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Everything you wanted to know about Welsh rugby, but were afraid to ask

As a response to the debacle surrounding regional rugby in Wales, and the letter sent by the WRU to its member clubs this week, I thought I would take this opportunity to express my concerns and thoughts as to the culpability of the WRU in this matter.

The context of the debate is that Wales operates a model of control and governance whereby the four regions (RRW) are privately owned and contract with the governing body (WRU) for participation in tournaments and compensation for international players produced.

The RRW and WRU had an agreement for participation called the PA which ran between 2009 and 2014. Recently, after much media bullying and threats from the WRU to set up new regions owned centrally at the cost of a thousand Welsh jobs, the regions declined to roll over this agreement.

Before I discuss why I think they declined this option to replicate the PA for another five years, let me break down the PA.

It is worth:
- Circa £10m split four ways p/a for TV rights and competition monies. This is money dependent on the regions playing, however the money is paid into the WRU accounts and then distributed by the WRU under the union run competition rules. The WRU acts merely as a middle man for this money and includes it on their balance sheet as money ‘pumped’ into the game.

- £6.6m p/a in further funding, which is a bone of contention. The WRU has claimed frequently that this is for extra access to Wales international players, who are contracted to the RRW but who play for Wales for up to twenty weeks a year. This is a misrepresentation. The £6.6m breaks down as follows (approximately):

  • £2.4m split four ways as core grant
  • £2.4m split four ways as a limit for non-Welsh qualified players
  • £0.6m to contribute towards the four regional academies
  • £1.2m as compensation for releasing Wales players for extra training and extra matches not sanctioned specifically by the IRB test window

At this point, it should be clear that £1.2m to compensate for the loss of internationals is derisory and cannot be sustained. The RFU have an agreement with their clubs for the same access and this costs £13.75m, to give you an idea of the market rate for internationals.

As such, it is clear that rolling over this agreement would have been detrimental to the business of the regions due to the WRU declining to contribute any further to the £5m annual funding gap identified by a PriceWaterhouseCooper report.

However, it was also impossible for the regions to have signed due to ongoing uncertainty surrounding the £10m relating to competitions as both the HEC European Cup and Rabo league are not confirmed for next year.

So why not sit around a table and find the best way forward for Wales in the collaborative approach recommended by the PWC report? It is my firm belief that the desire of the Group Chief Executive to control all of professional rugby in Wales is behind this impasse. He is documented as stating that he believes the WRU should control the four regions (despite the PWC demonstrating they were financially in no such position to support four regions without private finance – to date £40m of private finance has been invested in the regions).

As seen from his threat to close down the regions on 31.12.13, his agenda has been to force the regions to fail by refusing to negotiate for a new, fit for purpose agreement to reflect the realities of the current economic climate. He now finds himself forced by his Board of Directors to offer a new deal to meet a RRW deadline of 31.1.14 (the deadline by which RRW have to explore alternative contracts with PRL in England) despite having had years to prepare negotiations and having refused to come to the table. The question has been posed by journalists such the Guardian’s Paul Rees and BBC Wales’ Ross Harries, ‘is the WRU trying to bankrupt the regions to pick up their players on the cheap?’ This would allow the WRU to concentrate funding on retaining Wales players, probably with two fully pro sides and two development sides: a dismantling of the successful four region model which has provided three Grand Slams, a World Cup semi final, a victorious Lions tour and a further 6N Championship.

The arrogant and divisive manner in which Lewis has acted has threatened over a thousand Welsh jobs and has threatened to devastate professional rugby in Wales for at least a generation. Is this the man who should be representing the interests of a city region in Wales?

9 thoughts on “Everything you wanted to know about Welsh rugby, but were afraid to ask”

  1. An excellent post, in many ways, but misleading in two critical senses.

    The £13.75M that the RFU pay to the PRL clubs (EPS, EQPS, academy) is the equivalent of the £6.6M that the WRU pay to the RRW clubs. Not just the £1.2M. The RRW clubs actually receive more central funding per team from the WRU than the PRL clubs receive from the RFU. Hence the RRW dependence on their WRU subsidy.

    Even if the 4 RRW regions were replaced with 4 WRU provinces, there will be private finance involved as the WRU will offer franchises for the 4 WRU provinces based on coherent business plans. The WRU does not have the money itself to establish and operate 4 provinces.

