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Home » WRU Chair Richard Collier-Keywood Confident On Debt Deal With Welsh Government

WRU Chair Richard Collier-Keywood Confident On Debt Deal With Welsh Government

Chairman of the Welsh Rugby Union, Richard Collier-Keywood, is confident the union will be able to negotiate breathing space on millions of pounds of debt it has with both the Welsh Government and NatWest.

Addressing a meeting of Cardiff Business Club he also said the union has insurance provision to cover any financial payments arising from an at current early stage civil action being brought by former players diagnosed with neurological conditions, which they claim was the result of cumulative concussions and sub-concussions suffered during their playing careers.

The action against the WRU, RFU and World Cup, involves several hundred former players, including Ryan Jones and Alix Popham. It is being driven in England and Wales – due to the same legal system – by law firm Rylands Garth on a no win no fee basis.

The union currently has commercial loans amounting to around £30m with its long-term funder in NatWest and the Welsh Government. The Cardiff Bay administration provided a commercial loan of around £18m in 2022 after refinancing a Coronavirus Large Business Interruption Loans Scheme (CLBILS) funding package the union had with NatWest. The WRU passed through the loan roughly equally to the four Welsh regions in Cardiff, the Dragons, Ospreys and Scarlets, who are liable for the interest and capital repayments.

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The Welsh Government debt was negotiated at the current Bank of England base rate (then 0.25% but now 5.25%) plus a 3% margin. The regions are now faced with an interest rate north of 8%, which with capital repayments, means collectively they have an annual financing bill of around £1.5m. As of the end of June 2023, the Welsh Government debt had been reduced to £13.8m after the WRU negotiated a new lending facility (E) of £4.9m with NatWest to partly refinance it. The WRU also utilised the facility to refinance a £2m loan it had passed through to the regions from World Rugby which was provided in response to the pandemic

The Welsh Government’s position is as it is a commercial loan, it had to be priced at market rates. The regions and the union, possibly on cost, didn’t take out a protective hedge. In England the Premiership clubs received Covid recovery loans, via the UK Government’s Department for Culture Media and Sport, fixed at just 2% and repayable in 2032.

However, the Welsh Government did provide the union and the four regions £13.5m in non-repayable finance for the loss of match income during the pandemic. Having initially declined to move on the terms, the Welsh Government, which was advised on the structure of the debt by the Development Bank of Wales, is now in talks with the union over reducing its financial impact on the regions. The Welsh Government reduced the repayment period for the loan from 2040 to 2029. Its funding for the WRU came from its Financial Transactions Capital (FTC) facility from the Treasury, which the Cardiff Bay administration doesn’t incur any interest on. All it has to do is repay the capital over the long-term.

While Mr Collier-Keywood was unable to comment on the details on any revised funding deals, it could potentially see NatWest and the Welsh Government agreeing interest and capital payment relief for a period of time, while the union looks to drive commercial revenues. For context the Welsh Government has written off significant debt it has provided Cardiff Airport, which it wholly owns. The airport’s remaining debt of around £31m, will not see accrued interest and capital payments commencing until 2031.

In a question and answer session following his address Mr Collier-Keywood, a former managing partner of PwC in the UK, said: “At the moment we are suffering from around £30m of hangover Covid commercial debt from NatWest and Welsh Government and we have been asking the Welsh Government to give us some breathing space in relation to that loan and also NatWest. What I can tell you is that we are likely to be successful in parts, which is very positive. It would give us a bit of breathing space that will enable us to bring out our new strategy in June and we can then have further conversations about what is the shape of our balance sheet going forward.”

On the head injury legal action, the chairman said: “A number of ex-players have claimed significant harm arising from being involved in the game of rugby. That is a case at an early stage and from a financial perspective I am pretty reassured that we have insurance against it. I have spent time with our insurers trying to understand the complexity and how you keep this over multi-years, but I am pretty convinced from a financial perspective that we are protected.”

He added: “However, the bigger risk is actually to participation levels in the game and we are actively looking at many things that we think can change some of that. Obviously the mouth guards (smart technology) help considerably in looking at head acceleration.”

He said a lower tackle height requirement was being well policed by referees. He added: “We are also looking at how we make it as safe as possible at a club level and a real understanding of what the issues are and making sure the referees across the community game in Wales are right on top of those issues.

” I don’t believe rugby is any more dangerous than any other sports, but it is convincing mums and dads to put their young ones into rugby and I recognise with high profile cases that will be more difficult. We are taking steps to manage that case and interestingly now is the time when the people bringing the case against us have to put in their medical records, but so far we have had zero. We are not complacent about it and there is lots to do.”

A new strategic plan for Welsh rugby will be published this summer. The union is being supported by global management consultancy Portas Consulting on the review.

Last year the regions and the WRU, through the Professional Rugby Board, agreed to reduce the international cap rule from 60 to 25. Players leaving Wales on fewer caps, or those in England or elsewhere negotiating new contracts when still below the required number, will be ineligible to play for the national team.”

The regions, having invested in player development, see it (25 cap rule) as a means of trying to prevent a drain of talent to higher paying salary clubs in England, but also in France and Japan where wages are considerably higher – even in the French second division.

From next season, outside of two marquee signings, the four regions have agreed to player squad budgets of £4.5m. A region could increase that if approved by the others.

Mr Collier-Keywood said: “There are a lot of different opinions on this and the balance is clubs have invested a lot in their players and therefore their needs to a way of constraining them from playing abroad. You can argue whether that is a good strategy or not and that is something we are looking at the moment as part of the strategy review and you will get a proper answer from me on that in a few months time.

“There is also a broader point which is to play in Wales has to be a great offering for players. Most people who are Welsh want to play for Wales rather than anywhere else (those under World Rugby rules that could play for another or other nations), but we cannot be complacent about that. We have to look at the overall player welfare and life cycle as well.

” One of the things we will be talking about more in our strategy is how we make it attractive to be in Wales, which is really important to us going forward. What is the average life cycle of a player? It is somewhere between the ages of 30 and 35 and there is a lot of life left in those players post that date. So, how do we help them with a post rugby career and how do we look after them from a medical perspective. All of those are issues that we are looking at right now to create a differential offer in Wales for players.”

On closer alignment between the national, regional and community game he said: “We are trying to have a single rugby strategy across the whole of Wales. What struck me when I took on this role was how incredibly fractured it was, with lots of dissatisfaction in rugby clubs all across Wales. We have been working really hard to make sure it is more connected. Today we have a much more joined up strategy and will be announcing that before the end of June on where that is going with a big exercise at the moment involving all the regions. We are also investing in women’s rugby. We still have some challenges and acknowledge that we do need to put more money into it, but it is a great opportunity for us going forward.

On Welsh rugby supporters he said : “We have the most emotionally engaged fan base in the world and I get lots of advice day in day out, which is super helpful. I try to respond to every note I get. It is really important that we engage and as we have a fantastic fan base not just in Wales, but beyond with around three million diaspora which is a really important part of our fan base.”

On the Principality Stadium, he said: “It is a wonderful asset in the stadium. I talk to many people in similar roles around the world and they don’t have an asset which we don’t have a mortgage against that we can use to generate money.”

We have some great concerts coming to the stadium and that illustrates just how important that is to Cardiff and Wales. We have a huge economic impact on the Welsh economy, not just through the stadium but also the 282 rugby clubs that we are responsible for throughout Wales.”

The union is expected to announce a new finance director shortly, while it is also recruiting for a new chief growth officer to drive its revenue line.

On the national coach the chairman said: “We do have undoubtedly one of the best coaches in the world in Warren Gatland.”