Club talk

London Welsh’s woe and its possible impact on National 1…

The Liquidator
Will soon be coming around
You won’t feel safer
Until you get out of town
He’s an eraser
He’ll rub you out like a light
And for a chaser
He’ll kiss your woman good-night

Shirley Bassey – The Liquidator

London Welsh’s decision to go into voluntary liquidation is yet another reminder of the precarious financial situation many clubs outside of the Premiership are currently having to endure.

Their predicament follows just a few weeks after Jersey’s emergency restructuring  last month and the sale of their key assets, including the clubhouse, stands, pitches and car park needed to raise £1.5 m needed  to complete the current season.

It means that club staff and players, who weren’t paid last month, face a miserable Christmas and their game on Saturday, against Doncaster Knights is in doubt with concern that players won’t be covered for injury if insurance premiums aren’t paid.

According to the Guardian website:

In the New Year, it is the hope and intention of the board that London Welsh will be able to return to playing at Old Deer Park, however it will first be necessary to change the club’s business model to a semi-professional set-up and form a new company, then raise the £300,000 to regain a position within the Championship).

According to the same article, debts from the playing budget of £1.7m and attendances of as few as just 400 contributed to yesterday’s decision.

Welsh formerly enjoyed the patronage of long time benefactor Kelvin Byron, but since  his ‘withdrawal’ (The Rugby Paper 4/12/16), the club have had little income to rely on other than the £530,000 a year funding from the RFU.

Importantly, according to The Telegraph in an article released hours before The Guardian’s announcement, London Welsh have two main options, administration (where a buyer is sought) or liquidation (which involves the club being completely shut down).

The paper goes on to say explain the difference between the two:

Going into administration would involve a points deduction from the Rugby Football Union. In April, Plymouth Albion were docked 30 points for entering administration and a similar punishment would leave Welsh at risk of being relegated into National One.

Liquidation would mean re-forming the club, should it be able to keep its iconic name, at the bottom of English rugby’s league pyramid.

Neither scenario bodes well for one of the great names in British rugby. However, and please forgive my lack of understanding here, despite The Guardian confirming the news of Welsh’s decision to go into voluntary liquidation, they quote the Chairman Gareth Hawkins as saying:

In the New year, it is the hope and intention of the board that London Welsh will be able to return to playing at Old Deer Park, however it will first be necessary to change the club’s business model to a semi-professional set-up and form a new company, and then raise £300,000 so that the club can regain a position within the Championship

I’m not altogether sure how The Telegraph’s description of what liquidation will mean for the club squares with that of the club itself but, whatever the result, it is desperate news for the club one way or the other.

A points reduction of the magnitude of that suffered by Plymouth at the end of last season would put its future in the Championship in serious doubt and offer a lifeline to improving Richmond, whose business model based upon a refusal to turn fully professional, with none of its players on full-time contracts.

table3

Richmond’s Chairman, Peter Moore, confirmed that his club’s position was not going to change:

We won’t try to secure our position in the Championship by borrowing money or trying to sign full-time players because, frankly, it’s a one way street….Championship rugby  is a real loss leader and there are six or seven clubs right on the edge…

The situation is dire for London Welsh and the staff and players must be extremely worried about how they are going to cope financially in the days and weeks to follow, especially coming as it does just days before Christmas.

And whilst I’m sure that clubs in National 1 wish London Welsh well, those with an eye on next season might well be wondering how this might impact on National 1 next season. Could it mean that two teams go up from National 1 in April, for instance, if London Welsh have to drop down the bottom of the pyramid?

If Welsh survive in the Championship, it might well be that a significant points reduction could result in Welsh being relegated into National 1. And with a likely loss of a significant number of players, it could mean that they find themselves on a more equal footing with other National 1 sides, which hasn’t always been the case in recent years…Ealing, Doncaster and Jersey being obvious examples. In many respects, relegation for London Welsh, rather than Richmond, would be better for Coventry in the long run as the likelihood would be that Richmond could retain most of the present Championship squad given they have resisted the temptation to go full time.

It’s all very much in the air, but I have no doubt that the chairmen of National 1 clubs at the top end of the league at the moment will be keeping a pretty close eye on what is going on at London Welsh as they have more than a slight vested interest in the outcome.

One thing that it does bring home to me is that unless clubs can generate additional revenue streams, outside of that raised from the match day gates, they will always be on the edge of financial ruin.

Once London Welsh’s benefactor pulled out, they were pretty much doomed having relied too heavily on his benevolence.

