All posts by David Moffett

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WRU accused of neglecting clubs to tune of £16 million

In February of this year, I published an expose of the WRU’s recent financial performance in a document entitled “Lifting the lid: WRU Finances 2007 -2013”. This document was sent to all member clubs in Wales.

The information I analysed was gleaned from the WRU’s own Annual Reports which are publicly available from their website.

The WRU finally responded to my claims with a letter to all clubs stating that the document was “inaccurate” and a “scurrilous” attempt to mislead the clubs. They wrote on 20th February 2014 that a response to my document would be made available through district representatives. As of 7th June 2014, no such response has been forthcoming, despite numerous requests.

Why? Because they don’t want anyone to look further into my claims. Unfortunately for them, my team has continued to investigate. In particular, they have focused on my claim that the WRU has kept the game poor by paying down debt early.

Here is the latest statement from the WRU on that very issue in their response to the request by 43 member clubs for an EGM.

This is not the full article but is so comprehensively misleading in terms of my claim that it deserves to be highlighted. At no stage did I mention the current loan arrangements other than to say their terms have kept the game poor. This short analysis makes a nonsense of The WRUs statement:

In 2006 base rates were on average 4.75% so the WRU were paying 1.75% over base rate with their 6.5% interest rate.

After “two successful negotiations” they reduced their interest rate to 4.1% which for nearly the last four years has been 3.6% over base rates.

In effect, the WRU has more than doubled its borrowing costs (and Barclays’ profit) relative to base rates in that period (up 106% from 1.75% to 3.6% over base rates). The actual interest rate they pay has fallen 37% yet base rates have fallen by 89%.

The CEO likes to remind us how he has managed the Net debt down to £19M yet the WRU’s own quoted net debt, according to latest accounts,  is actually £67m. The Bank debt is £29m. The WRU have taken £10m of debt that isn’t repayable from this Bank debt and called it Net debt. This is deliberately misleading and typical of the headline-chasing CEO.

So approximately how much money has been denied to clubs at all levels of Welsh Rugby since a decision was taken to divert funds to accelerate debt repayments by the Executive and Board? The amount will shock you.

£16.6 million

If the WRU had followed the financing plan that existed when I left, they would have had approximately £16.6m more cash at their disposal.

Due to the need to have a solvent balance sheet, not all of this could have been distributed to the clubs, but in my previous statement regarding finances mentioned above, I felt that reserves of £5m would be sufficient, in fact there would have been GBP5.6m available for the Balance Sheet in cash after distributing 11million to the clubs. This contrasts with no cash reserves currently as the WRU has used all cash to pay off debt.

What could the WRU have practically done to help clubs with this huge sum of money, which roughly equates to an additional £34,375 per club?

For a start, the core grants to clubs could have been significantly increased, or the WRU could have issued more 100% grants. How many clubs have not bothered to apply for money knowing that they cannot secure the required match funding, particularly during the recent challenging economic climate?

If the WRU tempered their focus on capital expenditure projects, they might have allowed clubs to apply for financial assistance to pay for clubhouse repairs (wear & tear) or painting & decorating. That would have been a huge practical help to the many Honorary Treasurers who struggle to balance the books season after season.

The WRU could have used that money to centrally source playing kit for every team in every club in the Union, using that buying power to secure the best deal available. What other buying power schemes could the WRU have created that would have been of significant value to clubs? All it would have taken is imagination, because the funds were there.

The WRU could have provided money to pay directly for training equipment such as ruck pads and scrum machines, or at the very least better quality rugby balls than they currently supply.

That money could have paid for 30 brand new 4G pitches throughout Wales for use by everyone, from seniors through to minis and juniors, or the WRU could have addressed the extreme shortage of floodlights.

Or they could have subsidised the exorbitant cost of hiring council pitches, and for those clubs lucky enough to own their pitches, assisted with maintenance costs and equipment replacement, or even the cost of marking pitches which is not insignificant.

Of course, the WRU could also have been even more focused on practical day-to-day issues, and offered to assist with the crippling utilities bills (gas, water & electricity) that clubs are incurring. Or even have helped with a contribution towards the costs of the expensive SKY TV licensing that many use to attract people into the club.

Some of the cash might have kept top professional players in Wales, kept us in the European Cup, or centrally contracted all of the National Squad. There are many ways to skin this cat(astrophe)

This will be news and BAD NEWS at that, for all the clubs of Wales. Why?

