Chasing the Punter

There is a lot of narrative in Welsh rugby about two of its core issues: crowd sizes and money. The less well informed look at crowd sizes in Ireland (well, in Limerick, Dublin and Belfast) with little comprehension to the size of the market and automatically assume that we in Wales should be able to match those crowd sizes. We see images of crowd sizes in days gone by and they are used as a stick to beat our pro teams as their crowd sizes don’t match up.

The root of that thinking, sadly, lies in the amateur era of the game and with a generation whose rugby viewing habits / demands / entitlement haven’t caught up with what rugby is nowadays: a business. Its money first, rugby second. As a nation (looking at it from a macro level) that kind of approach doesn’t sit well with us. Our rugby teams are being judged on some hazy memories of larger crowds in the 1980s where rugby was played at the same time each week and didn’t cost much to attend because the players weren’t, ahem, getting paid. And, of course, the games weren’t all televised.

So why are crowds for Ulster larger than crowds for Ospreys or Cardiff Blues? The same question goes for Leinster’s crowds and the same answer applies to both: there are more people in both those areas and they have more money. The populations of both Ulster and Leinster are over 2m, which is the entire population of South Wales and it serves four professional rugby teams rather than just one. The GDP per capita in Northern Ireland is c.£18,500 whereas in Wales it is £14,600. In Dublin it is significantly higher. So they have more people and they can afford to pay higher ticket prices. This is compounded in Dublin as there is no VAT on tickets as there is in Wales – so for every ticket you buy in Wales, the Government in London takes 20%.

In Wales, therefore, we have our own ‘triple lock’ problem. We have a generation living in the past who cannot understand that crowds in the old days had as many away as home team supporters (we get very few away supporters in 8 of the PrO’12 games), we have fewer people to draw upon than our competitors and we have an economy that means the retail customer is struggling the meet the cost of tickets and that struggle is compounded by most of the games being on free to air tv. Why shell out £50 plus to take you and your kids (to a 7pm kick off on a Friday which is a) probably too late for the kids or b) too difficult for you to get home from work, fed, grab the kids and get back out in time) when you can settle down to watch it for free in the warm and dry on your sofa?

Therefore, what is the point of chasing a retail income that has a tiny market and is relatively economically poor? Cardiff Blues recently released a statement to show its crowds were up 18% on last year for the 13 home games (the Os being played next door) this season. So I did a fag packet calculation of how much income was lost by NOT selling out every game:

I know the rough split of stand / terrace tickets. I g-estimated a crowd mix of 60% paying full price terrace, 30% senior, 10% junior and adjusted that slightly for Stand tickets. Working on that basis and using the published ticket prices on the website, I worked out that each retail ticket sold is worth £16.40 on average.

With a ground capacity of 12,200 and an average ticket sale of 7,019, the ‘missing revenue’ had each game been a sell out was £1.1m.

That’s a really important figure to note because the business lost £1.5m the season previous. This means that even had every ticket been sold – and remember that Connacht was played at 1pm on a Sunday lunchtime during the Six Nations – the business would still have lost money. On top of this, you must note that the spend on the squad is £1.5m to £2m per year short of what the top Irish sides spend.

So even if the team playing at CAP had 100% “affinity and unity” and had sold every retail ticket possible, it would have lost money on a squad that is decidedly mid table. Please remember this fact each time somebody mentions to you that there are hordes of people willing to spend their £20 on a ticket each week.

To reCAP: a sold out CAP for each of the 13 home games (including both Italian teams) would still have meant the business losing money.

This goes to show that chasing the retail pound is completely pointless for businesses that have such limited resources. In business, there’s no point spending £1 unless it brings in more than £1 so the limited resources should be spent chasing the corporate pound and this is why Hospitality is such a big business.

In 2012/13, the Hospitality pricing at CAP was £1200 + VAT for a Hospitality Box for one off use or £32,000 + VAT for a three year deal. The Match Sponsor was £1,750 + VAT for 10 tickets to the match, with food. And those prices are now 5 years old.

If you average out the hospitality prices and remove the cost of providing food, it’s fair to say that the average corporate guest will be worth comfortably £80 a head, more than four times the revenue of a retail punter.

The point of all of this is pretty clear: the branding of the professional teams should be aimed to generate as much corporate income as possible through brand alignment as that is where the money is. It is sponsors who count FOUR times as much as a retail punter. When marketing the teams and when pushing the brand, it is not Dai from Maesteg who should be the target market, but Bob in Bridgend who runs a Business.

