Welsh rugby's supporters and players now need to see the evidence behind the Welsh Rugby Union's plan to cut one professional team in west Wales. Over the next few months, professional rugby in Wales will exist in a form of purgatory, with the current WRU board wanting to cut one team in west Wales, though which club will go remains uncertain.
Financial questions remain
There are still a host of fundamental questions to be answered, but many cannot be resolved until the WRU begins its workshops with the four professional teams in December. Until then, expect months of speculation, briefings and confident predictions about which region will survive and which will disappear.
As things stand, the WRU does not yet know the answer. The finances of Welsh rugby are perhaps the most important part of the entire debate, as the number of professional teams Wales can sustain will be determined by money or, more accurately, the lack of it. The problem is that there have been mixed messages and a notable lack of transparency about the WRU's true financial position.
Turnover versus affordability
The governing body reported turnover of £106.1 million last year, leading some critics to argue that it should be capable of funding four strong professional sides if it simply reduced spending elsewhere. But annual accounts tell us what a business has done, not necessarily what it can afford to do next; they are historical documents rather than a detailed explanation of the business plan for the years ahead.
Others point to the fact that the WRU's turnover is more than that of the Irish Rugby Football Union, but the governing body would argue that its costs are significantly higher. WRU chief operating officer Gavin Marshall explained on the governing body's podcast in May: "We have the investment in the hotel which brings an associated cost of running that hotel, whether that's matchday or non-matchday. We have the cost of that and we have the cost of running the stadium. It's 27 years old and while it is a fantastic asset, it is an expensive asset to run. When you look at our turnover number, you should be looking at our EBITDA (earnings before interest, tax, depreciation and amortisation) and the profit we are able to generate from that turnover. It's around £30m-35m in terms of that EBITDA. We need to invest in capital expenditure in the stadium. We choose to support the community game. We provide grants and funding for the community game and what we've got left we invest in the professional rugby game. After CAPEX on the stadium and after funding the community game, that figure is more around £20m."
A question of priorities
That explanation goes some way towards explaining why a turnover figure of more than £100 million does not mean the WRU has £100 million available to pour into the professional game, but it does not entirely settle the argument. There is another question which increasingly needs answering: is this purely a question of affordability, or is it also a question of priorities?
There are those who would argue that the WRU has not done enough to examine what could be cut, changed or commercially exploited elsewhere before deciding that professional rugby must take the hit. The professional game has endured years of underinvestment, while all four regions have been forced to make cuts. Yet the WRU has continued to spend money on its own organisation and has created a number of new positions over the past year or so. That may be entirely defensible from a business perspective, but when supporters are simultaneously being told that Wales cannot sustain four professional teams, the optics are inevitably difficult.
None of this means that the WRU can afford to fund four genuinely competitive professional sides, but the argument over what is affordable should be separated from the argument over what is being prioritised. There is also a growing belief that the WRU could do more commercially. Has the WRU exhausted every possible avenue for keeping four professional sides before concluding that one must go?
Confusing picture on finances
The finances are clearly under pressure. WRU director of rugby and elite performance Dave Reddin told the Rugby Management Board last week that the organisation could not afford to TUPE all regional academy staff across to the WRU in the current financial year. There are also rumours that the governing body may not be able to afford the coaching positions it has advertised in the women's game.
That creates a confusing picture. One moment the message is that the WRU's finances are in a sufficiently healthy position to allow it to reshape Welsh rugby and invest in its pathway. Then, seemingly within weeks, elements of those plans are being scaled back because the money is not there. If the WRU wants public support for a reduction to three professional teams, it needs to be much more transparent about why that reduction is financially necessary.
Last year, the governing body provided the four professional clubs with £27 million. It was not enough to make them competitive. Indeed, if Wales wants four sides capable of succeeding at the highest level, the regions are probably short of somewhere between £15 million and £20 million in additional investment. That is an enormous sum, and it is also the uncomfortable reality at the heart of this debate: simply keeping four teams alive is not the same as having four teams capable of competing.
Uncertainty and the future
There is another decision that will continue to hang over the WRU. The governing body has chosen to retain ownership of Cardiff. Would Welsh rugby have been better served had it sold the club to the Hollywood consortium which had presented ambitious and potentially lucrative plans for its future? That question will not disappear simply because the sale did.
The bigger issue is that Welsh rugby is now stuck in limbo. The appointment of a new WRU chair could come as late as November. The workshops with the regions do not begin until December. Until then, the four clubs are left preparing for a future they cannot properly plan for. Players, coaches and staff are being asked to operate against a backdrop of existential uncertainty. Supporters are being asked to accept that something must change without being given the full financial case for why it must change. And the Ospreys and Scarlets are left knowing that, for one of them, the future may ultimately be decided not on the field but in a boardroom.
A reduction to three teams may indeed be necessary. This writer has previously argued that it could be, given the lack of investment and poor performances across Welsh professional rugby over a number of years. But if that is where Welsh rugby is heading, the WRU has a responsibility to make the case properly. It needs to show the numbers and it needs to explain the choices. And, above all, it needs to be transparent about the financial reality. Because if the argument is that Wales simply cannot afford four professional teams, and only one in the west, then supporters deserve to know exactly why. Until they do, the union will never escape the doom cycle of mistrust and anger.
For now, Welsh professional rugby remains in purgatory. And the bill for deciding its future has yet to be presented in full. The WRU has set Wales the target of being a top-five nation by 2029. Two years ago, it was unclear how that would be achieved. Today, it is even less clear.