  1. Because the clubs were never consulted over the decision to repay the debt early.
  2. Because it is clear that if this information got out there would be wholesale revolt.
  3. Because The Board either knew of this figure or more likely they did not and were not interested enough in the welfare of the clubs to demand the information.
  4. Because if the Executive knew of this figure and withheld it from the Board that would trigger a call for their dismissal.

So, either the Executive and Board were aware of this figure or they were not. Either way they are culpable of keeping the game poor throughout a really difficult period for all clubs in Wales.

On this basis alone the Chairman, Board, CEO and FD should immediately resign even before the EGM. Their actions are unforgivable and they need to pay the ultimate price.

I am sure though that they will claim my numbers are wrong. They will attempt to brush it all under the carpet. The clubs should demand to see their numbers.

There is another issue which needs to be highlighted. In my original document I stated the WRU had reserves of £11 million, as per their 2013 annual report. They said these reserves did not represent cash but have never explained what they are. We are still unsure but believe they may in some way be associated with the Stadium and Debentures.

The WRU have steadfastly said they have no cash reserves or extra money to give clubs. In fact they called my claims regarding these reserves “ludicrous and inaccurate”. If I now take their word for it, then why are there no cash reserves? Where has all the cash gone? Well you don’t have to be a genius to work out that it has all gone to pay off the debt early.

The WRU’s apparent lack of cash has led to the unseemly and highly unprofessional attempt to raise money from Sponsors (or “Business Partners”) to centrally contract players. I have never come across this sort of activity anywhere else in all my years in sports administration. If I was a sponsor and found out the WRU needed these funds because they needlessly paid down debt early, I would suggest some rather unpleasant things.

It is a matter of huge concern that a company turning over £60 million of member’s funds, does not have any cash reserves.

But that is not the only financial problem the WRU faces. I can reveal that there is an ongoing investigation into the WRU’s accounts by the Financial Reporting Council. It is alleged that the 2013 accounts are materially incorrect, principally due to an overstatement of expense/liabilities in relation to the regional rugby teams in the amount of £1M. If this is correct they have understated their profit by GBP 1million

It’s not all doom and gloom though. There is good news for one set of people in all of this, and that is the WRUs own staff.

Since 2007, their numbers have swelled by 28%, wage costs have gone up by 50% and cost per employee has risen by 20% – an increase equivalent to £7,355 per person.

The salaries of the Chairman and CEO have risen by 67% from £229,000 to £383,000 during this period. The CEO in particular has done extremely well out of this. His pay even managed to increase when he was on sabbatical leave to run the ‘Yes’ campaign in 2011. It has risen from an annual equivalent of £220,000 in 2007 to an eye-watering £337,000 in 2013.

The actual salary increase awarded to the Group CEO for FY 2013 is in the region of a whopping £30,000. The WRU’s accounts spin this so that it does not appear so – at first reading it looks like an increase of £16,000; however FY 2012 emoluments included what appears to be a one off payment of £14,000 of Company contributions to a defined contribution pension scheme for the CEO. It will be interesting to know whether the £14,000 is accounted for on an ongoing basis, if not the increase is still a substantial £16,000 a year.

Finally, in a letter dated 9th April 2014, the WRU Chairman and CEO revealed a “multi million pound boost to the annual investment to the game in Wales”. The community game will benefit from a 13% increase to £2.6M from July 2014. This represents GBP 300,000 or the equivalent of sending the board, their wives, staff and others to 3 away games in the 6 Nations.

The community clubs will be delighted to learn that they will still collectively be receiving less than the WRU spent on the recent refurbishment of Millennium Stadium’s Hospitality Boxes (£3m).

In inimitable fashion the WRU will try and obfuscate and spin their way out of these issues. The clubs must bring them to account.

 

David Moffett, the Chief Executive of the Welsh Rugby Union

The Reasons Why

I left my position as CEO of The WRU in 2005, a year after extending my contract through to 2008. That probably seems quite bizarre, but I had no choice. I needed time out with my family & friends to recover from a severe clinical depression. The best place to do that was in our home in New Zealand.

