Category Archives: Regions

orwell

A Wall of Silence

It’s been two months since BBC Wales broadcast their “Scrum V Special“, a supposed “debate” about the current crisis in Welsh rugby. A group of us who were at the recording wrote a letter of complaint to the BBC expressing our concern about editorial bias in the programme.

The BBC eventually responded:

Thank you for your letter regarding our special Scrum V debate. We are sorry to hear your concerns about alleged editorial bias, the editing process and the interactivity of the debate.

 In your complaint, you raise concerns about the billing of the programme. I’d like to clarify that the programme was never billed  as a “Question Time” style debate. It was planned largely as a panel debate with some contributions from the floor.  The audience was asked if they had any questions they wanted to raise and a number of contributors sent their questions in beforehand. Our presenter saw these questions and he highlighted a few people he could turn to during the debate. As there was a wide range of issues to cover during the course of the 45 minute programme, we could not turn to every individual that wished to ask a question. However, we are satisfied that most of the key issues were raised during the course of the programme.

The audience was selected by the programme team and our aim was to reflect a broad editorial balance of those with a relevant opinion about Welsh rugby. We featured contributions from a regional and grass roots supporters group, a player representative, a legal expert, Paul Thorburn, supporters of Irish and English clubs, Mark Davies and former WRU and Regional Rugby Wales Chief Executive David Moffett. As well as the regional supporter groups, over 180 Welsh clubs were invited to send representatives to be in the audience and those who attended came from Cross Keys, Neath, Canton, Newtown, Penarth and Llanelli. A volunteer referee and people involved in Women’s rugby also attended.

Prior to the recording of the programme, members of the audience were asked to raise their hands, clap and show its reaction politely, but they were not encouraged to boo the contributions of others. The audience was clearly told, both by the floor manager and the presenter, to show respect for speakers and not to shout or barrack.  The reaction and interaction from the audience was important to this debate and we feel it was fairly reflected. The programme was pre-recorded and and it is not unusual that the recording overruns and the programme is edited to time. Some elements of the debate were dropped from the final edit because they weren’t deemed to be as editorially relevant when considered against the programme as a whole. I am satisfied, however, the programme was fairly edited and was impartial, accurate and balanced. 

We weren’t satisfied with the BBC’s response. So we wrote to them again. At the time of writing, we still haven’t received a response. Here’s what we had to say about their response to our complaint:

Thank-you for your response about the BBC Scrum V Special programme broadcast and recorded on 19th January 2014.

We believe your response contains a number of inaccuracies regarding the programme and fails to adequately address a number of the concerns in our original complaint.

For these reasons we are copying the BBC Trust Unit in our reply here.

We must stress that several of us were present at the recording of the programme.

Firstly, you state that the programme was not billed as a “Question Time” style debate. That is not true. I quote from the invitation email from a member of the production team, Cathy Williams:

“The programme is presented by experienced journalist Gareth Lewis (former Scrum V Presenter), speaking to a panel of 4 guests. There will be a chance for the audience to ask questions if they wish, or just listen and enjoy the debate!”

We can confirm that no audience members were allowed to ask questions during the recording of the programme. This is clear from the broadcast version.

Secondly, you state that the key issues were raised during the course of the programme. Whilst it may be true that a number of issues were raised during the RECORDING of the programme, quite a few of the important points raised did not make it to the edited version which was broadcast. For example, at one point, the presenter directly asked Roger Lewis for his view on the comments of Cardiff Blues Chairman Peter Thomas (for clarity, Thomas is on record in the Rugby Paper as saying that the Welsh Regions have “no confidence” in Roger Lewis). Mr Lewis repeatedly avoided answering that question. Most of the exchange on this topic was edited out of the broadcast version of the programme.

You claim the pieces that were cut from the programme were not deemed to be “editorially relevant.” We would strongly contest this view: what we had was a statement from one of the key protagonists in the issue, expressing his lack of confidence in one of the other key protagonists. This kind of statement is clearly relevant to the debate.

Thirdly, you list the various “contributors” in the audience. These included supporters of Irish and English rugby clubs. We were very disappointed that the Irish and English supporters were given more time to speak than the Welsh supporters, when the programme was supposed to be about Welsh rugby, broadcast to a Welsh audience.

Fourthly, you describe the encouragement audience members were given to show their reaction to what was being said in the debate. We can confirm that the floor manager, the bald gentleman with a headset, definitely told the audience that they could audibly show their appreciation or lack of appreciation of what was being said, in whatever manner they liked, and this included booing. He even made a booing gesture with his mouth to illustrate this. The only caveat he used was that we were to show respect and not use any offensive language.

