The Welsh Rugby Union has reported losses of £18m, highlighting the financial challenges facing the governing body as it prepares to reduce the number of professional teams from four to three.
In an interview with WalesOnline, WRU chief operating officer Gavin Marshall detailed the union's financial position, outlined plans for Cardiff Rugby and addressed the £10m United Rugby Championship deal that has sparked controversy.
Cardiff Rugby ownership and future sale
The WRU has owned Cardiff Rugby since the club entered administration in April 2024. According to the latest accounts, the club posted £1.2m worth of losses, which Marshall noted is not bad in comparison to other professional rugby clubs.
The union initially sought to sell the club to Ospreys owners Y11 Sports & Media, but the proposed deal collapsed. A consortium featuring three prominent Hollywood producers were also interested, only for the WRU to take Cardiff off the market. That consortium, which includes former Cardiff director Martyn Ryan and Rhino owner Reg Clark, remains interested in buying the club.
Marshall revealed the WRU's long-term goal is to return Cardiff to private ownership.
"We tried to sell Cardiff and we didn't feel that we found the right buyer," he said. "We went through that process and decided not to sell Cardiff."
"The strategy is not to own Cardiff. What decision we made was that while we're in this restructure, and while we're in this level of uncertainty it's a tough, tough environment to try and sell a professional club."
"So I think what we said is, 'let's get through this, get through this restructure, and as soon as we're through the restructure and there's certainty on Welsh rugby on the clubs going forward, then we'll sell Cardiff.' That will enable us to find the right buyer for Cardiff and get the right value for Cardiff, so we're able to invest in Welsh rugby."
The Hollywood consortium's ambitions for Cardiff extended beyond the pitch, with plans to develop a scripted television drama set in the Welsh capital while transforming the club's marketing and commercial reach. The group has previously engaged bankers from Rothschild to represent them in talks aimed at reopening the sale process.
URC share sale and £9.6m windfall
Last week ITV reported the WRU received nearly £10m from a deal involving the United Rugby Championship. The league's shareholders are the five national rugby unions and private equity firm CVC Capital Partners.
An Irish company filing shows that Pro Rugby Championship DAC, the company that operates the competition, issued 1,378 new shares to Pentagon UK Bidco, a CVC-controlled entity, in September. The move increased Pentagon's stake, while Celtic Rugby DAC, which represents the unions' interests, remained the other shareholder.
Marshall confirmed the governing body sold off some of its shares in the URC along with the other shareholders.
"There was a commercially sensitive transaction that the URC took out," he said. "We, CVC and all of the governing bodies who participate in the URC, who are shareholders in the URC received monies as a result of that."
"So we sold off some of the shares. We did receive £9.6m and that is obviously helpful in terms of the money that we have that we're able to invest in Welsh rugby. But it was a one-off transaction that happened last month which we weren't directly involved in but we benefited from a cash perspective."
Some figures within Wales' four professional clubs claim they were unaware of the transaction and believe the money should instead be directed towards the teams. Marshall confirmed that a portion of the proceeds would be distributed to the four professional clubs.
"We've got reduced shareholding now and there's new shares in the URC, the clubs will be worse off in terms of the competition income they receive because they own less," he said. "So what I've said to the clubs is that we'll make them good, so they won't be worse off. So out of that money, we will increase their funding that we give them over and above PRA 25 so they're not any worse off as a result of this transaction."
Financial losses and the move to three professional teams
The WRU posted a loss of £18m despite turnover rising £10m to £116.2m, while EBITDA (earnings before interest, tax, depreciation and amortisation, and before rugby allocations and exceptional costs) fell from £32.8m to £19.7m. Excluding the impact of owning Cardiff Rugby, EBITDA reduced from £35.2m to £28.5m.
The WRU attributes this partly to rising energy and staffing costs combined with falling ticket sales and reduced fan spend. Marshall is adamant there is no realistic prospect of funding four strong professional clubs along with an improved pathway.
"We've made an EBITDA this year of £28m. Looking historically, post-COVID, we've made an EBITDA of around £30m," he said. "After that we need to cover any capital expenditure costs on the stadium, anything which typically are around £3-4m a year. We need to service our interest costs on our loan. We fund the community clubs which we funded to £4m this year."
"Then we've also got exceptional one-off costs which we indicate. If we improve these numbers that will leave us with around £20m to invest in professional rugby. At the moment, we're funding the professional clubs at £26m in terms of across the four clubs, and PRA 25."
"So from a financial perspective we just can't afford that level of funding which we're currently at. We're living beyond our means as shown by the loss we've made this year which is a significant loss."
Marshall was asked whether the WRU should revert to its original optimal solution of two professional clubs rather than three. He said: "It's not my role to say, and I leave that to the board and to the performance team in terms of how many teams. What I can say is we can't afford the level of funding that we're doing."
"I think we can have as many clubs as you like it's just how we fund those clubs and how competitive they can be under that level of funding, and the level of owner benefactor funding that goes into those clubs. I can look at it and say, 'look, at the moment we're not sustainable and we need to cut that.' We need to cut the amount that we're spending on professional rugby because we're making a significant loss and even though I'm ambitious and I can see growth and I know we'll improve, we've got a long way to go to improve by £18m."
Cost-cutting and accountability
Critics argue the WRU is bloated and could make significant savings by cutting its workforce. But Marshall believes even substantial reductions in headcount would not generate enough money to sustain four professional teams.
"I think when you post results like this you've got to look at all aspects," he said. "What I've said before is that from a commercial perspective I think we've got to get the balance right. We can't cut our way to success. We can't find £18m worth of cost savings. I think it's a balance between trying to grow our way out of this and trying to grow revenue."
Marshall conceded the WRU has to take some accountability for the financial situation but pointed out financial challenges are not unique to Wales.
"Yeah, of course there's always accountability," he said. "You've always got to look at your financial performance and look at where you can improve it, where you can do better, and maybe where you haven't done so well. I think of course as an exec team we're accountable for these numbers and we take accountability."
Wales are currently ranked 11th in the world, which has hit the WRU's ticket sales. Marshall noted the team has won three of its last five games and that Six Nations sales have started strongly.
"In terms of the Six Nations sales they've started really strongly. We expect to sell out for England in the next few weeks," he said. "We also expect Ireland to sell out and from a women's Six Nations our ticket sales are far stronger than any ticket sales we've ever had before for women's rugby. So we anticipate getting a record crowd next April for Wales v England."
