156-year-old rugby club Wasps suspended indefinitely and relegated for going into administration

Wasps, the debt-ridden former European champions, pulled out of Saturday’s game against Exeter Chiefs after running out of time to secure a rescue package and with “insufficient cash to continue to fund operations”.

The Times revealed on September 21 that Wasps Holdings had triggered an insolvency process after HM Revenue & Customs announced its intention to issue a winding-up order over a £2 million tax bill. The club had also defaulted on a £35 million retail bond that was due to be repaid with 6.5 per cent interest in May.

Wasps bought themselves time by filing successive notices of intention to appoint an administrator in the High Court. That protection expires on Monday and Wasps conceded yesterday (Wednesday) that they would not find a solvent solution in time. RFU regulations, which have already been applied to Worcester, state that a club going into administration are automatically relegated, barring a successful appeal on the grounds of a “no fault” insolvency.

“It has become clear that there is likely to be insufficient time to find a solvent solution for the companies within the group, and it is therefore likely that they will enter into administration in the coming days with a view to concluding deals shortly thereafter,” Wasps Holdings, which oversees the men’s and women’s rugby teams, the netball team and the CBS Arena, said in a statement, adding, “while the companies within the group all represent strong and viable businesses, the reality is that they have insufficient cash at this time to continue to fund operations until these complex negotiations have concluded. We have therefore been asking potential funders and investors to provide bridging finance to provide enough time for a solvent solution to be found.

“Regrettably, this has not been possible to date, although we will continue to pursue this until the very last opportunity. We have therefore taken the decision to withdraw the Wasps men’s team from this Saturday’s league fixture.

“This was an extremely difficult decision to make and we recognise that this will not only impact on our players, staff and supporters, but also Exeter Chiefs and the wider rugby community.

“However, we strongly believe it is the right course of action when, at this time, we are unable to meet our regulatory requirements in the absence of fully concluded deal negotiations.”

Worcester were suspended for the season because the complexity of the business arrangements at Sixways Stadium meant there was no prospect of a quick sale, plus they had no players or staff under contract.

The RFU could lift the suspension on Wasps if new owners took charge and demonstrated that all rugby creditors had been paid.

There are up to five parties interested in Wasps. David Armstrong, a former chief executive of the club, is involved with an investment company who would be prepared to buy the club out of administration.

Wasps have also reportedly been in talks with Mike Ashley, the former owner of Newcastle United, and NEC Group, whose interest appears to be in the CBS Arena in Coventry and not the rugby club.

One of the critical factors in any sale, however, is what happens to Wasps’ share in the league (P share), which guarantees them access to central funding. The other clubs have a right to buy a P share for £9.8 million.

Although doing so would force clubs to adjust their own balance sheets, where the P share is valued at closer to £20 million, there is also a mood not to allow Wasps or Worcester to take the hit of relegation for one year but shed their debts and still retain a slice of central funding.

“Worcester and Wasps are at the hearts of our communities and deserve a future,” the two clubs said in a joint statement. “We are at the mercy of the clubs and Premiership Rugby. Don’t take our P share.”

The Premiership has lost clubs before – Richmond and London Scottish ceased to exist as professional sides after the 1999 campaign – but this is on a different scale, not only because it has happened mid-season but because Wasps are one of the most successful and historic clubs in the world.

Founded in 1866, initially as Hampstead Football Club, they are one of only four clubs to have been ever-present in the top flight. They have been English champions six times and conquered Europe twice, winning the Heineken Champions Cup in 2004 and 2007.

Exeter will play Bristol Bears on Saturday in a friendly to militate against potential lost revenue on the day of about £500,000.

Rugby stands silent as Wasps go to the wall

By Owen Slot

As Wasps go through their death throes, does everyone else just stand by and watch? Because that is how it seems.

Do we even need to spell out the vast significance of Wasps as a club, their history, their contribution to club rugby in England, their contribution to the England (and other national) teams, their nearly peerless track record of success? In the 36 seasons of Premiership rugby, Wasps are one of four clubs who have been ever present, and only Leicester Tigers have won more titles; Wasps are also twice champions of Europe.

This is what the Premiership is saying goodbye to, though no one is really saying anything. As Steve Diamond, who was director of rugby at Worcester Warriors when they finally bit the dust a fortnight ago, said: “The ship has sunk, the captains are nowhere to be seen. The RFU/PRL [Premiership Rugby Ltd] band played in the background.”

You wonder where CVC, the private equity company, has got to too. It is nearly four years since CVC bought a 27 per cent share of the Premiership. It has never publicly explained why, or what was – or is – its intention with this acquisition. In recent weeks, it has lost two of the 13 clubs. Why was there no rescue package coming to the assistance of two of its assets? From CVC, not even a word.

Rugby, like all professional sports, thrives on rivalries. Yet the Premiership has just lost one of its most historic brands, every other club have lost one of their biggest home fixtures. The broadcasters have lost the opportunity to show them.

Wasps finally declared on Wednesday that they were unable to pay their bills and are therefore destined for administration. It would have helped for them to have some time while they negotiated further with potential suitors, but they needed to buy that time. They needed some kind of a cash runway while they searched for a solvent solution. Could CVC not have provided that?

This is where sport is complicated. Buying into a sport is more than a business deal. You are buying into the hopes and dreams of fans, you are buying into a community activity; your clients are not just paying punters, because they share a culture of emotional ownership; in other words, you, the owners, are custodians as well as business people. How does CVC’s custodianship look today?

It turns out that Wasps, their brand and history, were not worth saving. The next issue is whether the other clubs are prepared to give Wasps and Worcester even a pulse.

Once a Premiership club go into administration, the other 12 clubs have the opportunity to decide whether to buy out their P share. The P share is in effect your golden ticket, your access to the cashflow system. That is why clubs from outside the Premiership find it impossible to break in – because they have no P share. It will cost £9.8 million to buy each of Wasps and Worcester out of their P shares; at that point, they will find it impossible to come back out of administration and break back in.

The other Premiership clubs prodding the carcass of Wasps and Worcester is like a starving family debating whether to eat its weakest family members. If they share round the value of the Wasps and Worcester P shares then, naturally, the value of the annual P share dividend that they each accrue themselves is greater. Kill off Wasps and Worcester, in other words, and we all get fatter.

I suspect that this is where the Premiership is going. It is an entirely Darwinian approach, but when did clubs work together to look after themselves? The levels of debt across the (surviving) clubs are such that they are motivated by selfish priorities rather than the collective good.

This is the terrible, harsh reality of professional club rugby in England. One of the greatest clubs have hit the wall, the captains are still nowhere to be seen and the band still plays on in the background.

– The Times

Originally published as 156-year-old rugby club Wasps suspended indefinitely and relegated for going into administration