Mental illness is a horrible thing. It can and does happen to anyone, and it can turn you into a very unpleasant person. It also has a devastating effect on those around you. When you break your leg, everyone can see what is wrong, and sympathises. When you are mentally ill, let’s just say some people’s attitudes are different. For a while, I didn’t even realise myself that I was ill.

When I was diagnosed, I decided that I needed to get out of the goldfish bowl of Welsh Rugby politics to recover. Do you blame me? I am not looking for sympathy just your understanding.

I told David Pickering that I was leaving and why, and he was very disappointed, but also understood. We agreed a settlement that he requested be kept confidential. I have done that. Let’s just say that it was fair and equitable and in keeping with my contract, given the time and effort I had put in over the previous years, plus the impact that undoubtedly had on my health. It would also help me to recover knowing that my family had something to live on whilst I took the time off.

I was and still remain grateful for that simple act of compassion & generosity in my own hour of need.

A couple of years ago, RRW contacted me out of the blue and asked if I would help out with negotiations with the WRU over a new Participation Agreement. It was always my intention to start RRW and then hand over to someone else – which I did after completing the bulk of negotiations with the WRU.

It was a strange and frustrating time, but something happened to me whilst I was back in Wales. I started to care again. I lost that back in the dark days of 2005, and perhaps wrongly blamed Welsh Rugby for my illness. But being back in Wales and amongst the rugby fraternity re-ignited something. It was just a small flame then, but it was to grow…

Throughout 2012 and 2013, I watched from afar as the WRU and the Regions squabble became an argument and eventually an all-out war. I was deeply saddened that Welsh Rugby was tearing itself apart yet again. I gave 3 years of my life to Welsh Rugby, and it cost me a lot more, and now, yet again, the Welsh were fighting amongst themselves, right after they’d almost got to the final of the Rugby World Cup in my own backyard.

I suppose it made me realise a few home truths about my time as WRU CEO.

Regional rugby, which I introduced, has been very good for Team Wales, but not so good for the rest of Welsh Rugby. I made mistakes 10 years ago. I should have held out and got the regions I really wanted, not the ones I had to settle for. The trouble was, I didn’t have any money to fight the threat of legal action. I couldn’t even afford to employ people to paint the  concourse  at Millennium Stadium – Paul Sergeant, Rupert Moon, and the staff did it instead. That’s how broke the WRU was.

Since being back I have reminisced with many of my old friends as to how dark and tough those days were. The people who took over in 2007 just do not know or appreciate just how lucky they are.

Another mistake I made was to underestimate the fierce tribalism within Welsh rugby, and the need for every club to be able to aspire to greater things. I thought that clubs from the Premiership down to League 6 would be happy to fight it out for promotion and relegation within that structure, but now I know that clubs want to be able to go even further.

Nowhere is that view held more passionately than at Pontypridd. Here is a proud club with fanatical supporters, and with whom of course I have a bit of history. The problem now at Pontypridd is that they are winning the Premiership regularly, but there is nowhere left for them to go, except perhaps to take one further step and win the British & Irish Cup. I wish them and all other clubs the very best in that quest, but once they achieve it (and I have no doubt they will), then what? There is a solution in my Manifesto.

Ponty still blame me for the demise of the Celtic Warriors. Well, that’s a bit rich. I didn’t hand in the keys to the WRU – that was Leighton Samuel. It was Leighton who also decided to take the Warriors away from Sardis Road and go full-time to the Brewery Field, not me. It was the Ponty supporters who didn’t get on the free buses to Bridgend to support the team they now claim to have cared so passionately about, 10 years later. And I wasn’t the one leading Ponty when it went bust. The WRU had actually provided Ponty with half a million pounds which they then lost.

When Leighton Samuel eventually wanted out, the WRU couldn’t afford to run a region that was losing millions as it didn’t have any money either. At no point did I promise to keep the Warriors going. What was I supposed to do? Keep them afloat and then potentially go to jail for knowingly entering into contracts that could not be honoured, whilst the WRU then went bust?

People forget that, when I came in, the WRU was just a few of weeks from going under, and the Board didn’t even realise it. They didn’t know that they were trading whilst technically insolvent. They would have lost everything, including the stadium, had I not turned things around.

What really irks me is that it wasn’t just David Moffett who decided to shut down the Celtic Warriors – it was the WRU Board that unanimously made that decision. Ten years later, and some of them still sit there around the Board table, pretending that they manage the current CEO. The only reason that they are still there is because I saved their positions but more importantly their reputations. I was also solely responsible for David Pickering becoming Chairman, a position which he so treasures.

