Lions led by donkeys: the WRU board.

Today, on 2 January 2014, the board of the Welsh Rugby Union Limited (WRU) met to discuss the next stage in their attempt to reach agreement with the four professional teams they put forward to compete at the professional level of the game of Rugby Union. On the 31 December 2013, the professional sides represented by Regional Rugby Wales (RRW) declined the opportunity to continue their participation agreement with the WRU for the next 5 years.

On 1 January 2014, the Chief Executive of one of those four teams, Gareth Davies, challenged the WRU board to carefully consider at their next meetings whether the route of non-negotiation with RRW as laid out in their press release of 31 December, was really the route that they wished go down.

Effectively, he was asking the board of directors to challenge the executive directors, led by Roger Lewis, to justify the actions that were being done in their name.

So who are the board of the WRU, and what should be their role and composition?

We will firstly look at the role of the board.

It is accepted that good corporate governance in public interest entities such as sporting bodies, and that the work of the staff at such bodies (including the Chief Executive) is monitored and controlled by an effective board of what are termed ‘non-executive directors’.

In other words, directors of the business that have no day-to-day involvement in the business. The Institute of Directors (IoD) state that the non-executive director’s (NED) role “is to provide a creative contribution to the board by providing independent oversight and constructive challenge to the executive directors”.

In terms of composition, the UK government recently put their name to a set of guidance rules for sport and recreation boards, such as the WRU. In section 4 of this guidance they outline the following (amongst other points):

– Bodies should have a board of no more than 10 members

– The board should have at least two independent NED’s bringing knowledge and experience from outside the sport

– Ideally should have an independent Chair to bring an objective perspective

– The board should be chosen on the basis of their competence, ability, quality, leadership, integrity and experience

Let us look at three comparable bodies and the composition of their boards.

The Scottish Rugby Union has a board of nine members. One of these is an executive director. Of the other eight, two appear to be completely independent NED’s, including the chairman. The Chairman is a former CEO of First Group PLC, and the other independent NED is the UK CEO of Deutsche Bank. Of the other 6 NED’s, one is a former rugby player who is a specific NED appointment and the other 5 appear to be elected. Of those 6 though, there is an entrepreneur, a Chartered Accountant, and a CEO of a listed company.

The Rugby Football Union (RFU) has a board of 15 members, including three executive directors.

They have 3 independent NED’s, who all current hold senior appointments at businesses, for example, a large law firm. Of the other 9 directors, many have held, or do hold, senior positions in a variety of businesses.

The English Football Association (FA) board is made up of 12 members. One of these is a staff member, the General Secretary. There is an independent chairman, who is a former Director General of the BBC, amongst other appointments. Of the other 10 directors, 4 are elected from the grass roots of the game, 4 from the professional game, and 2 appointed NED’s. One is a barrister and local authority CEO, and the other is a former executive director of Hilton International and Ladbrokes.

So, how does the WRU match up against these? Who actually sits on the WRU board?

There are 18 directors, only one of whom is an executive director. That is Roger Lewis, the Chief Executive Officer.

There is a chairman, David Pickering. He is not independent, as shortly before being elected as Chair in 2003 he was employed by the WRU as Wales team manager. His business experience is somewhat unclear.

Another two directors sit as a ‘National Representative’. One is Gerald Davies. Whilst he has a healthy business background, his independence could be questioned due to his previous rugby career. The other is Martin Davies. Whilst being a Chartered Accountant, he does not seem to have experience at a senior level in a large business, according to the WRU website.

If the WRU claim that the ‘National Representatives’ are the equivalent of an independent NED, then I would question their independence. The skills and expertise of the other National Representative do not appear to be as strong as the comparable bodies laid out above.

The other 14 directors are elected by WRU districts. Not one of these directors has any senior business experience. Many are retired, and worryingly, 6 of them were directors when significant decisions were made in 1999 and subsequent years, decisions which almost placed the WRU into an insolvent position.

To summarise, the composition of the WRU board, in the author’s opinion, fails to comply with best practice set out by government endorsed guidance relating to the governance of sport. In addition, the business acumen and experience of its board members falls short of that of comparable bodies, and if the National Representatives are the independent NED’s, their independence and calibre is questionable, certainly when compared to similar bodies.

6 thoughts on “Lions led by donkeys: the WRU board.”

  1. How does corporate governance improve by having 2 representatives of the inherently loss-making RRW clubs on the WRU board? I can see the logic of having 2 representatives on the WRU board, but not for reasons of better corporate governance. The WRU has reduced its debt from £60M to £20M over the last decade, so not sure that corporate governance reform is the immediate priority.

    The philosophical divide in world rugby union between union managed provinces (NZ, Aus, Eire) and independent club businesses (England, France) has erupted in Wales due to the European Cup debacle. Wales is particularly vulnerable, because we have a hybrid of the 2 systems due to unsatisfactory compromises in 2003.

  2. If the Regions decline to continue the PA then what happens for them. Rugby Union is rugby run by Unions. If the pro clubs want to breakaway from Rugby Union they of course have every right to do so but they have no right to run rugby Union and this is what the nub of the issue is about, control (a spill over from the PRL row). The WRU board are elected by the 320 teams in Wales. Thats called democracy. The job of the WRU is to look at the game as a whole in Wales from amateur to pro to International. The job of the pro clubs is to look after their bottom line, end of! Whats best for Welsh rugby overall? Dont think you need to be a rocket scientist to work that one out. The same applies to rugby throughout Europe. The PWC report was scathing on the management of the pro regions, whose teams have been underperforming on the pitch and have been unsuccessful in attracting significant numbers of supporters while Wales at International level has outperformed all others in Europe. You seem to think the problem lies with the WRU, the facts would suggest otherwise.

    1. The issue that people forget is that the Blues, Dragons, Ospreys and Scarlets companies were set-up by 6 member clubs in 2003 purely to represent the WRU in cross-border club competitions. They represent the WRU in the Celtic League, the Heineken/Amlin Cups, and the LV Cup. It may not be ideal, but they are not part of the WRU. They are simply external service providers to the WRU under a service (participation) agreement. If that service (participation) agreement ceases on 30 June, the WRU will have to find/establish 4 other professional teams to represent them in these competitions in accordance with and to comply with the WRU’s own various contractual obligations. That is the reality of the matter.

  3. What would you suggest then? You should be on the board is it? I’m comfortable with the board being elected by the 320 member clubs as this the constitution of the WRU and keeps them accountable.

    1. Dai

      I think my suggestion is implied within the article. The WRU needs to urgently reform its board in line with good corporate governance practice. The District representatives should form a council which meets less often, and should elect which of them sit on the WRU board itself. At the same time there should be 2 places for the Professional game on the board. There should be 3 Independent non-executive directors, that are truly independent and of high calibre. One of these could be chairman.

      It is obvious that a board elected by 320 clubs does not meet good governance expectations.

    2. Dai, the constitution of the WRU keeps them ‘accountable’ to the 320 clubs (in theory at least). I guess you remain hopeful that the 320 clubs will operate some sort of commonsense collective which will balance the interests of all levels. I don’t share that expectation.

      Given the money in the game and the need to deal with commercial, professionally-run organisations, the constitution of the WRU is outdated and obsolete – i.e. no longer fit for purpose. Proper corporate governance is required – which should allow for the continued representation of club rugby interests but also enable transparent steering of the game at all levels.

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