At several points during the recording, the audience loudly expressed their displeasure and derision at the inability of Roger Lewis to give a straight answer to a simple question. However in the broadcast version, the audience’s reaction was only audible on one occasion, when Roger Lewis repeatedly tried to avoid answering a question. Technical shortcomings cannot be used as an excuse, as applause at the beginning and end of the programme was quite clearly recorded.

Finally, you have failed to address our original question about the presence of the WRU’s legal representatives at the TV studios on the day of the recording. We are still very concerned that their presence had a detrimental effect on the partiality of the editing process, and indeed, the entire format of the programme.

In our view, based on the evidence described above, the programme was not impartial and did not address the issues in a manner which was fair to all the participants. Unfortunately, this is only one example of the BBC’s consistently poor and unbalanced reporting of what is the most serious issue to affect Welsh rugby in the professional era. For example, when Regional Rugby Wales recently issued a very detailed critique of the WRU’s negotiation tactics in a letter to the National Assembly (see the RRW website, http://www.regionalrugbywales.com/2014/02/28/response-questions-raised-chair-communities/) this was almost completely ignored by BBC Wales television and radio.

We would appreciate a full and frank response to our concerns this time, and we would be happy to meet the production team to discuss these matters further.

 

Rotten

Ever get the feeling you’ve been cheated?

There are great deal of people in Wales who believe our institutions are run by a cosy little clique of self-serving men and women who get all the best jobs, creaming off our hard-earned money.

They may have a point. This morning, in a committee room at the Senedd in Cardiff Bay, the National Assembly (the people we voted for who are supposed to take responsibility for running things in our country properly and accountably) decided to wash their hands of any involvement in the current crisis in Welsh rugby.

Is it their business, you may well ask. Yes it is. The Welsh Rugby Union (WRU) is in receipt of a great deal of public money, as these figures show. The Assembly Committee for Communities, Equality and Local Government is responsible for sport in Wales. As the governing body of what many regard as our national sport, the WRU falls right in the middle of the Committee’s remit. So, definitely the Assembly’s business.

A bit of background for those who aren’t up to speed on this. Earlier this year, the National Assembly held a debate on the current crisis in Welsh rugby and this led to the Assembly Committee responsible for sport in Wales writing to the WRU and Regional Rugby Wales (RRW) asking them to explain their sides of the story.

The WRU and RRW both responded, along with a number of other parties, among them a group of fans representing Gwladrugby.com. All the submissions to the Committee can be seen here (PDF reader needed).

Today, that committee met to consider the responses it had received, and to decide whether they would make any further inquiry work into the Welsh rugby matter.

It must’ve been a cracking meeting. Here’s what these solid guardians of our democracy had to say on the matter:

“The Committee considered the correspondence received. The Committee agreed not to undertake any inquiry work on this matter and will release a statement shortly providing more detail about its decision.”

Wow. That must’ve been quite a meeting.

Given the amount of correspondence received on the matter, along with the huge gulf between the WRU position and that of RRW and the other groups represented in submissions to the Committee, it is astonishing that the Committee could decide that this issue was not worth pursuing.

Meanwhile, up in Cathays Park, the Welsh Government had also been hard at work responding to concerns regarding the current dispute between WRU and RRW. The Welsh Sports Minister must’ve spent all of 5 minutes coming up with this, er, “concise” response to a question from Bethan Jenkins AM on the matter:

“I have had conversations with the Chief Exec of WRU and 2 of the regions. I listened to their views and we discussed the current situation.” said the Sports Minister John Griffiths AM in his decidedly-less-than-comprehensive reply.

“I made clear the [Welsh Government's] view that they must resolve their differences as soon as possible in the interests of the game,” he concluded.

We have a phrase for this in the cynical, weary world of Gwladrugby: “Magic Table.” Essentially it refers to any empty platitudes which call on the various parties to “just get around the table.”  The fact is, they have been getting around a lot of tables, and none of it has worked, in spite of what the WRU spin in the mainstream media might have you believe.

All of this makes you wonder what reasons the Assembly Committee might have for trying to brush the issue under the carpet.

First of all, let’s have a look at the people who sit on this committee. For starters, there’s Leighton Andrews AM. Here he is with a couple of his mates.

gravy train
We’re all in this together

Back in November the Welsh Government trumpeted its new “City Regions” based around Cardiff and Swansea. Guess who was made chairman of the South East Region? Yes, it was Roger Lewis. Mind you, he’s always wanted his own region, so he must be really chuffed with that.