Now, none of them, including David, will even give me the time of day..

Many of you have questioned why I have returned to Wales and taken on the biggest battle of my life. The truth is that I’m coming to the end of my career, and I just want to finish what I started in 2003.

You see, my plan was always to evolve Welsh Rugby as the game itself inevitably changed. That both the WRU and RRW have not done so since 2005 upsets me. All the other Rugby nations have moved on,  and they are not waiting for Wales to catch up, that’s for sure.

I also want to set the record straight. I did what needed to be done at the time. Sure that makes me very unpopular now, but at least respect me for the fact that I made the tough calls which saved your National Game from utter financial ruin.

Respect, I know, is earned, and I will earn it again if you give me the opportunity to do so.

You might argue that I’ve had my chance once before. But now you know why I had to leave, you will also realise why I have such a deep burning desire to put Wales firmly back on the centre stage of world rugby, both on and off the field. Call it pride – I have plenty of that. Call it ego – I have plenty of that too. In fact, call it whatever you like, but I feel I owe Welsh Rugby, and its time to settle the debt.

And what better time to do so…

Given the current state of affairs in Welsh Rugby, and the absence of anyone else putting themselves forward to sort out the mess, I decided to fly back to Wales in January this year. I thought I could help solve the problem between the WRU and the regions, given that I introduced them. I said I could do it in 10 days, but no-one listened.

However, what I then quickly learned was that the problems ran much, much deeper. Grassroots Welsh Rugby was being left to rot. The top-down management approach at the WRU was starving the community game. It wasn’t the regions or the WRU that needed help, but the very foundations of the game – the clubs.

Within weeks, I put together a small team and published an 8000 word Manifesto. It had never been done before. There might be one or two contentious points in it, but the Manifesto has been widely accepted as the blueprint to take Welsh Rugby forward.  I am very proud of that. The WRU has even started implementing parts of it already, although they don’t acknowledge the author of course!

Encouraged by the positive reaction, I made it public that I would indeed stand to be Chairman of The WRU.

Many people said I had no chance whatsoever of getting to an EGM, let alone becoming Chairman. They also asked me why I would want to take on that role, especially given what happened to me personally back in 2005.

The answer: I care deeply and passionately about Welsh Rugby. Can’t you just accept that? Or must there always be a hidden agenda for the Welsh?

Why can’t I love Welsh Rugby? Is it because I was born in Doncaster, or raised in Kenya, or lived in Australia or now call New Zealand my home? What nonsense. I fell in love with Welsh Rugby the same way many of you did. I watched Gareth, Mervyn, Phil , Barry, Gerald, JPR, and the Pontypool Front Row, marvelled at the way they played the game and saw that Wales truly was New Zealand’s greatest rugby rival on the planet.

I watched the toughness of the Welsh forwards and the dazzling brilliance of their backs and knew that was how the game should be played. I followed them through the golden period of the 70’s and then watched in despair at the unravelling of their reputation through the 80’s, 90’s and culminating in a dismal start to the new millennium. I watched Wales in the 1999 Rugby World Cup and marvelled at the new stadium, the best in the world. I just felt that you  needed a team to do the stadium justice.

Just ask yourselves: Why else would I fly 12,000 miles and walk into this rugby storm of the century? Why else would I spend tens of thousands of pounds of my own money? Why else would I work flat out like a lizard drinking for 4 months and then take on the incredible pressure of an EGM. Why else would I leave my family back home in Christchurch to come to Wales, and walk into The Shed at Sardis Road in the middle of winter? Why else would I risk everything about me, including my hard-earned reputation?

It’s certainly not for the money. The Chairman gets £40,000 a year, give or take. I won’t get rich on that.

No! My want and my need is to finish the job. I promised to fix Welsh Rugby in 2003, and I will, if you let me. I’m back because I want to save grassroots rugby in Wales; to get RRW and the WRU back working together in a relationship based on respect & trust that allows the professional game to flourish; to steer through much-needed changes to governance and to refresh the Board; to give the Union back to the clubs by devolving power so that there are local solutions to local problems.

And as one of my daughters regularly confirms on twitter, I’m a stubborn old bastard too!

