So, some 20 days on from the dropping of the bombshell, just where do we stand now? What exactly is the future for regional rugby in Wales?
Well, the first thing to say is nothing has been decided yet. As one of my contacts succinctly put it today: “Meetings continue”. Indeed there’s another significant one planned for this week.
But what we do have now is a fresh backdrop in the wake of Nigel Walker’s appearance on ScrumV. It was the WRU performance director who straight away brought up the elephant in the studio by referencing the Oakwell Report into the finances of the game in Wales. It’s 85 pages long and contains a “whole raft of options” to use Walker’s words. But, inevitably, it was the option of axing one of the four regions that grabbed the headlines and set the agenda.
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Plenty of people have had their say on the matter over the past couple of weeks and the reaction to the proposal has been pretty much overwhelmingly negative. Now here we had a WRU official speaking about it for the first time.
Walker’s message was pretty clear. Nobody in Welsh rugby wants to go from four to three, not the regions, not the WRU. So there we are, that’s the end of the matter. Well, except it’s a bit more nuanced than that. Not wanting to do something is different from ruling it out altogether.
Walker’s final words are worth revisiting. He said: “We’ve got to find a structure which works and we’ve got to able to fund it at the appropriate level to keep four regions going forward.” Now that you can read lots of different ways.
For me, it raises a key question. Is Welsh rugby able to fund four regions to “an appropriate level”? If the answer to that is no, then what do you do? Presumably the concern over whether that is possible is why cutting to three was suggested in the Oakwell Report. In pure economic terms, it was somewhat inevitable it would be raised given the available finances.
But, of course, it’s not just about economics. It’s also hugely political and highly emotive. As the past couple of weeks have shown, cutting to three would be a seismic move.
There’s a widespread view that reducing the player pool to such an extent could be deeply damaging from a rugby perspective. There’s also the human element in terms of this being people’s livelihoods we are talking about and also the extent to which loyal supporters have invested in the respective regions over the years.
You can also question whether it really would stack up financially, as you would have a lot of people to pay off, plus there would probably be compensation to URC for not fulfilling the obligation of providing four teams, while competition and TV income would also decrease. There is the potential for operating savings evaporating amid costs.
There’s also the practical issues. You are not going to get one of the four regions willingly falling on their sword, in turkey-voting-for-Christmas style. As Walker says, the desire of the Professional Rugby Board - which features representatives from the pro teams - is to maintain four regions. So the PRB isn’t going to be voting for ditching one of them.
Of course, that isn’t necessarily the end of the matter. The ultimate power lies with the WRU board, on which the community clubs hold the majority. The Union executive - headed up by CEO Steve Phillips - could in theory go to them and seek approval for cutting to three teams. Ditching one of the independent teams could prove problematic and messy, with legal obstacles to overcome, which has led people to see the WRU-owned Dragons as the most vulnerable outfit.
So could it happen? Well, it’s not impossible, but it doesn’t seem the likeliest course of events, given the scale of the opposition to the idea and the various public pronouncements.
The general impression I am getting is we will continue with four teams, while potentially restructuring the funding model. On the subject of which, there’s a new ‘R’ word in Welsh rugby - roles. It has been mentioned a few times over the last week or so.
The statement from the PRB in the wake of the leaking of the Oakwell Report was that it was “committed to working together to ensure all four regions continue to play important roles in the professional game”. You then had Dragons chairman David Buttress saying all four teams have “a different role” and “a different purpose”. And now Nigel Walker has chimed in on a similar note, saying the PRB were looking carefully at what the roles of the regions should be.
So what’s this all about? Why has it suddenly become the buzz word? Well, it could be seen as some form of code, pointing at a remodelling of the funding formula. Now we’ve been down this path before, with talk of a 2+2 system, with two of regions selected for enhanced funding. There have also been rumours of a 3+1 or even a 1+3 creating a Welsh Leinster. Choose your equation of preference.
But, once again, the problem is reaching agreement. It’s hard to see two of the sides voluntarily agreeing to secondary status in funding terms or any of them accepting a development region role. Ospreys chief executive Nick Garcia has made it clear he feels it should be a level playing field on the funding front while Dragons boss Buttress has dismissed the notion of a development team.
With the regions unlikely to reach unanimous agreement on a radical redistribution of funds, it would again have to come down to the WRU enforcing a policy change, with all the resultant outcry, so not an easy one.
As things stand, the way the available pot of cash is divided up relies heavily on the make up of the elite group of 38 home-based players chosen each year by Wayne Pivac. Essentially, the more players you have in the 38, the bigger the slice of the financial pie you receive. That system looks likely to continue as the Union are keen on it, although it remains to be seen whether it will be amended or modified.
The WRU payment pot for next season is expected to be around the £22m or £23m mark, which is pretty much the same as it was this term. We wait to learn whether there be will any kind of different model moving forward, in terms of how the cash is split up.
But there is an argument that if the overall amount of money stays the same, then cutting the cake up differently is just rearranging the deckchairs on the Titanic having failed to navigate past the iceberg. Or, to put it another way, it’s applying fudging to the cake.
All of which brings us on to the age-old question of whether the pot of money should be increased and whether the regions are receiving sufficient financial backing from the WRU, with the contrast with the IRFU funding for the Irish provinces often being raised.
Now there appears to be a clear recent narrative from the Union that their funding of the regions is actually on a similar scale to the IRFU, with Walker saying it was within one per cent. What we need to see then is the figures. It’s very difficult to work out from the IRFU accounts just how much of its expenditure on the pro game goes on the provinces.
If the WRU are claiming a similar spend, then we need the details really. Some transparency on this subject would be very welcome. The Union may well point to much of the Irish provinces’ income being self-generated via gate receipts and commercial activity, but that’s a legacy of sustained success which, in turn, is a legacy of sustained IRFU investment over many years.
On the finances, it would also be good to know just what is happening with the £51m of CVC Six Nations money that the WRU is receiving. Steve Phillips said the plan was for the bulk of it to be spent on capital projects. Is that still the case? It didn’t go towards the much-criticised Parkgate Hotel project as that pre-dated the CVC money coming on line. So where is it going? Is any of it going in the PRB pot given the pressing need for investment in the pro teams?
The reality is there doesn’t seem much chance of the payment pot being swelled in the foreseeable future, so where do we go from here? Well, one way of sustaining four teams amid flatlining income is reducing costs. We are already seeing that happening with the regions cutting the size of their squads amid mass departures. One other way of doing it is by driving down salaries, so we wait to see what will happen on that front, with the wage banding system. You can see a fair bit of cloth-cutting coming up over the next few years.
In the short term, there are some significant cash-flow issues on the horizon. The losses accrued by the regions through Covid are sizeable and there are no more emergency grants coming on stream, while they have that much-debated £20m loan to pay off.
It’s a really challenging situation and they could do with help to keep their heads above water. According to the WRU accounts, the Union do have a multi-million pound borrowing facility and they may well need to utilise that to navigate the regions through some very choppy waters.
So the sense I get is the focus is likely to be on surviving the next couple of years with four teams intact. That’s the short-term objective and, in tandem with that, there’s a longer term aim of establishing a sustainable financial model. It’s easier said than done, of course, and, as ever, there are big, big decisions to be made.