You might also remember the glorious day back in 2011, when Roger Lewis (you know, Roger Lewis, the CEO of the WRU) helped out his chums at the Senedd once again in the successful “Yes” campaign.  If you don’t remember it, here’s a photo to help you:

roger and leighton
Jobs for the boyos

OK, before you say it, I know there’s more than one member of the committee. But because Welsh Labour are in power in Cardiff Bay, they make up the majority of the members. And by the way, Welsh Labour are led by the guy holding the big silver plate in the photo up there.

Perhaps these titbits of information might have something to do with the committee’s puny response today. Or perhaps they don’t.

Food for thought.

15011_1_other_wallpapers_protest_peaceful_protesters_with_flowers

Welsh rugby crisis: fans state their case to the National Assembly

Back in January, the National Assembly held a debate about the current crisis in Welsh rugby. Following the debate, the Chair of the National Assembly Committee responsible for Welsh sport wrote to the Welsh Rugby Union (WRU) and Regional Rugby Wales (RRW), asking them to respond to a number of concerns which had been raised during the debate.

The WRU and RRW have responded already. Now it’s time for the fans’ response. Today we have sent this letter to the Chair of the Committee.

RE: The Welsh Rugby Union and Regional Rugby Wales

We have seen the reply sent by the WRU to your recent letter seeking information about the crisis affecting Welsh rugby. We note that the WRU stated that its intention was to give you some background to allow you to take ‘a fully formed view’ of the situation, and we would share that very proper concern.

Therefore we, the undersigned who have come together through the gwladrugby.com website, believe that, as concerned followers of the sport that we love, we should take the opportunity to also place our views concerning the reply on record, and in your hands. We have also taken the liberty of grouping our response under a series of headings.

‘The good of Welsh Rugby’

In any document emanating from the WRU, or in the frequent interviews that they give to the media, there is regular reference to ‘working for the good of the game’ or ‘working for the good of rugby in Wales’. Indeed the statements are chanted like some kind of mantra. This begs the question – how does one define ‘rugby in Wales’?  To Mr Roger Lewis it has a single, defined meaning – it means ‘working for the good of ‘Team Wales’. His entire focus is built around the need to project the national team as a brand and to promote it. It is our contention that there are other ways of ‘working for the good of rugby in Wales’ and they range from the people who give up their free time on a Sunday morning to run junior squads, those who turn up to support their local team on a Saturday in bad weather, to the backers of the professional teams who have to put their hands in their pockets from time to time.

The concern is exacerbated by the fact that recent statistics have shown that, while the income from the international matches have gone up, the number attending them have actually gone down! So the formula is to take more and more from fewer, more affluent spectators and corporate clients – a sustainable model we wonder? However this rich breadth of activity that we depict is not a part of his perception as it does not contribute, in his view, to the greater good of Team Wales. We suggest, therefore, that you should be wary of Mr Lewis’s frequent and gushing references to the WRU taking steps for ‘the good of Welsh rugby’ – those steps may actually be at variance with the ‘good of Welsh rugby’ in its proper context.

The WRU’s approach to “negotiations”

Throughout the response from the WRU words such as ‘negotiation’, ‘collaboration’ and ‘discussion’ occur regularly – indeed they, or their derivatives, occur more than 12 times. However the rhetoric is not necessarily matched by what is seen by many as the reality of the situation. A ‘Participation Agreement’ would suggest that it is agreeable to both partners.

Equally any extension of such an agreement would presuppose debate, discussion and agreement. The suggested readiness to negotiate does not reconcile easily with the statement of one regional CEO at a recent meeting with the WRU, who stated that the regional representatives were told that the Participation Agreement document was on the table for agreement only and not discussion. This is, in our view, a curious form of negotiation.

As stated the PA was not agreed on the last day of the year and the WRU suggest that 6 months of potential negotiation were lost – a curious form of negotiation. The WRU suggestion at the time was that it was all over, however seven days later a new, and very lengthy, document suddenly appeared.

Governance versus Control

The WRU’s view of its role and status bears some examination in terms of its implications. The need for appropriate governance arises from developments in the business world which necessitate better controls in businesses, particularly in businesses where ownership is disparate, as is the case with WRU.

Those in charge at the WRU were respected in the sphere of amateur rugby where they had great experience in the field. However the world of rugby changed radically with the emergence of the professional game that operates in a demanding business environment. But has the WRU changed?  The change in the status of the game clearly emphasized the need for a different relationship to be developed – and quickly.