Chasing “affinity” is utterly pointless. Chasing the pounds is what is needed and those pounds do not lie in the wallets of the individual who may or may not turn up, whose cost of attracting is significantly more than the cost of retaining an existing customer and for whom the very chase may alienate those who are already spending their £20 each week.

Taking games “on the road” is also non-sensical based on the above as there is only one suitable ground in each Pathway that can host professional rugby to the standards required by Corporate Guests. The idea of corporate guests spending £80 a head to watch Welsh Premiership rugby before being bussed to a significantly inferior ground is also frighteningly ludicrous. Genuinely frighteningly ludicrous.

In Wales, we need to be chasing the corporate pound. We need to capitalise on the position of rugby in the Welsh psyche and learn that it is brand alignment in the 21st century that pays the bills, not harking back to a time 30 years ago when the world was a very different place. We need brand alignment and discussions with sponsors as our business drivers, not bland branding designed to not alienate those unwilling to participate.

NOTE – of course the above is what each of the four can do whilst the real income comes in via the TV contracts, but that work is for Mark Davies of PRW to do. This blog was about what each of the four can do and, thankfully, at least the Scarlets are already on this journey.


U-Turn if you want to

It’s not boring being a Cardiff Rugby supporter. Whether the team on the pitch is trying to run in tries from everywhere or whether the board is trying to work out whether its a property development company or a rugby club, things rarely stand still for long. Indeed, there are more jinks to come in this story than in a Halaholo line breaks so God only knows if this blog is anywhere near accurate for hows things stand right now.

Thanks to the detective work of CF10 – the Supporters’ Trust – and a couple of prime questions at the Cardiff Blues Ltd AGM (the annual meeting of shareholders of the company that owns and runs Cardiff Blues and Cardiff RFC) a story hit the newsstands that the keys for Cardiff Blues were to be handed to the WRU. Oddly, and this has upset many, more of the story emerged via a Simon Thomas interview with Peter Thomas than the Board were able to tell its shareholders. Peter Thomas called it “babysitting”, preferring to label his rugby club “a franchise” rather than admitting what we all knew – he didn’t want to pay for it any longer.

The accounts show that, over a period of 21 years as a professional rugby club, Cardiff Blues Ltd has been loaned £14m by Peter Thomas. And, as his right, he seemingly didn’t / doesn’t want it to cost him any more. However, instead of just walking away to let somebody else take over, he and the Board took a bizarre decision to just “give up” the team and dump it on to the lap of the WRU.

It’s probably worth noting here that the WRU didn’t really want to “babysit” the “Blues”.

This is a really bizarre course of action for a company to take if you look at it on face value. A business that cannot service its debts, or who knows its expenditure will be greater than its income and has no way of making up that gap, can be seen as trading insolvently. In such circumstances the business is normally put into administration or liquidation, but Thomas was clear in his interview that the business would still be able to service its creditors. So that’s ok then…. right?

What he didn’t explain was how or why the company would be able to service its creditors, of course. Why would a business lose its main asset (the rugby team) yet continue to trade? The answer is simple: because it is desperately trying to gain a 150 year lease on 7.5 acres of city centre land so that it can develop it. And, guess what, once it has that lease then it will have an asset it can sell. I wonder if the sale of the business with that 150 year lease would go someway to covering that £14m spend?

Now I have no issue with Thomas and his fellow directors making a penny or two out of any future redevelopment of Cardiff Arms Park. Why shouldn’t he? As the first custodian of the club in the professional era we owe him a debt of thanks, to a degree. It would extremely easy, of course, to argue that he has spent £14m because he has run the business so abysmally (let’s not forget that the Leckwith lunacy cost an estimated £3m of that).

However, what I would have an issue with is any lease deal not being in the very best interests of Cardiff Rugby and both its teams. Here, of course, is where this whole episode has let the cat out of the bag with the following phrases too often heard:

  • franchise
  • “we cannot guarantee the Cardiff name in the team beyond the end of the current RSA”

If we look at the first phrase, it’s completely nonsense. Only in this latest interview has Peter Thomas ever called Cardiff Blues a franchise because, frankly, it isn’t a franchise. At the end of the last Participation Agreement, the business traded happily before signing the Rugby Services Agreement. This is just one example of why it is not a franchise. Let’s not forget, £1m of Thomas’ £14m was to ensure that Cardiff Rugby stood alone in 2003.

