Premiership clubs face losing out on millions in central funding because of a clause in the longstanding agreement with the Rugby Football Union which will become active at the end of the coronavirus pandemic-interrupted season. A significant shortfall could prove fatal for some clubs, with at least one thought to be in danger of going bust if the lockdown extends through the summer.
Under the eight-year Professional Game Agreement, signed in 2016 between Premiership Rugby Limited (PRL) and the RFU, clubs are guaranteed funding from the union each season. For the first four, they have received a fixed amount and £25.5m for this campaign. But as of next term that sum becomes variable and, crucially, is based on the RFU’s revenues.
It is understood the exact figure for next season is still being discussed, but the RFU is forecasting losses of up to £50m over the next 18 months and that is on the basis that England’s four autumn internationals at Twickenham will go ahead.
Premiership clubs have already imposed 25% wage cuts on players, with many putting staff on furlough. Saracens have implemented 90% wage deferrals for top earners such as England captain Owen Farrell, with PRL holding back funding from the clubs in the absence of matches.
Bill Sweeney, the RFU’s chief executive, has already ruled out a rescue package for the clubs and with the nature of the union’s agreement with the Premiership due to change, some of rugby’s biggest clubs may be pushed closer to the brink.
The RFU remains optimistic that England’s autumn Tests will go ahead, and there are contingency plans for another Six Nations competition if the southern hemisphere teams do not travel north.
However, World Rugby says there is a “distinct possibility” there will be no more Tests this year and, even if there are, they would likely be played behind closed doors. That would deliver another hit to the RFU’s revenues through ticket sales, hospitality, and potentially sponsorship and broadcast deals.
Negotiations over TV rights for the Six Nations and the autumn internationals have stalled, along with the proposed £300m deal with the private equity company CVC, as a result of the pandemic, and while Quilter is due to sponsor this year’s November Tests, Sweeney confirmed that deal would not be renewed last year.
Quilter could also expect a rebate if the autumn internationals are cancelled and a Six Nations, sponsored by Guinness, takes place instead.
The picture is bleaker still for the RFU because it is understood the union does not have the kind of pandemic insurance taken out by the All England Club and the ECB.
Given that grim financial outlook, a cut in Premiership funding in the coming seasons appears likely, all the more so given that the Professional Game Agreement was identified as a key reason for the RFU making a loss of £30.9m in November 2018. In his parting shot before being leaving the RFU, the former chief executive Steve Brown said: “There’s a lot of reasons why you might say it’s expensive.”
The clubs may, however, have one significant bargaining chip because the Professional Game Agreement governs Eddie Jones’s access to his England players for the Six Nations, summer tours and autumn internationals.
It ensures Jones can have his players for rescheduled Six Nations matches, if their postponed fixture against Italy takes place in October. However, it is believed there is no such provision for rearranged summer tours. Sweeney has suggested that England could yet tour Japan in October, assuming their July Tests are called off, while an autumn Six Nations would also require additional access to players.