However at the WRU the same people are still there on the new Board of Directors. Yet they have moved rapidly towards a new definition of relationships – the new perception is not one of governance, but of control. The WRU, it would appear, wants complete commercial control of the game in Wales. Here we enter a completely different context as the control position proposed is considerably more than simply governance of the sport. Here the personalities involved become key to the value and indeed the validity of the proposed change.

The current Directors of the WRU are a Chairman who, it is claimed, has extensive business experience, two National representatives – one with business experience and the other a respected former player who has had involvement in business and public bodies, the other directors – the majority – are representatives of the clubs at District level and many have been there since the amateur days. It is now intended that they, through their officers, should have complete commercial control of the game as well.

In contrast the regions are led by business men who have wide, successful experience in business – within Wales – and who have put their own money into the game that they love. Surely this is also acting ‘in the best interest of Welsh rugby’ – something apparently prized by the WRU? The directors of the WRU were eminently suited to the governance of the game in its amateur era, however they have little or no business experience of the type that can decide strategy with big contracts.

Fitness for purpose

The WRU is a private association. It has a business arm to deal with necessary business that forms a part of its activity brief. We take the view that, given the WRU’s size, income, assets and market value, there would be a completely different group of directors with a markedly different skill-set. In a world where there is the ownership of a massive stadium with its mortgage to manage and TV contracts involving millions of pounds to negotiate, is it not unreasonable to question the fitness for purpose of the present board of the WRU?

There is a dearth of appropriate experience in the business field which severely limits the Directors’ contribution in many situations and, at the same time, enlarges the power vacuum to be filled by officers. Perhaps the greatest indictment of the WRU is that it didn’t change when the game changed.

As a result of the inertia that accompanied the failure of the WRU to recognise the change in the climate of the operation that followed professionalisation, there is no representative of the professional game in Wales at Board level. Thus there is no representative at board level of the organisations that employ over 600 professionals working in rugby, and manage the academies that are key to the future and produce the stream of players needed by Team Wales. In the circumstances it is ludicrous that the WRU wants to control their activities without even allowing them a voice. The WRU will point no doubt to the panel set up to deal with the professional game, but will neglect to observe that they have also effectively emasculated it.

While the WRU is a private company and a business, it also performs a public function, given its permeating role in Welsh society.  It is perhaps best viewed as a quasi-public body.  As such, the decisions taken by its board should be subject to greater scrutiny and accountability in the same way that public bodies are.

In our view it is the duty and function of government bodies and, if appropriate, the judiciary, to provide such scrutiny.  We fail to see how the current board could possibly stand up to the even the slightest scrutiny: the board is wholly deficient in terms of appropriate qualifications and business experience.  Such deficiencies are manifest in the board’s abject failure to prevent its CEO from pursuing the single-minded assault on the regions – the issue which sits at the heart of the current crisis.

Central Contracts 

Much is made by the WRU of central contracts as though it is a single concept. Manifestly it is not, as there are as many different types of central contract arrangements as there are organisations that use them. It is not a single identifiable concept, but a handy term that is used as a short hand description of a variety of styles of operation.

The implementation of central contracts requires proper planning and the agreement of all involved in order to be effectively implemented. It will only work if it involves the whole squad of international players and will be a disaster if it only applies to a favoured few. When all that is agreed and there is adequate funding to bring it into operation, then the arrangement becomes one of the various forms of viable operation. However without those pre-conditions there is no situation in which it will be either acceptable or effective. The present proposal – to offer it to a limited number of players – screams out for answers to some key questions –

  • Will the centrally contracted players be given precedence in selection to justify the expense?
  • What will happen if a centrally contracted player has a loss of form? Will he still be selected anyway?
  • Is the WRU actually bidding against its own regions for players?
  • Where is the money coming from?
  • What message does the arrangement send out to the current rugby internationals of Wales? Does it tell them that they may be good enough to play for their country, but not good enough to be considered worthy of a central contract?
  • Where will they play their ‘club’ rugby if an agreement is not concluded with the regions for them to be loaned back to regions in Wales – will they have to be loaned out to England or France?

When a new situation leaves you with more questions than answers, you do not have a policy or a strategy – you have a knee jerk reaction that is designed to capture media attention and a clear sign that those responsible may be making it up as they go along. There is a major concern for the sport in all this – many have legitimate fears that the proposal is divisive within the playing squad and that is bad news – especially for Team Wales.