It’s the second claim above, however, that is of the greater concern. Simply put, if the business cannot guarantee the name of Cardiff Rugby in the professional /primary / major team playing out of Cardiff Arms Park then I doubt any lease will be agreed. The ground belongs to Cardiff Rugby and it should be used for the benefit of Cardiff Rugby.

We know where the money will be coming from to fund the redevelopment, we know that a redevelopment (if done well) could propel Cardiff Rugby back to the top of the tree domestically and, potentially, in any cross border competition. What we don’t know is if the new owners of the lease will have the interests of Cardiff Rugby at heart, or the pockets deep enough to employ lawyers to rip through any lease agreement signed in 2017.

All this incident has done is to whip up more distrust. Firstly, the Board wasn’t as clear as it could be at the AGM of the plans it had to dispose of the first team to the WRU. Secondly, many supporters understand and remember the 21 years of fighting the WRU in the professional game so the idea of just giving the team to them is outrageous. Thirdly, CAC can now see the end game for what it is so have no incentive to complete this lease until after 2020 (the renewal date of the RSA) as no team called Cardiff equals no professional team playing out of Cardiff Arms Park. Fourthly, the Trustees of CAC have a duty to ensure the facility is used for Cardiff Rugby and its difficult to see how that could happen if the lease is sold to allow Taff Trailfinders to financially benefit from the asset of Cardiff Rugby.

And now we have the news that the babysitter has been cancelled. Instead, we could see more moves next season similar to that of Ma’afu and Knoyle this season.

There is such an easy way out of all of this to ensure that all parties win. However, it involves transparency, honesty and Cardiff Blues acting as the Scarlets do.

So, there’s your goal Uncle Peter. Make it happen.

Double Speak, Misrepresentation, Half Truths, Rumours and Nonsense

Phil‏ @rugbyPhilBB  July 1: Blues come under “control” (somehow) of WRU. Temporary / permanent remains unclear & unknown. Detail shrouded in unnecessary secrecy

The above is a tweet I sent at 11:16 on May 9th, 2017. It’s a tweet that I’ve wanted to send for many weeks / months but had to wait until Peter Thomas let the cat out of the bag at the AGM of Cardiff Blues Ltd. Within two months the entire fabric of the club I’ve followed for 30 plus years would be changed but nobody has seen it worthy to ask supporters if this is something that we would favour.

Regardless on where you stand on regional rugby, the cold fact is that Cardiff RFC ltd stood alone in 2003 to form its own regional brand. The company didn’t change, the Articles of the Company didn’t change, nothing changed at all other than adding a new brand – Cardiff Blues. Later on, the company changed its name from Cardiff RFC ltd to Cardiff Blues ltd, whilst operating under the same Articles. These are facts. It is just the way it is. That is why this is about far more than the last 14 years of regional rugby in Wales and it’s about far longer than 30 plus years for many other supporters.

Ever since the game went professional in 1995/96, Cardiff Rugby has been fighting the WRU. From the WRU’s botched application for stadium funding when it built the Millennium Stadium, before that with the attempt by the WRU to hold 51% of shares upon first incorporation as a professional rugby club, through a High Court battle over VAT, a Rebel Season where Cardiff were kicked out of the Leagues but begged (upon the insistence of the sponsors and broadcasters) to play in the WRU Cup, right up to ensuring that the Roger Lewis years of devastation were ended, there has been nothing but conflict. But now, all of a sudden, we’re supposed to just hand over the keys to the WRU without even letting supporters know? That doesn’t sit well at all.

As with all things in Welsh rugby, so much of this story is clouded in mystery and secrecy with even the AGM being told that “matters were confidential”. Remember, that is the OWNERS of the club being told that they weren’t to know what is being negotiated on their behalf. Now, this isn’t a big business. To put this in context Cardiff has a turnover of about £9m a year. It is a tiny business. There is no need for confidentiality, secrecy and an over riding sense of huge self importance from the Board of Directors. This business is a puddle. Stop trying to be a big fish.

There simply is no need to hide behind confidentiality in a business this size. Share prices won’t be affected by leaks. Takeover attempts won’t have to go market regulators and public enquiries. This is small fry, so stop hiding behind big business terms.

As the cat is now out of the bag on this, Cardiff Blues Ltd should now take this opportunity to publish its plans and to inform its stakeholders of its intentions. Sponsors need to know what they are sponsoring, selling Season Tickets as though nothing is changing for next year seems underhand in the light of these circumstances.