However, I am not a politician. You know where to look if you want to find one of them in Welsh Rugby. I am a change & conflict manager. Its what I do; its in my blood. And I’m good at it – very good. In 3 years, I turned a £3 million loss into a £6 million profit for you, and even now, the current Board and Executive can’t do any better, despite higher turnover. I also reduced the debt on the stadium from £72 million to £45 million.

Who else has put up their hand to turn around Welsh Rugby ? Let’s be honest, who would want to do it right now? I don’t see a queue forming down Westgate Street to get the job.

Who has the skills, knowledge, contacts & experience to run the WRU, a £60 million pound sports business, with a brand new Board from Day 1?

Why not let me prove myself again by running the interim Board as your tenth man? If I don’t perform, you can replace me at the AGM in October. It’s as simple as that.

There is no hidden agenda, no pot of gold within the WRU vaults for me to spirit away to fund an extravagant  retirement. I’m not in RRWs pocket; I’m my own man. RRW won’t ever get a free ride from me, and I assure you that they are not paying me to bring down the Board and hand the power and your money over to the regions. I won’t be bullied again; I will have a much stronger hand to play in 2014 than the one I was dealt in 2003!

Make no mistake: I’m not out for personal revenge or to be a wrecker. I’m not tearing down everything that the WRU stands for. I’m not destroying Welsh Rugby. I want it to grow and flourish again.

What have you got to lose by giving me the chance to fix the problems in Welsh rugby? Someone has to do it and I am ready, available and humble enough to concede that the clubs are the only ones who can take such a tough decision.

The choice is quite stark. Vote for a Union that listens to its clubs, or continue with this unpopular, dictatorial and ignorant WRU that you have today.

Appointing a new Board has to be the next step. It’s simply got to be done, and I know many of the clubs and the Welsh public agree. The Executive is running the show, and that is bad for governance & bad for grassroots rugby. You can all see the results.

A vote of no confidence in the current Board and its Chairman frees the clubs to make the changes needed to restore the reputation of Welsh Rugby in the eyes of the Rugby World.

A vote of no confidence doesn’t adopt my Manifesto. That’s not my aim right now. Appoint a new Board, and then we’ll have that debate about the future. Let’s all come together to decide what will work and what won’t, vote on it at an AGM, and then I’ll ask you to support me as your Chairman to steer the Board and the Executive to deliver.

Without an official position, I have already forced change on the WRU and shown the clubs that they can still have a voice. Let me continue.

And when the job is finally done, probably within 3 years, I will look you straight in the eye, shake your hand firmly, and board the final flight back to New Zealand as a happy & contented man. I certainly won’t stand for re-election in three years time.

You’ve listened to my message and acted by calling the EGM. Now I ask you to trust what I have said today, trust my motives, trust my passion, trust my ability, and trust me to deliver.

And if you can’t, then I will stand down and go back home to my wife and family in New Zealand without further fuss.

But then you will have to find someone else who can deliver change, someone who won’t be bullied, and someone who will stand for what’s right for the clubs. That is certainly not the current Board.

It’s up to you, the clubs, now…

David Moffett, the Chief Executive of the Welsh Rugby Union

Putting the record straight over the demise of the Celtic Warriors

The dislike for me over the Warriors continues to be argued using half- truths and misinformation. Here are the facts, like them or not.
1. Leighton Samuel approached me to say he wanted out as he could no longer sustain the losses of £1 million a year. (Remember what happened with his RL team)
2. Pontypridd had been declared bankrupt and with the exception of 2/3 matches their supporters did not follow the Warriors in sufficient numbers and LS moved all games to the Brewery Field.
3. Neither I nor the WRU made any promise to continue with the Warriors.
4. I was expected by the remaining Warriors fans (approx. 2,500 regularly attended matches) to commit the WRU to on-going losses of £1 million plus per year.
5. I was not prepared to do that and recommended to the Board that the Warriors be closed down. The Board voted unanimously including those that are still there from the Region affected.
6. There is no way I was prepared to put the Board or myself at risk of being prosecuted of entering into financial arrangements knowing we could not meet our financial obligations.
7. This was in an environment where the WRU had been left on the edge of bankruptcy and technically insolvent by the Board prior to my arrival.
8. 10 members of that Board are still there and have been rewarded with an extra 10 year’s service with no accountability for their actions. I saved their jobs and reputations.
9. The Chairman, in particular has recently sought to take all the credit for the rescue, in a letter to clubs. He was on the Board for 5 years before my arrival and did nothing. He was not even aware of the size of the problem.
If there are any clubs, Chairmen or Secretaries out there who would have behaved differently and would have put themselves and the Union at risk, will they please have the courage to publicly say so.