Conclusion

At the moment what we need is cool appraisal of what ‘is best for Welsh rugby’ – defined in the widest sense and we would respectfully suggest that such concern is not limited to the WRU. What we do not need now is reckless brinkmanship and the use of the media to spin biased points of view to the public. I am sure that the irony of the occasion was not lost on you, when the CEO of the WRU stated that the WRU was not negotiating through the media and actually stated it in an interview the radio! We also do not need an attempt to starve the regions into submission by denying them the money due to them by contract. Sadly, it was a tactic that we know only too well in Wales – it was much loved by the colliery owners who wanted to starve their workers into submission.

The relationship between the game of rugby and the people of Wales is unique. The relationship changed, in some ways, with the advent of the professional game. The current actions of the WRU will further distance the game from the people of Wales and that should be a matter of concern for yourselves at the Assembly.

We have seen it as important that you should know that there are two sides to this debate and we believe that it is important to make you aware of that fact for another reason.  It may have been brought to your notice already that the only evidence in the media that there is any coherence in the regions’ contentions, and that there is a different point of view to that of Mr Lewis, comes from the media outside Wales – a fact that, in our view, deserves to be properly noted and pointed out to you. In a country that prides itself on its democracy, it is less than acceptable that its people are dependent on the media in England for a fair case to be made. The media inside Wales, in all its guises, only seems to report what they are told by the WRU and we find that both sad and regrettable on the one hand and a palpable lack of an even handed approach on the other.

crayons

It only takes a minute

Throughout the recent debacle in Welsh rugby, I’ve been very impressed with the work of the regions’ respective supporters’ clubs. They’ve been to meetings with the WRU and RRW, and have published an honest account of proceedings.

Recently, I was part of a group of supporters’ club representatives who wrote a letter of complaint to the BBC about the farcical ScrumV “Special” programme which was recorded in January. A programme all of us who were there know was heavily edited to favour the position of Roger Lewis. The response we received from the BBC could be best described as inadequate, and we are now going to raise this with the BBC Trust.

On Monday 17th February, representatives from the supporters’ clubs met RRW to discuss the ongoing crisis once again. The minutes of this meeting have now been published, with the approval of RRW. You can read them here.

The minutes of this latest meeting are disappointing for many reasons.

Firstly, it’s not clear who was in attendance.

Secondly, the minutes have no structure and the discussion points are not organised in a way which makes it simple to understand the various issues which were discussed.

Thirdly, there are basic grammatical errors which make the document difficult to read. In addition to this, the minutes are not written in an objective way. In fact at several points the writer adds emotive punctuation, such as exclamation marks, which makes it seem like a rant rather than a serious account of a meeting.

I’m all in favour of people venting their spleen about something which they clearly feel very passionate about, but these minutes have been approved by RRW’s public relations representative, and are now in the public domain. Is this really the standard of document RRW should be putting their name to?

We all know that the WRU are never shy in putting their position forward in the media, while RRW have preferred to keep their own counsel, as Roger Lewis might put it.

If this is the best RRW can do, maybe it’s better they keep quiet. These minutes are a mess.

Let me try and summarise the key points, because some of them are worth noting:

1. The WRU’s proposal for a new PA

It appears the terms of this are even more in favour of the WRU than the original PA. Central contracts are the order of the day, and the regions will have to release players for internationals outside the IRB window at their own expense, with no compensation from the WRU.

2.  The new European Cup

The WRU have finally agreed to a new competition, not run by the ERC. But we already knew that.

Stuart Gallacher (RRW CEO) resigned from ERC once RRW had stated they supported the new Rugby Champions Cup, to avoid any conflict of interest. If Roger Lewis is involved in negotiations on a new European Cup, surely he should follow suit and resign from ERC to avoid a similar conflict of interest?

3. The outstanding ERC payments

The WRU Finance department assured RRW in an email back in January that the payments would be made as expected. The ERC board were supposed to meet before January to decide on whether the payment would be made, but that meeting never took place.

4. The TV position

Sky and BT have met, but there is no agreement

5.  WRU accounts

A thorough review of  WRU financial position is needed, in light of the surplus highlighted by David Moffett.

6. WRU governance

Are the WRU board holding CEO Roger Lewis to account? An independent inquiry is needed.

7. WRU Director of Rugby

Josh Lewsey was appointed by a one-man interview panel. What qualities make him suitable for this role?

8. Central contracts

Why is the WRU pursuing this unilateral policy when it is obvious they are not the solution?

9. Celtic League

There has been no progress in planning for the future, for example sponsorship, TV contracts and composition. What are the Irish and the Scots doing to help keep this league going? The Italians have already said they are ready to leave.

10.  WRU “loans” to the regions

These have to be paid back by 31st March, even though it is not clear whether the money will ever be paid by ERC.