Our own Chairman, Jon Sharp, has been criticised in the past for some extravagant plans to develop the Butts Park Arena.

However,  the more I read of the plight of clubs like Jersey and London Welsh being unable to meet the cost of professional rugby, selling their assets, if not their soul, to simply survive, the more it seems that the Coventry chairman is right to explore any and every avenue in order to enable Coventry to become financially solvent. And, if it provides additional monies to develop both the club’s facilities and its squad in order to compete in the Championship and beyond, so much the better,

Coventry have worked extremely hard behind the scenes to get the club back a degree of financial security, however fragile it might still be. The plans for a synthetic pitch seem to be at a fairly advanced stage and with Coventry United looking to make the BPA their home next season, together with prospect of the ground becoming a venue for outdoor concerts with the arrival of UB40 and friends in April, the club seems to be well ahead of many of its rivals both in National 1 and the Championship.

It’s worth remembering just how far we’ve travelled since the club almost folded in the summer of 2008. We’ve come a long, long way since then and still have a hell of a way to go but at least it looks like it’s not going to be a return journey this time round.

UPDATE: According to the BBC Website:

  • The club can continue to play during the liquidation process, but they will be deducted 20 points.
  • A Rugby Football Union spokesperson said: “The RFU are working with the club to find a way to fulfil their fixtures this season.”
  • London Welsh will have to put together a sustainable business plan to the RFU – and raise a bond of £300,000 – in order to exist as a phoenix company.
  • If this is approved by the RFU then they will be able to keep their place in the Championship, or National League 1 if they are relegated.
  • If the plan isn’t approved and they can’t raise the bond, then they will drop out of the leagues altogether.

~~~~~~~~~~~~~~~~~~~~~~~~~

It was interesting to read Kevin Maggs’ comments in the Birmingham Mail earlier this week. Talking to Paul Smith, the Moseley DoR suggests that the RFU needs to rethink its policy re: the funding of the two tiers below the Premiership:

They are not paying the clubs at Championship level enough and are not paying those of us in National One at all…

…I believe they should lock those three leagues off from the rest and make them full-time.

His argument is similar to those we have heard expounded many times before, namely that over recent years National 1 has offered essential game time for scores of talented  dual reg. players on loan from their parent clubs and capped at England  U 19/20 levels ;

As he rightly says:

(The RFU) could rightly look after the welfare of the players and they would have an unbelievably strong model to produce endless players for England

Whilst I’m delighted he’s made that statement,  it’s a shame that he didn’t voice such opinions regarding RFU finding of National 1 when he was in the Championship, or at the time when Moseley looked as if they might be able to provide more of a sustained challenge to Hartpury in the opening weeks at the same time that Rowland Winter was saying something similar, for instance.

Unless there is pressure put on the RFU from outside of National 1, by the head coaches of Championship and, in particular, Premiership  clubs then little if anything will change. Unfortunately, coming from Maggsy at a time when it looks as if Moseley are destined to spend at least another season in the third tier of English rugby…well, let’s just say it doesn’t have quite the same impact.

~~~~~~~~~~~~~~~~~~~~~~~~~

Had forgotten all about this…

Shirley Bassey – The Liquidator

 

5 replies »

  1. It is 20 points as the Championship has fewer matches.
    That assumes they fulfill all their fixtures.
    There is potentially a separate 5 point penalty for each fixture postponed other than for weather.
    The Doncaster match has been cancelled and the Knights are looking for alternative opposition for the return fixture – but those are in B&I Cup.

    If they fold, I believe it is no relegation rather than two promotion places. That would leave LW Amateurs in Herts and Mddx 1 to carry on the name. They will play at Old Deer Park on Saturday.

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  2. I’m not sure why it’s only a 20 point deduction for liquidation – which is essentially closing the business. Administration carries a 30 point deduction for trying to keep your business afloat.

    Sad as it is, if London Welsh as we know it ceases to be – cue the dead parrot sketch – then in my opinion as a new company they should be existing as far down the pyramid – even right at the bottom of the authorities see fit. Leaving them to continue in the Championship (and NL1 at the very least after possible/probable relegation at season’s end) seems to say “Yes you’ve managed your business very poorly and now that business is gone, so please start again from scratch and we’ll let you carry on just 20 points worse off than you were before.” That seems a bit strange to me.

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    • Hi Warren, hopefully Marcus’ comment (see above) explains the reason…like you, I was expecting a greater reduction but it makes sense now. Hope they manage to come out of it intact though…

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