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Lifting the lid on the WRU Financials

Let me say from the outset that the information I have gleaned from the WRU numbers is a matter of public record. I have compared the financials between 2007 and 2013 from the Annual accounts. Both of these years only had two 6 Nations matches and 2007 represented the first year of the incumbent CEO’s tenure.

The following financial explanation is interesting in the context of the attitude the WRU shows its owners, the clubs. All WRU revenues belong to the Welsh Rugby Clubs. They entrust the WRU to manage those funds in the best interests of all Welsh rugby and especially the clubs. There is ample evidence in their own numbers that the clubs and regions have been short changed by the current administration. It should be a matter of grave concern to the clubs that their representatives have not shown enough interest or knowledge to question inadequate funding policies. THE GAME IS BEING KEPT POOR AS A RESULT.

Here are some of the more significant issues that have been uncovered:

Income

  • Match Income up by 33%
  • Competition Income up by 94%
  • Commercial and other event Income up by 31%
  • Other income up by 41%
  • This represents an increase of 39% in revenue

Costs

  • Operational costs up by 41% which is faster than revenue increase.
  • Allocations up by 48% (though there are more clubs in 2012/13 compared to 2006/07 – this resulted in a reduced allocation per club to existing clubs)

Surplus

  • Operating Surplus up by 11%
  • Interest down by 46%
  • Cash Surplus up by 59%

Other Considerations

  • Interest cover FY 2013 = 6.9x; FY 2007 = 2.2x
  • Match Attendances down by 15%
  • Match Income per attendee up 56% -
  • Directors Emoluments up by 67%

It would be easy to conclude that the finances of the WRU and its obligations to use those finances for the betterment of Welsh Rugby, is being met.

Not so, in my opinion. The reality lies in a simple review of the WRU’s own numbers.

  • Match income has increased by 33% despite a fall in spectator numbers by 15%.
  • Match Income (gates and TV) per attendee has increased by 56% due mainly to an increase in ticket prices and TV revenue. Increased ticket prices are having a detrimental effect on clubs and spectator attendances.
  • Commercial and other event income has increased, but is exactly the same % of match revenue as FY 2007. This shows an inability to raise other forms of income as a % of match income and is a matter of concern.
  • Operational costs have risen by 41% – faster than income – staff and wage increases.
  • Director’s emoluments have increased by a massive 67% in that time, almost twice the increase in income and six times the increase in operating surplus.
  • Stadium naming rights have still not been sold. (MS events dramatically down from era prior to 2007)
  • The CEO inherited an operating surplus of £6.2 million.

The often quoted increase in allocations by 48% also needs some clarification.

  • Allocations to Regions have increased by 45% but of that 94% is ‘Pass Through’ competition income. Only 8% of 45% is attributable to the WRU, despite Regions making players available for an extra Autumn International.
  • Despite increases in revenue, WRU clubs have only received 20% extra and Community 10%. The actual £’s increase is less than modest.
  •  Conditional allocations include £1 million to Regions which were not paid and Community (facilities grants)

This last point was based on Regions achieving targets which were not met and is an amount that could be distributed elsewhere. Adjusting the WRU’s treatment of conditional allocations and ‘pass through’ competition income the actual increase in allocations is approx. 10% and compares unfavourably with a growth in income of 39%.

I have consistently stated that it is my view that the WRU has unnecessarily renegotiated their loans to be repaid at a faster rate than originally negotiated with the Bank. This is, of course, largely irrelevant as that decision cannot be undone. The WRU claims that they cannot breach their covenants by increasing allocations to all levels of the game.

A measure of an organisations liquidity is the multiple by which operating profit exceeds interest. Their current operating profit cover of interest is 6.9x compared to 2.2x in 2007. Adjusted for conditional allocations it rises to 8.7x coverage. If applicable this is more than enough to fall inside normal bank covenants.