11. The Anglo Welsh League

This is still an option. The English clubs are also anxious to have a competition to help them sell season tickets.

In summary:

None of this information is a surprise to those of us who have been following the issues. What is of most concern is that RRW don’t seem to be able to speak for themselves, and instead seem happy to rely on well-meaning but incoherent information from meetings with supporters.

If RRW want to achieve their goals, they need to adopt a far more professional approach to communication. The WRU are already miles ahead of them in the PR race. RRW are falling further and further behind by the day. This is too important a matter to ignore.

 

Public domain image, royalty free stock photo from www.public-domain-image.com

Whose Income Is It Anyway?

Today the Welsh Rugby Union (WRU) magnanimously offered to help the four regions in Wales out, with a temporary loan to tide them over whilst they wait for the delayed payments from European Rugby Cup Limited (ERC). An amount was due at the end of January of £800,000 but was withheld due to uncertainty over the future of that entity. Whether that is a reasonable course of action is open to significant question, but that is not the purpose of this piece.

The purpose of this piece is to examine how it is that the WRU treat the income that is received by the Welsh game from the competitions that the regions play in, as their own income. And whether common wisdom on the reasonableness of this policy is affected by today’s offer, and the clear message underlying that offer that if ERC don’t pay, then the credit risk falls on the Regions, not the WRU.

In background, until the holding back of money by ERC, it was assumed that competition monies was received by the WRU and the distributed by them to the four regions. However, it now appears that these monies are received directly by the regions from ERC. Given this, people say, how on earth is it this the income of the WRU?

In deciding whether this money is the income of the WRU, one has to look at the rules governing the way that accounts are put together in the UK. These rules taken together are known as Generally Accepted Accounting Principles (GAAP). The key rule in this instance is contained with Financial Report Standard 5.

The issue is whether the WRU is acting as principal (it is their transaction, and therefore, their money), or whether they are acting as agent on behalf of the 4 regions (when it wouldn’t be their money).

If we look at the relevant rules we are told that if the WRU were to be regarded as acting as principal they either need to have the risks and reward relating to selling price of the service or holding the stock. Well there is no stock, and the WRU have no control over the price as they are paid what ERC agree on. With, of course, RRW having the right to appoint a director to ERC. So they probably fail on that front.

There are then three more tests. Firstly, if the WRU modify the service or perform part of the service. Well they don’t. Next do the WRU have discretion in the choice of supplier? Well this may be less clear cut, but there is long contract for the 4 regions. Six years left to run at the last WRU accounts! Finally, there is the question of who bears the credit risk. Well, if the WRU are offering a loan, it is plainly obvious they suffer no credit risk, as they are not affected at all by the non-payment by ERC. The only people in Wales affected, are the regions.

Therefore it would appear, that the WRU are NOT acting as principal here, and should NOT be accounting for this money from ERC as their income.

The standard then goes on to talk about circumstances where the ‘seller’ (WRU here) are acting as agent, and the money isn’t theirs to account for as income. The non-assumption of credit risk, as the WRU are saying today happens in this case, is given as a key indicator that they are acting as agent, not principal.

So what? Well the WRU turnover in their last accounts was stated as £61m. Of that, approximately £5m is the income in question from ERC. There is a total of £9.1m which is ‘competition income’, but that includes reveunes from other competitions where the principal/agent relationship may be different (though one would think they would be similar if not identical). Excluding ERC income would reduce the WRU’s turnover by £5m to £56m. Profit would remain the same at £5.6m, as that money is paid out to the regions. So, why are the WRU so keen to count the ERC money as their income?

Might it relate to on the covenants (conditions) in the Barclays loan?  A key indicator of financial performance is “EBITDA”. The WRU labels this figure clearly in their profit and loss account. It includes the ERC income, but doesn’t include the payment of the same sum to the Regions. This comes after this figure as an ‘allocation to affiliated organisations’. So maybe, there is a covenant that relates to this EBITDA figure? Without ERC income this drops from £29m to £24m. If all competition income was taken out, this drops to £20m. Would this cause a problem with Barclays?

On the face of it, today’s offer to the regions from the WRU looks generous. That is what it is designed to do. In doing so though the WRU have clarified where the credit risk lies on ERC income, and have therefore, at the very least, questioned, whether they are correct in counting ERC income as their own. Bluntly, in my opinion, they have clarified that it is not their income at all. I do accept that there may be information not in the public domain that may alter my opinion, but given the credit risk issue, it would need to be very convincing information.