Richard Holland and Martyn Ryan were both good enough to give their time to a CF10 Trust Question and Answer evening recently and both had ample opportunity to explain these plans. Neither took the opportunity. More than one member from the Floor expressed grave concerns about possible WRU intervention yet, again, neither took the opportunity to explain the kind of discussions that had been going on. We were told about possible use of the Principality Stadium, we weren’t told about the WRU “babysitting” the team or what that entailed.

Remember – CF10 is a shareholder in Cardiff Blues Ltd.

Much of this plan is tied into the proposed redevelopment of Cardiff Arms Park into a modern stadium, either similar to Parc Y Scarlets or as a multi purpose indoor arena. A new lease between Cardiff Athletic Club (the major shareholder in Cardiff Blues Ltd and the owner of Cardiff Arms Park) is planned but negotiations on the details have stalled / changed / amended / whatever term you choose to use over many, many months.

These lease discussions further cloud the story and further cloud how this will play out, to the point where very little of it makes any sense at all. Here are just some of the unanswered questions:

  1. How can Cardiff Blues Ltd claim it needs the WRU to “babysit” the costs of the team when, at the same time, it is offering £8m as a down payment on the new lease?
  2. Who at CAC has asked for the £8m? CAC is made up of 69% Rugby Section Members and, under the Articles I mentioned earlier, Cardiff Blues ltd runs the Rugby team for CAC. In effect, this £8m is a payment that will lead the business to not being able to pay for itself during the redevelopment. Well, how about there is no £8m down payment? The 69% of members may prefer a down payment of £0 and no WRU “babysitting”. How about somebody asks us?
  3. How can the WRU “control / babysit” the team when the Articles of the Company explicitly prevent any person from controlling more than 24.9% of the business? This means that the business can’t be sold to the WRU, or it means that somebody will try to convince people that the Articles of the company don’t apply to the, erm, company.
  4. What are the terms of the “babysitting / control”?
  5. What is the mechanism to get the team back?
  6. Will the team be renamed by the WRU?
  7. Will CAC evict Cardiff Blues Ltd from Cardiff Arms Park because of rent arrears?

I could write a dozen more such questions, and I may well do over the coming days, but the general point of this blog was to highlight the two of the biggest issues for supporters in Welsh rugby:

  • the inability of those running the game to actually involve the supporters in events to ensure that actual customers are provided with what they actually want
  • the crazy notion that hiding things under “confidentiality” will keep things secret in Welsh rugby.

This is 2017, folks. Information spreads easily and quickly, and rugby clubs in Wales should use this for their own benefit to deliver a culture of inclusivity, openness and transparency instead of hoping that the Chairman doesn’t go off on one during an AGM.

Addendum: Simon Thomas of Wales Online has published his interview with Peter Thomas since the above was written. In that interview, Peter Thomas is incoherent and, frankly, talking complete nonsense. He claims that the Board of Cardiff Blues ltd cannot run a rugby team and develop a 7 acre piece of land at the same time.

Erm, Peter, you’re a bloody property developer. As is John Smart. As is Paul Bailey. The three of you sit on the Board of Cardiff Blues Ltd and run, erm, property development companies. For the past 21 years the three of you have sat on the Board and, guess what, developed lots of properties AT THE SAME TIME.

The interview is just testimony to the double speak, nonsense and, frankly, bollocks spouted by figures in Welsh rugby. Stop hiding behind nonsense and start telling the truth. There is no mechanism to “return the franchise”.

The Duplicity of the WRU

When the last Chief Executive was pushed out of power there was a chance, a hope, a light at the end of the tunnel for professional and community rugby in Wales. There was a glimmer that the WRU would finally become a professional organisation that understood its customers, understood its market and could push rugby forward in Wales.

Alas, it hasn’t happened and the hope that it “could” happen is now weaker with each week. Instead, what we have is more of the same at the top end of the game and excuses about “taking time” with the governance at all levels.

The first major problem with the WRU is its make up. The controlling influence through the Districts puts men (19 men and only 1 woman) in charge whose primary concern is mileage expenses for community clubs or getting a little cash for a new roof on the clubhouse. In turn, these men have a huge influence over the professional game and its budget, despite having zero experience of running a professional sports team.

