improving collaboration and increasing central revenues, with clubs losing on average around ?4 million per year.
London Irish, with debts of more than ?30 million, are skirting dangerously close to the abyss but are hoping that an American consortium can finalise a takeover from owner Mick Crossan. As of Tuesday, the Rugby Football Union had yet to receive notification for any potential takeover.
In the case of Premiership Rugby, the losses were anticipated as a result of the venture capital firm CVC Capital Partners? taking a 27 per cent stake in 2019. In the strategic report released alongside the financial results, the board of directors wrote: ?The company now posts an accounting loss, which is to do with the accounting treatment of the CVC investment in that period, as opposed to reflecting operating performance.?
There is, however, no explanation as to why the losses scaled up so dramatically in the space of a year. Overall, turnover increased by six per cent to ?65.5 million as Covid restrictions on crowds at sporting events were lifted. The report, signed off by CVC managing partner Nick Clarry, makes clear that the clubs are still far from out of the woods with the loans from the Sports Survival Package during the pandemic due for repayment.
?Another major factor affecting the league is the financial health of the shareholder clubs, as illustrated by the recent issues impacting Worcester Warriors and Wasps,? Clarry wrote. ?Premiership clubs have benefited from loans provided by DCMS and Sport England through the Sports Survival Package, and whilst this support has been a key factor in no clubs going under during the main phase of the pandemic, those loans will remain on the clubs? balance sheets for many years to come. We continue to work closely with clubs, Sport England and DCMS on this topic.?
Premiership Rugby?s two main sources of funding are the Rugby Football Union, through the Professional Game Agreement, and their broadcasting deal with BT Sport, which is due for renewal in 2024.
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