But Covid loans weren't the reason three clubs went bust...
No, but paying them on time is causing major cashflow problems. Organisations do not go 'bust' because they owe money. They go bust because they run out of cash. That they have been losing money hand over fist for years means they cannot borrow money. The rich owners kept putting money in the cookie jar, and everybody closed their eyes and pretended to be happy.
But, when things get tough, when you run out of cash, as I suspect 3 of the clubs have, the first organisation to go to the option of a winding up order is always HMRC. The fact that HMRC are acting collection agents for the DCMS, is the problem. The PRL are not actually asking for the Covid loans to be extended. They are asking DCMS to tell HMRC not to pursue them for late and/or missing repayments. Most will have long since negotiated extending these repayments (DCMS has been very accommodating and allowing this), but, one club after another is failing to meet even the renegotiated terms. And DCMS will not extend again.
And so, the clubs file for administration because they do not have the cash to pay HMRC off, to keep them at bay.
So, no, the Covid loans will not be the cause, but they will be the means. It amounts to the same thing, and certainly small minded journalists would be utterly unable to grasp the concept, and so we see the Daily Fail publish articles like this.
In reality, published as it is today, will cause bored rugby journos to go trawling discussion boards, like this one. The light bulb will go off. The 10 clubs are not asking for the Covid loans to be extended. 3 of the clubs can't pay the next installment. They are out of cash. Suddenly, their interest is piqued. Smelling blood, they start lifting stones. Talking to people over a pint or G&T, off the record. Looking for a chink in the silent armour. And they will find it, and we will see articles by tomorrow in the Sunday papers. 'Nameless' club is in deep trouble they will say. Likely to fold before the season.
The creditors of those 3 clubs, the players, will start asking very pointed questions. Asking their owners not for assurances they will be paid. Those were made by the last three owners of clubs to go bust. No, this time they will ask for written personal guarantees. The sort of thing the bank asks you to sign when you borrow money to buy a car. And they will not get those guarantees. They will only get oily smiles, platitudes, warm words. All of which are meaningless. And then they quietly tell their friends things are not looking good. They start looking for new clubs, or trigger retirement plans early. Each time the wheels came off a club this last season, each successive club went under faster once the talk started. The next one, no one will believe, 'We have a buyer ready and waiting, just about to sign.' They know that will be a lie. The discussion boards debates, when they start, will be short and terminated by the club going in to administration.
The ideal, perfect league of 10 becomes 9, then 8, then 7. Will that stop the rot? I do not think so. I think we are heading towards a 4 club league; Bath, Bristol, Exeter and Sarries. But Steve Lansdown is said to be getting bored with funding Bristol. Rich folks and their playthings.
OUR GAME. OURS. The one we played when we were young (and not so young). OURS. Not the RFU's, not the PRL's. OURS. Stolen, ruined, destroyed.