All should be clear soon, I am writing to the Financial Reporting Review Panel to ask them to investigate the WRU accounts on this very matter.

valera-professional-hair-dryer

Robert Davies lets rip at Roger

Ospreys shareholder Robert Davies was interviewed by Ian Hunt on Radio Wales last night. Here’s what he had to say.

IH:
“… before that’s we’re going to look at rugby. We touched on the Six Nations right at the top of the program, of course, and the top Wales players are nicely cocooned away from all the politics swirling around Welsh rugby right now. But the Six Nations continues against a backdrop of more discussions and debate over the future of the domestic game with meetings taking place in London today and Dublin tomorrow partly aimed at thrashing out which competitions the Welsh regions will be playing in next season. A row brewing also over the missing £800,000 the Regions’ claim they haven’t been paid for this season’s Heineken Cup. It’s emerged that they could take legal action if the European Rugby Cup decide to withhold this money. Well, last night the WRU Chief Executive Roger Lewis gave us his thoughts on this and the various issues. Earlier though I got a regional perspective from Robert Davies, speaking in a personal capacity as the major shareholder at the Ospreys. Here’s what he had to say”.

RD:
“I was quite shocked to read your report, the BBC that is, report about what Mr Lewis had said and he was saying that:
- firstly the regions are open to the idea of expanding national contracts – that’s untrue;
- both sides plan to make more deals – that’s untrue;
- we have a plan on the table that we are discussing – that’s untrue;
- the regions have engaged with that plan – that’s untrue;
- WRU has been working on the plan for several months – that’s untrue;
and
- (the) regions originally contacted the Union to keep six players in Wales – well that’s untrue

In fact, there is no relationship with the Regions and the Regions have been consistent in the view there is no system to support central contracts in Wales”

IH:
“Yes, well Regional Rugby Wales have reiterated today they stand by what they said last week about central contracts, namely that no agreement is in place to play players who are centrally contracted”

RD:
“That’s correct”

IH:
“Can you outline, you know, the issues around this and what the objections are to central contracts”

RD:
“Well, it’s not being debated. It’s just something that has been put on the table by Mr Lewis and has not been debated as to whether or not it’s good for Wales, whether it’s bad for Wales, it’s not part of a strategy, it’s not part of a plan. The PwC report which the Union commissioned actually stressed the need to increase revenues. Now, those revenues can only come from the club game in reality because the international game is saturated with fixtures. And therefore what we try to do is to increase revenues for our own benefit and for the benefit of the retention of those players in Wales and there has just been no debate about central contracts whatsoever”

IH:
“Do you not think it is a good plan, though? I mean, if we’re struggling to keep players here in Wales… we’re losing players to France and to England left, right and centre. Isn’t it a good thing if it will…”

RD:
“Well, there’s no proof that the players will stay in Wales. It’s got to be part of an overall plan. We employ 400-500 professional people. To employ one or two is not going to build the base for a professional sport in Wales, that’s not going to do it. You have to have a whole plan not just a plan that grabs headlines and says that certain marquee players are staying in Wales. We’ve got one player so far, fine, good luck to him. But the issue needs hundreds of players”.

IH:
“Can they contract anyone down at the Ospreys? I mean Alun Wyn Jones has signed with the Ospreys”.

RD:
“Well, anybody who’s out of contract with the Ospreys, yes of course they can sign, there’s no way they can’t”.

IH:
“Would you see that that happening?”

RD:
“No”.

IH:
“You don’t think any Ospreys players will end up being centrally contracted?”

RD:
“Highly unlikely…because, the players are already contracted other than one and we’re in discussions with that one. As I say, you have one or two or three players centrally contracted, it just doesn’t work. The Union tried it once before with, I think the first player to be contracted centrally strangely enough was Derwyn Jones who was Warburton’s agent, and that proved not to be successful because there was no plan to go with it. If there was a plan to increase the strength of rugby in Wales, right throughout, all the way down to the grass-roots, fine, let’s debate it. But there is no plan, or at least not one that we’re aware of”.

IH:
“Can I ask you Robert about the other issues swirling around at the moment? There are two big meetings this week to try and resolve the future of all the various competitions. There’s one today in London. Do you know what happened at that meeting?”

RD:
“I haven’t heard as yet, I’m not sure if it’s finished, but it would to be very difficult if there’s anything to come out of it as the English have stated, they stated a long time ago, eighteen months ago, that they will not participate in the European competition. And that will not change. So therefore I cannot see how anything can come out of that meeting today. But I haven’t heard”

IH:
“There’s a big meeting in Dublin tomorrow, ERC meeting, which the Regions have been invited to attend. Do you know whether they’ll be sending someone to that?”