What is more worrying is that the WRU claimed recently in a letter to clubs that any attempt to renegotiate its bank loans would result in an increase in interest rates. They also claimed that their interest cost had fallen from 6.5% to 4.1% a reduction of 58%. The reduction is actually 37%. Unfortunately for the WRU their claims do not stack up, as the Bank of England base rate covering the same period has dropped from 5% to an all-time low of 0.5%. By any measure the WRU’s so called achievements should concern the clubs greatly.

Taking into account the WRU’s interest repayment of £2.8 million and their £10 million revolving credit the WRU has much more flexibility to increase investment in the game at all levels.

Also taking into account the operating surplus for FY13, adding back non-recurring allocations and deducting Capital Expenditure, Bank debt and potentially taxation, the WRU should be able to invest close to an extra £3 million of the club’s own money back into the game today. This should be able to occur annually. This should increase WRU funds available for investment from £11.2 million to £14.2 million (after adjustments for ‘pass through’ and non-recurring conditional allocations). This represents an increase of 26.7%.

In addition the WRU made a windfall gain of £3.7 million following agreement with HMRC for tax liabilities it had made provision for in prior years. This money is available now for distribution to all levels of the game. The total available now is over £6 million and can be funded from the £11.25 million reserves account

To say that the WRU has kept the game poor with its policies is an understatement in my view. They are denying much needed funding to the owners of the game who should be rightly incensed at their treatment.

At the very least the clubs should be holding the WRU Board and Executive to account. The best way to do that is through an EGM.

Flock of sheep

Central Contracts: the differences and similarities between NZ and Welsh Rugby

There is currently a lot of interest in the differences between the NZ and Welsh Rugby structures. Having been CEO of both organisations and delivering Pro Rugby in NZ and Regional Rugby in Wales I might have some knowledge to impart of how each country works. In the table below I set out the current structure in both countries. There are obvious differences; however I do propose a structure for Wales at the end.

New Zealand

Wales

The 600 clubs (Wikipedia/IRB) are the owners of the game in NZ. The 330 clubs (WRU) are the owners of the game in Wales.
The clubs are distributed around NZ and are formally part of one of 26 Provinces. The clubs are distributed around Wales and are formally part of 9 Districts.
The clubs elect a board to their Provincial Governing body. The clubs elect a board to their District body.
The PGB’s elect members to a 9 man NZ Board, which does not include the CEO. The Districts elect 13 members to a 17 man WRU Board which includes the CEO.
The NZRU owns the 5 Super Rugby Franchises, although they have recently decided to sell shares to PGB’s and individuals. The Union still Centrally Contract all pro players and control most sources of revenue. TV, commercial etc. The SRF’s keep all gate receipts and some commercial revenue. The 4 Professional teams in Wales – referred to as Regions are privately owned. They are funded by TV Revenue which is negotiated by the Union, some additional WRU funding and additional income from gate receipts and commercial activities. They are responsible for contracting their elite squad. They provide the players for Wales at a level higher than IRB requirements.
The Union sets policy and maintains control of Inter provincial competitions at all age groups. They also provide high level support for the development of the game. They provide direct funding to PGB’s who in turn are responsible for the Provincial Teams, clubs, schools, juniors, girls and women and Maori teams. This support involves some funding and grass roots development The Union controls all aspects of the game in Wales, including development of players and all income. The Regions are barred from having any involvement in the development of the game. The Union controls all levels of club competition in Wales. They have recently introduced Central Contracts and have succeeded in signing 1 player on a contract that makes it impossible for their own Regions to compete with them.

 

There are 3 glaring difference between the 2 systems:

  1. The NZRU owns the Professional Franchises and centrally contracts all professional players.
  2. The NZRU has a much more mature and evolving approach to the ownership of the franchises.
  3. The NZRU (clubs) trust their PGB’s work in their best interests and be a fundamental part of the development of the game. This includes opportunities to raise funds.

So, what is the solution for Wales?

Once an agreement has been reached on the way forward for the pro game in Wales, it is my view that the critical next step is to address the issue of governance. This does not need a long drawn out study at huge cost. It needs to be discussed by the owners (clubs), agreed then acted upon.

This is an option that I favour, would be easy to introduce and would be easy to implement. It would approximate the NZ model whilst still recognising the history of Welsh Rugby.

The key to any governance change to ease the tension between the Pro and Community game is to give fans a reason to buy in. New history and tradition has to start somewhere. It is a matter of record that the WRU, in particular and the Regions have not evolved the Regional structure. This shows a genuine lack of leadership.