Martyn Phillips has tried to change this, despite having zero experience himself of running a professional sports business. In his defence, he has tried to change the governance structure to split the running of the community game from the professional game (as is desperately needed) but, guess what, he couldn’t get it beyond those 19 men with no experience of running a professional sports team.

Next, Phillips realises that the pro teams in Wales are vastly underpaid for the services they deliver to the WRU and to the National Team. Phillips knows this because he can see what the IRFU, RFU, SRU and FFR pay for exactly the same services and he knows the underpayment is causing our pro teams to be uncompetitive. The Pro Teams are the window into the game for the next generation as they are the ones on the TV most during the year. A successful bunch of pro teams will ensure more youngsters entering the game, which benefits all levels throughout the game.

But, guess what, those 19 blokes wouldn’t allow the payments to go up to match the other unions without asking for yet more in return, thus maintaining the imbalance between payments and services provided. Therefore, the plan Phillips had hatched has been ditched because of its unfairness and imbalance.

Now we have the complete shambles in Newport whereby the WRU is seeking to pay (net) £2.9m for 9 acres of land in Newport. They are asking Newport RFC shareholders (who own the land) to sell it to them for that price so that “Dragons” and Newport RFC can continue to trade. But here’s the issue: NOBODY has paid for a professional valuation on the land so nobody knows what it’s worth. The Directors of Newport RFC ltd claimed recently (in their published accounts) that it is worth £6.5m, but no valuation was made in order to get to that figure despite it being their legal requirement to do so.

So the WRU are bidding on a property that they haven’t told the owners what it’s worth. Nice, eh? The reason there has been no valuation, according to Stuart Davies (CEO of Newport RFC and Dragons) is that nobody can afford the £10,000 fee it would cost for the valuation. It’s probably worth noting at this stage that the WRU own 50% of the Dragons already.

Therefore, we have a WRU board unwilling to release funds to support our professional game on fair terms but, seemingly, willing to pay £2.9m for a piece of land in Newport. Why? Because it’s obviously worth significantly more than £2.9m.

But – and here is the crunch – the WRU will give NO guarantee of any future for either of the rugby teams presently playing at Rodney Parade. None. No guarantee at all. It could all close by the end of next season. Finished.

This is where Phillips is clearly again struggling in his role. He went public to note his Masters’ viewpoint that “we are regions, not super clubs” yet so sure is he of the business strength of “Regions” as the model for pro rugby in Wales that he refuses to guarantee even one year of trading for such a region. He also claimed branding wasn’t important, thus fundamentally missing a huge reason why supporters follow a team and why sponsors back sports teams.

Think on that – he is pushing the regional dogma yet so confident is he in its business model that he won’t guarantee any future for “Dragons”. He claims branding is not important for team names yet the best sports teams in the world value their brands in the billions of dollars. His words are so far off the required mark as to be questionable in their competence.

So why is all of this contradictory nonsense happening? Because of those 19 men and one woman. They are the block on the progression of the game in Wales, they are the link to the amateur era where their influence was required and necessary. They are out of their depth in a professional sport, unwieldy, imbalanced, inexperienced, arrogant and misplaced. Phillips just has to do their bidding whilst the rest of us are told that turning around the WRU will take time.

Well, as Newport RFC and Dragons fans will testify, the game doesn’t have time. Gareth Davies stands for re-election this year as Chairman and, if he gets in again, he has only one option to professionalise the WRU: nuclear. He has to clear out that Board and the WRU has to become fit for a professional game because, as we can see in all of its dealings so far, it’s far from good enough.

The Lease

Many rumours are flying around the world of Welsh rugby as to the future of ownership of Cardiff Blues, some of which are more accurate than others. The world of Cardiff Blues is, at best, a complicated place that leads many to come to the wrong conclusions, so hopefully the following will shed a little light on what possible conclusions may arise from this saga.

It’s important to break down the players in this soap opera so that it’s clear as to which part influences the other and who has ultimate control, if anybody does at all:

Cardiff Athletic Club

The organisation affectively known as CAC (often with good reason) is the owner of 7 acres of city centre land in Cardiff on which sits Cardiff Arms Park (CAP) (and a Bowls club). CAC is a “Members Organisation” which means that it is owned, run and controlled by its members who pay an annual fee to be members. There is a Members Lounge at CAP to which non-members are often excluded from entering on Cardiff Blues match days, much to the annoyance of many.

