No voice, no choice and £16.6M worse off

David Moffett reveals the financial scandal at the heart of Welsh Rugby.

How much money has been denied to clubs at all levels of Welsh Rugby since the Board decided to pay off debts quicker? A whopping £16.6 million!

Without asking the clubs, the Board sanctioned a programme to accelerate debt repayment to its bankers. They used THE CLUBS money, but didn’t consult them.

At the same time, the salaries of the Chairman and CEO have risen by 67% from £229,000 to £383,000, wage costs across the WRU have gone up by 50% and cost per employee has risen by 20% – an increase equivalent to £7,355 per person.

And in a blatant attempt to misdirect clubs, they recently announced a so-called “multi-million pound” increase to their funding (from July 2014) that actually equates to a pitiful £938 per club.

After “two succesful negotiations” with its bankers, the WRU has more than DOUBLED its borrowing costs.

They will tell you that the actual interest rate they now pay has fallen by 37%, but let me remind you that bank base rates have fallen by 89% over the same period.

According to the WRU, “the current loan arrangement delivers the best deal for Welsh rugby”.

What do you think? Does my financial expose back in February now appear to be as “inaccurate” and “scurrilous” as they branded it?

And on the subject of inaccuracies, are you aware that there is an ongoing investigation into the WRUs accounts by the UKs independent regulator ? It is alleged that the WRU’s 2013 accounts are materially incorrect and that profit has been understated by £1 million, amongst other things. This is an extremely serious issue.

The WRU wrote to clubs on 20th February 2014 to say that a response to my financial expose would be made available through their district representatives who are, of course, also their WRU Board members. As of 7th June 2014, no such response has been forthcoming, despite numerous requests by many clubs.

Why? Because the Board don’t want anyone to look further into my claims.

If the WRU had followed the financing plan that existed when I left back in 2005, they would have had approximately £16.6m more cash at their disposal.

Right now, and by their own admission, they have no cash reserves AT ALL. It’s why they had to go begging to sponsors for extra money to fund the embarassingly unsuccesful programme of central contracts.

It is highly irregular and a matter of huge concern that a company turning over £60 million does not have ANY cash reserves.

Where has all the cash gone? Well you don’t have to be a genius to work out that it has ALL gone to pay off the debt early.

This will be news and BAD NEWS at that, for all the clubs of Wales. Why?

Because the clubs were never consulted over the decision to repay the debt early.

Because it is clear that if this information got out there would be wholesale revolt.

Because The Board either knew of this £16.6M or more likely they did not and were not interested enough in the welfare of the clubs to demand the information.

Because if the CEO (Roger Lewis) and Finance Director (Martin Davies) knew of this £16.6M and withheld it from the Board that would trigger a call for their dismissal.

So, either David Pickering, Roger Lewis, Martin Davies and The Board were aware of this £16.6M or they were not. Either way they are culpable of keeping the game poor throughout an extremely difficult period for all clubs in Wales.

On this basis alone the Chairman, Board, CEO and Finance Director should immediately resign even before the EGM. Their actions are completely unforgivable and they need to pay the ultimate price.

What could the WRU have practically done to help clubs with this huge sum of money instead of paying off debt early?

Well, after shoring up the currently non-existant cash reserves, I calculate that £11 million could have been invested back into Welsh Rugby, or £34,375 per club.

That desperately-needed money could have resulted in core grants to clubs being significantly increased, or the WRU could have issued more 100% grants. How many clubs have not bothered to apply for money knowing that they cannot secure the required match funding, particularly during the recent challenging economic climate?

If the WRU tempered their focus on capital expenditure projects, they might have allowed clubs to apply for financial assistance to pay for clubhouse repairs (wear & tear) or painting & decorating. That would have been a huge practical help to the many Honorary Treasurers who struggle to balance the books season after season.

The WRU could have used that money to centrally source playing kit for every team in every club in the Union, using that buying power to secure the best deal available. What other buying power schemes could the WRU have created that would have been of significant value to clubs? All it would have taken is imagination, because the funds were there.

The WRU could have provided money to pay directly for training equipment such as ruck pads and scrum machines, or at the very least better quality rugby balls than they currently supply.

That money could have paid for 30 brand new 4G pitches throughout Wales for use by everyone, from seniors through to minis and juniors, or the WRU could have addressed the extreme shortage of floodlights.

Or they could have subsidised the exorbitant cost of hiring council pitches, and for those clubs lucky enough to own their pitches, assisted with maintenance costs and equipment replacement, or even the cost of marking pitches which is not insignificant.

Of course, the WRU could also have been even more focused on practical day-to-day issues, and offered to assist with the crippling utilities bills (gas, water & electricity) that clubs are incurring. Or even have helped with a contribution towards the costs of the expensive SKY TV licensing that many use to attract people into the club.

Some of the cash might have kept top professional players in Wales, kept us in the European Cup, or centrally contracted all of the National Squad. There are many ways to skin this cat(astrophe)

It’s not all doom and gloom though.

Roger Lewis in particular has done extremely well out of the WRU since his appointment. His salary has risen from an annual equivalent of £220,000 in 2007 to an eye-watering £337,000 in 2013. His pay even managed to increase when he was on sabbatical leave to run the ‘Yes’ campaign in 2011.

Finally, in a letter dated 9th April 2014, the WRU Chairman and CEO revealed a “multi million pound boost to the annual investment to the game in Wales”. The community game will benefit from a 13% increase to £2.6M from July 2014.

This actually represents an increase of just £938 per club, a grand total of £300,000, or the equivalent of sending the board, their wives, staff and others to 3 away games in the 6 Nations.

The community clubs will be delighted to learn that they will collectively be receiving LESS than the £3M the WRU spent on the recent refurbishment of Millennium Stadium’s Hospitality Boxes.

In their inimitable fashion the WRU will try and obfuscate and spin their way out of these issues.

The clubs must bring them to account next Sunday. IT IS THEIR ONLY CHANCE.

DAVID MOFFETT