  2. Sticking with regions is not the way forward. The system was proposed by a New Zealander with no appreciation of the culture and history of the Welsh club game – and it is the clubs who have to produce the players of tomorrow, which the WRU wants to ignore.

    If regions are behind the Welsh national team’s success of the last 10 years – then why Scotland been so poor, given that they have the same system? And why did England win the World Cup in 2003 when their domestic scene is all about clubs? Why have France been the most successful European team of the last half century when club rugby – a lot of it – is all their players know?

    Club rugby is the Welsh tradition, and it has produced great teams before in the 70s, and briefly in the late 80s before rugby league came calling. It can do so again.

    There was one solution the PWC report didn’t offer: a system of central contracts AND a club competition. The WRU pays the international players which (hopefully) keeps them in Wales, and they can then be subcontracted to the clubs for domestic and European games. An agreed pot of money would then be distributed to the clubs, with the current ‘region clubs’ receiving more to run academies.

    The top division would be eight clubs, playing each other three times, and promotion to the league would be dependent on certain criteria, similar to the Super League licensing system.

    1. But would you be happy with Cross Keys, Pontypridd, Aberavon and RGC1404 representing the WRU in the P12, HC and LV next season? I am not being serious, but you get the point…..? You are happy as long as it is a club you support (Cardiff, Newport, Swansea, Llanelli). The problem is not that the clubs are “regions”, but that they resolutely remain mere “super clubs” (other than the Ospreys, who have arguably developed a new regional identity beyond what was historically just Swansea RFC and Neath RFC).

      1. No, I don’t really get your point.

        There would be no P12 if the club championship came back as the main competition.

        Realistically, the greater resources of the current ‘region clubs’ means they would remain strong. Which should be good for the national team. But this system would offer a lifeline to teams like Ponty who feel excluded from the party at present.

        You mentioned Cross Keys – realistically, clubs need to be capable of generating a fair chunk of revenue from crowds and sponsors, and I’m not sure a village team like Cross Keys would – hence my point about teams only being allowed promotion if they satisfy certain criteria, e.g. decent sized catchment area.

        1. A club competition is hopeless. We had 8 or 9 professional club teams in 2003, and we were falling behind. The national team was rubbish. Graham Henry and Steve Hanson thought there were enough quality players for 2 teams (East/West). 3 at the outside (North?). We had this club merger fudge, cutting to 4 via 5. That is still too many teams. Worse still, 2 of them are alienated from most of their catchment area due to the historical legacy. It is a complete mess. Wales can only afford an East Wales team at the CCS, and a West Wales team at the Liberty. Possibly a development team at Eirias Park. And that is it. And they must all be WRU owned, to put an end to the constant conflicts of interest between Team Wales and the super clubs.

  3. Whats your source for the 13.7m sum? If you are referring the 110m agreement over 8 (13.7m a year) that covers all the below not just player release:
     Season Structure
     Elite Player Squads and the Player Management Programme
     Academies
     An England Qualified Players compensation scheme
     Player Welfare & the PRA
     EPS Player Agreement, Match Fees & IP Rights
     First Division Rugby
     Governance
     Commercial
     The European Rugby Cup
     Finance and Funding matters

    1. Excellent post (see my own). One clarification.

      The European Cup money (about £9-10M, or about £800k per club) that PRL receive from ERC is additional to the £14M that the RFU pays the PRL for player release and associated matters.

      The £14M from the RFU to the PRL clubs is equivalent to the £6.6M from the WRU to the RRW teams.

      The RRW teams receive more per team.

  4. Great to see some of the figures clarified so succinctly.

    I’m still unsure what a “core grant” means – just the WRU’s own money given to the regions without restrictions on its usage (other than those defined in the PA). Also, am I right to assume the “limit for non-Welsh qualified players” is money that would be withheld from a given region, if that region retains >= X Welsh-qualified players in its squad/teams?

    How does the WRU’s £150k contribution towards each region’s academy compare with the academy funding from the regions themselves? I’ve seen/heard figures for the Ospreys ranging from an additional £300k (http://www.ospreysrugby.com/News/Article/26819) and £550k (gossip).

    Regardless, it’s a top, top article.

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