There are a number of sporting sections to CAC: Bowls, Cricket, Hockey, Tennis and Rugby. As noted, the Bowls and Rugby sections share CAP and, of course, the rugby section has by far the largest number of members – about 600 – more than the other sections combined. We, as members, “own” CAP.

CAC is incredibly wealthy. Not only does it own those 7 acres but it also owns land in Lisvane, where the Tennis Club plays. Therefore, it sits on assets worth (conservatively) £10m.

Within CAC, there is a Bowls team, a Cricket section running multiple teams, a Hockey section running multiple teams and (I assume) a number of Tennis teams. There is, however, no rugby team. CAC has a rugby section but it doesn’t have a rugby team.

The reason for this is because it did once have a rugby team called Cardiff RFC but, in 1996, ownership of that team transferred to Cardiff RFC ltd – the business set up to run rugby when it turned professional. As part of that incorporation, CAC is the major shareholder in that Company and instigated a ruling (through a mechanism called Heritage Shares) that no group or individual can own more than 24.9% of the Company.

Whilst that Company changed name a couple of years ago to Cardiff Blues Ltd, the same ownership structure remains. CAC own 1,250,001 shares in the company, which is more than the just over 1,000,000 shares that Peter Thomas owns. Other major shareholders (at least 500,000 each) are John Smart, Paul Bailey and Martyn Ryan.

This is a crucial point in this story as you may read that “Peter Thomas owns the Blues”. He does not. He is not the major shareholder. He controls the company through loans he has made to it, but he does not own it. It is not his.

One other major issue to raise is that CAC’s income (£201,858 in 2016) mostly comes from the rent Cardiff Blues ltd pay to play at CAP – £115,161 in 2016. It is this rental payment that is at the root of this issue.

Cardiff Blues Ltd

This is the company that runs and owns both Cardiff RFC and Cardiff Blues. This is the company that employs all of the players, the coaches, the staff etc. for BOTH teams. It used to be called Cardiff RFC Ltd but changed its name a few years ago.

For many years there has been a battle between CAC and “Club Limited”. Late rental payments from Club ltd, promises broken, plans of growth blocked by CAC, personality clashes etc. It’s been as pathetic as its been entertaining at times. Suffice to say, the leading lights of both parties have not always seen eye to eye.

Therefore, for many on both sides of the divide, there would be a happy divorce and this is despite CAC holding three seats on the board of Cardiff Blues Ltd.

The company are seeking a 150 year lease on the land at CAP so that they can redevelop the stadium into a 365 days a year facility that will bring conferences, concerts, a “drop in pitch / sliding pitch”, other meeting facilities, huge car part, hotels, flats, bars etc. All of this is hugely exciting and should “cement” the future of professional domestic rugby within the City Centre of Cardiff.

However, to do this, the Club ltd is seeking to completely change the set up of the business to rid the block of the previously mentioned 24.9% of ownership. There are many good reasons to amend that particular clause, first of which would be allow Thomas to convert his somewhere near £14m in loans (made over 21 years) into equity, leaving the company debt free.

Therefore, in theory, the Cardiff Blues could be set up for “200 years” with a debt free start (other than the debt of the redevelopment, which should be more than met from the income of the new facilities) and this would be pretty similar to the set up Wasps enjoy at Coventry.

The Supporters

In 2003, Welsh rugby nominally changed to a ‘regional structure’ that was actually club mergers to form development pathways. If anybody moans that this isn’t the case, the Rugby Services Agreement (the contract that presently governs the relationship between the WRU and the four professional teams in Wales) explicitly states “four pro teams running regional development pathways”. This is exactly the same structure the English clubs run.

At Cardiff, we stood alone in 2003 and merged with nobody. Even when the WRU put through the Celtic Warriors, the business and ownership structure at CAP did not change. We continued to stand alone and gave up £1m in services payments from the WRU in order to do. So, there’s £1m of Peter Thomas’ £14m gone.

The first jerseys worn by Cardiff Blues in 2003 were the change jerseys from 2002-3 with a new bade sewn over the top. You could buy these shirts in the club shop – just with the badge sewn over the top. We were told we had a new brand, an addition to the Cardiff name and, to this day, the crowd continues to chant “Cardiff”.

Why is this important? Simply because those who were CAC members, shareholders and season ticket holders in 2002-3 moved our viewing habits to Cardiff Blues. We went en masse because it was exactly the same thing under an amended brand. There was a team called Cardiff RFC that remained, but the crowd didn’t watch that team and few still watch it today.