  1. Maintain ownership and control with the clubs.
  2. Disband 9 Districts and replace with 4 Rugby Provinces and 1 Development Province.
  3. Clubs in each Province would elect a Provincial Rugby Board.
  4. Each PRB would elect 2 Board members to the WRU. There would be 3 Independent board members elected at the AGM by all clubs. The CEO would not be a board member = 11 member board.
  5. Provinces given meaningful and historical names that are easy to say and remember i.e. Gwent
  6. The Pro Team represents the Province and is called say Gwent Dragons. There is no mention of any existing team in the names i.e. Newport. There should be a rep from the PRB on the pro team.
  7. The Provinces are given devolved rights such as the development of the game in their Province according to protocols set down by the Board of WRU. There would be other devolved powers operating under WRU protocols.
  8. The marketing and branding of the province is a joint initiative with WRU. Every team in the province would be encouraged to have a provincial badge on their kit.
  9. Not only would this encourage a sense of belonging but loyalty as well. The threat of football needs to be taken seriously in all this debate as more and more kids follow Swansea and Cardiff.

Many people will say they favour splitting the Pro and Community game. NZ does not do that and they are the most cohesive, well run Rugby Union in the history of the game.

These are my thoughts and I will be seeking to raise them at the forthcoming Rugby Debates on the future of Welsh Rugby.

schoolgirlfight

David Moffett: My reasons for seeking a WRU Board position

In a Gwladrugby exclusive, former Welsh Rugby Union Chief Executive David Moffett reveals the reasons behind his decision to return to Welsh Rugby.

I guess there will be a lot of readers wondering why I have chosen this time to seek a return to the hurly burly of Welsh Rugby.

The catalyst has been the latest imbroglio between the WRU and the regions. It is my firm opinion that there is no respect or trust between both parties. This situation has existed for many years now. Indeed there is scarcely a year goes by without a stoush of some kind and the inevitable threat of litigation.

This has simply got to stop and stop now. There is no one in the world who thinks that the actions of the WRU or the regions is acting in the best interests of Welsh Rugby.

YOU CANNOT BE SERIOUS!
YOU CANNOT BE SERIOUS!

Putting aside the real facts for one minute and considering the whole picture, this type of behaviour reflects very badly on Welsh Rugby and indeed affects the wider Welsh community. After all rugby is the National sport.

The current behaviour of both parties is less than professional and must make the players, both professional and amateur squirm with embarrassment. Remember the WRU exists to encourage and foster participation in the game at all levels. How can anyone say that this latest shambles is contributing to that purpose?

Because of the strategies that I implemented as CEO with the assistance of the Board, Wales has had its most successful decade in its history. This has happened both on and off the field. The introduction of regions and the restructuring of the debt whilst I was CEO have had a profoundly positive effect on the fortunes of Welsh Rugby. That these gains are now in jeopardy says a lot about the current administration.

Instead of all this fighting and bickering the WRU should be basking in the glory of being current 6 Nations champions and providing the bulk of Lions who defeated Australia. But No! Here we go again and it must stop.

How can we best achieve the stability Welsh rugby deserves?

That answer lies with the member clubs, the owners of Welsh Rugby. I believe the clubs have been treated quite shabbily in recent years. They have never been consulted on major issues and they have struggled financially. That is not how shareholders should be treated.

The clubs elect a board who elect a Chairman. This should be enough to protect their interests. The board then selects a CEO. This system largely renders the executive irrelevant in the politics of the game. The Board sets policy and the executive executes it or that is what should happen.

My firm belief is that the clubs should call an EGM to ask the WRU and Regions a series of questions aimed at getting a better understanding as to how Welsh rugby has engineered such a mind numbing dispute. Only then can they make up their mind as to what should happen next. They and only they have the power to set the pathway for the future of Welsh rugby. I think the time for them to exercise that power has arrived.

So, what can I add? Here are a few attributes but by no means exhaustive.

  • A track record of unprecedented success with Welsh Rugby.
  • An unshakeable view that the clubs own the WRU.
  • An understanding and adherence to good governance
  • An inclusive, inspiring and motivating personality.
  • An absolute gutsful of the continued fighting and bickering

I will be back in Wales next week to start my campaign for election to the board and will provide regular updates on the Gwladrugby blog.