RD:
“We won’t be.”

IH:
“Why not?”

RD:
“Because there’s no point. Look, this is the ERC, this goes to the root of the differences between us. The ERC is run by the Unions and they, this week, have decided not to pay the Regions in Wales £800,000 which is due to them. Nobody had the decency to tell anybody. This was to enable the Regions to pay the players wages. The WRU’s FD Steve Phillips attended the meeting when they decided not to make the payment. He did not inform the Regions and the Regions had to make arrangements to pay the wages themselves. We’re not going to turn out there as one vote out of many and just be like nodding donkey. There’s just no point. There’s nothing we can contribute and nothing they want us to contribute.”

IH:
“But surely its in your interests to attend to fight your corner, isn’t it?”

RD:
“We have written to them today voicing our concerns, but one vote out of many, there’s just no point in being there because we know this is just a kangaroo court”

IH:
“That sounds like a defeatist attitude though doesn’t it? I mean, if you’ve got a seat on the board…”

RD:
“No, no, we’ve written to them today and we expect them to honour the agreements they’ve committed to”.

IH:
“How tough has it been, Robert, for the Regions to, you know, to bridge the gap with this money missing? How tough has that been? As you’ve alluded to already you have had to scrabble around to pay the wages, haven’t you?”

RD:
“Well it’s no different to any other business if, suddenly, you’re confronted with somebody who’s promised to pay you – and they don’t – a large sum of money and you have to make alternative arrangements to cover the shortfall. And that’s what we did last Friday and we covered it to enable the wages to be paid. But it’s no way to run a business. We’ve got no relationship, any meaningful or trustworthy relationship, with the Union. It’s no way to conduct any business let alone one like the WRU which is really a public body. It’s disgraceful”.

IH:
“If this money isn’t paid, what’s the worst case scenario? Could this send one of the regions out of business?”

RD:
“Well, at the end the day, we are owed a lot of lot of money, and maybe it’s a way of the Union threatening us again. There is a history of threatening and using the big stick. That’s one of the reasons why we no longer wish to be party to an organisation that’s run by the Unions. We would rather be dealing with proper business people who act in good faith. And the outcome? Who knows? If they continue not to pay us we will have to make alternative arrangements, and that could be legal or financial”

IH:
“Better in terms of alternative cup competitions for next season? Are you as Regions determined to pursue an alternative European competition that isn’t run by the ERC?”

RD:
“Well, at the moment there is no alternative competition. The ERC has had notice for over 18 months that this is going to happen. We’ve warned them. We’ve repeatedly asked them ‘what are you going to do?’. Our own agreement has come to an end. We’re left just wondering where we’re going to play? There is no Rabo for next year, there’s no European for next year. We’re expected to commit to a payroll and pay players costing us £4-5 million per year and it’s very unfair. We don’t know what income we’re going to have. So, to answer your question, unless the Union comes up and tells us well there is a Europe we can participate in meaningfully, and by that I mean financially meaningful, then I can’t see us agreeing anything other than an Anglo-Welsh”.

IH:
“I was going to say, if the Union sort of meet you halfway, if you find some middle ground on the European Cup issue, would you drop plans to join an Anglo-Welsh league?

RD:
“Look, we’ve been trying to negotiate with the Union for a long, long time. It’s very, very difficult for us to have any sensible discussion with the Union. They’ve reneged on so many agreements with us, there’s no trust left”.

SG:
“These are difficult times, aren’t they Robert? I just wonder if…”

RD:
“Very difficult and it’s very sad. I’m looking forward to going to Ireland this weekend, one of 10,000 or more Welshmen. We’ve all bought our tickets paid for our hotels, paid for our beer, our own food and we enjoy ourselves, and it’s very sad that we should be going there in this atmosphere where we don’t know, next year, what the game is going to look like. And this is a game we’ve all supported for many, many years. It’s very, very sad, and the Union board itself should be looking at itself. I don’t think that anybody comes out very well out of this, but the Union Board itself should have shown more leadership, more decisiveness, more honesty, more integrity. Everybody’s complicit in this and we need really to have a look at the way we run the game in Wales”.

IH:
“Strong words there from the Robert Davies said who’s speaking as a major shareholder at the Ospreys. Regional Rugby Wales, the umbrella organisation acting on behalf of the Regions, declined to respond to what Roger Lewis told this programme last night, apart from reiterating the stance they made last week on central contracts, namely that there is no agreement in place to play centrally contracted players at the Regions.