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Backing for Welsh Rugby Union’s radical plans for elite game
Leonard Curtis director and ex-rugby player Alex Cadwallader supports WRU’s proposal to cut number of professional clubs
• Former Newport winger Cadwallader says it will be a “daunting time for the players” amid uncertainty but says a “reality check” is needed due to deep financial challenges for the Welsh game.
• With the Premiership also struggling to be financially sustainable, Cadwallader believes major changes are needed in the English professional game as well, as clubs continue to rely heavily on owner funding.
Alex Cadwallader, a Leonard Curtis director and former England U21 rugby union player, has backed the Welsh Rugby Union (WRU)’s plans to make radical changes to the elite game, and warned that professional rugby in both England and Wales requires a “reality check” amid serious financial challenges.
The WRU has proposed cutting the number of professional clubs from four to two, with the other options on the table being to keep four professional clubs, but with unequal funding, or to have three professional clubs with either equal or unequal funding.
The prospect of dramatic changes in Welsh rugby comes amid major concerns over the financial sustainability of the game in the country, and follows a marked decline in performances on the pitch from the Wales men’s team and the regional clubs.
A formal consultation period canvassing views from players, professional clubs, fans and community clubs begins on 1st September, with the WRU due to make a decision in October.
The governing body is in favour of halving the number of professional clubs, and has said the move “would release significant investment” for the wider game. The proposal, which puts Cardiff, Dragons, Ospreys and Scarlets at risk, is being met with fierce opposition from three of those teams. Cardiff went into administration in April before the business and assets were acquired by the WRU to “rescue” the club.
Cadwallader, who played professionally for Newport before the shift to four regional teams in Wales occurred in 2003, said the coming weeks will be a “daunting time for the players.”
He said: “When I was at Newport I was aware of the first regional rejig taking place, and it is concerning for a player. You are worried about your livelihood, and where you're going to be employed. It is difficult – there is a lot of emotion attached to that, and it is challenging to look at the bigger picture.”
Need for change amid financial difficulties
However, Cadwallader – who also played for Newcastle, Bristol and London Welsh over a 10-year career and is now a well-respected restructuring adviser for Leonard Curtis – stressed that “what the real focus has to be, and what the WRU and [director of rugby and elite performance] Dave Reddin are clearly trying to achieve is to put something together that is sustainable.”
He added: “My message, and it’s similar to what we've seen in England, is that changes do need to be made, because what we do know, the one certainty we do have, is that both models, in England and Wales, do not currently work and cannot continue. And another mid-season administration would be much more damaging than a planned restructuring.”
Cadwallader’s comments follow the publication last September of the inaugural edition of the Leonard Curtis Rugby Finance Report, which featured the first-ever comprehensive index of the financial health of clubs in the Premiership.
The report found that in 2022/23, seven of the ten clubs could be classed as balance sheet insolvent, meaning they were reliant on financial support from their owners, as they were also loss-making.
Clubs racked up total losses across the league of £30.5 million during the year, with no team posting a profit, while the combined debt level across the Premiership amounted to £311.5 million.
The clubs’ financial data for 2023/24 will be included in the next edition of the report, which will be published this autumn.
Unsustainable model
Cadwallader said: “Our first report showed that the ten Premiership clubs currently adopt a model that produces on average a £3 million annual loss per club, which means the benefactors behind those teams are having to provide further funding every year just to keep those clubs going. So, clearly, that is unsustainable.”
With the financial difficulties facing the club game in England showing little sign of easing, there have been growing calls for change, and proposals emerged in April for Premiership Rugby to adopt a new franchise model, a move supported by Cadwallader.
Under the proposals, the league would reportedly abolish relegation but maintain promotion to support an expansion to at least 12 teams, and possibly 14 or even more.
Stark financial challenges in Wales
Cadwallader noted that the financial challenges facing the game are even more stark in Wales, and have persisted despite the salary cap for the regional clubs being slashed from £7.2 million to the current £4.5 million following changes made in 2023.
The annual revenues of the Welsh regional clubs are typically around £10-11 million, often failing to match even the sides with the lowest income in England, who in 2022/23 were Newcastle Falcons (£11.2 million) and Sale Sharks (£11.7 million).
Five Premiership clubs had revenues of at least £21 million that year, with Harlequins topping the list on £26.8 million, followed by Saracens on £23.2 million.
Cadwallader said: “As [WRU CEO] Abi Tierney has flagged, ultimately those are hard, cold facts that can't be ignored. If the game isn't generating revenues to a certain level, you can't have costs to match the other leagues.
“So for me, what needs to happen is a bit of a reality check and to put a business model in place that matches what your revenue is. And that's clearly what the WRU have tried to do.
“It would be great if the WRU was able to find a model that works and perhaps find a platform for the game to grow and add another region in time. Other leagues could then learn from them.”
French broadcast deal
Cadwallader stressed that for the game in England, major changes are also needed as clubs continue to struggle financially.
“Clearly the English model tries to follow the French model, but the game is just substantially bigger in France than it is in England and Wales,” he said. “If you look at the size of their broadcast deal, it dwarfs the deal for the English clubs.”
While Premiership Rugby has struck a new five-year broadcast agreement with TNT Sports reportedly worth around £40 million per year, in France the latest combined deal for the Top 14 and second division Pro D2 is worth €139.4 million a year.
“This is even before we consider the stark difference between attending a match in Bordeaux to Rodney Parade in Newport,” he added. “As commercial enterprises they are very different. We simply have to accept that the revenue generated in France can't currently be replicated in England and Wales.”
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