For the vast majority of supporters, Cardiff Blues today is the same as Cardiff RFC was in 2002, just the brand has changed. Its also worth noting that Thomas’ debt is all caused by decisions he has made. He authorises the “overspending” that he meets by loaning the business money, such are the tax laws in the UK that make it advantageous for the business to do so. He wasted another couple of million on the move to Leckwith that many of us warned was not economically sensible. So, in short, he’s made two key business decisions (one of which utterly ludicrous) that constitute £3m of the £14m or so he’s owed. This means that he’s spent c.£10m on the team over 20 years. Or that his season ticket has cost him £500,000 a year. That’s roughly 2000 times what my season ticket costs me and I’m pretty confident his net worth will allow that cost to be in line with his wealth.

Cardiff RFC

This is the team that plays in the Welsh Premiership and is, seemingly, unloved by many. Cardiff Blues flip flop between wanting the team and not wanting it, as part of the lease negotiations and have now seemingly settled on something quite bizarre (more of which later). The team is run by a Committee made up of four Cardiff Blues employees and two volunteers from CAC, although the number of meetings attended by the four Cardiff Blues employees can be counted on the fingers of one hand.

The budget for the team is to “employ” 25 players on very semi professional wages, with the squad then topped up by academy and fringe first team players of Cardiff Blues.

The total spent on wages for the core 25 is under £100,000 and it is no wonder the team lost out on the top 8 position in the Welsh Premiership this season and lost in the Cup to Pontypool, as all the more superior opposition have higher wage bills.

Some in CAC wish to take this team fully back ‘in house’ but this is where the soap opera takes a turn for the sour and sad. The number of non-Cardiff Blues season ticket holders (i.e. Cardiff RFC only) is well under 200. Of the 600 CAC Rugby Section members who can watch Cardiff RFC for FREE, fewer than 200 do so on average. Crowds are typically around 300 to 400, with the more popular visiting sides often outnumbering the home support.

The ‘New Lease’

Negotiations over this have been ongoing for many, many months and a number of deals have been put on the table that have been re-negotiated and changed. I’ll try to break things down as clearly as I can:

  • the desired term of the lease is 150 years (although even this has changed at different times of negotiations)
  • there will be a lump sum payment of £8m up front from Cardiff Blues ltd to CAC in order to cancel the Heritage Shares and to remove CAC shareholding from Cardiff Blues ltd
  • the annual rent will increase to £200,000 and this will obviously be indexed linked
  • the source of finance for the redevelopment is supposedly Middle Eastern based, with the strong rumours being that those involved in Manchester City FC maybe providing at least some of the money.
  • At least initially, Cardiff Blues Ltd would continue to run Cardiff RFC but the operations and finances of that team could be transferred to a presently dormant company called “Cardiff RFC ltd”. You’ll remember above that I mentioned the name change of the company, so this action would be to almost reverse that by moving the Welsh Premiership team back to a company named appropriately. This transfer, and its timings, would be reviewed over a period of the first three years
  • During the redevelopment of CAP, Cardiff Blues would play out of Sardis Road, Pontypridd and Cardiff RFC would play at the Athletics stadium in Leckwith.

The Future

The cessation of any CAC ownership / shareholding within Cardiff Blues ltd is obviously the severance of the hard link between Cardiff RFC and Cardiff Blues. The transition of support many of us made in 2002 to 2003 would, in some ways, be replaced by a new entity.

With that severance comes the risk that Cardiff Blues Ltd would then be fully the plaything of Peter Thomas for him to do with what he wants. This is where the rumours of name changes and ownership arrive in this saga so it is vitally important to note that this can only happen once the Heritage Shares are bought off. At this stage, that 24.9% block will disappear so, in theory, Thomas could hand the keys to the WRU or anybody else.

What must be considered here is that the company owning Cardiff Blues after the signing of a new lease will be sitting on the asset of that lease and the income it brings. The redevelopment will obviously bring great debt but great income to that business and it is believed that the income will fund the rugby team for many years to come – again, a la Wasps. Therefore, that company will have a positive value.

Many within CAC think the shares held in Cardiff Blues ltd are worthless. Indeed, the book value of these shares in the CAC Annual Report is £0. There are those within some other sections of CAC (especially the cricket club) who want the £8m to sit in the bank to make CAC even more wealthy. These guys want “the Blues” gone, to be nothing more than tenants paying £200,000 a year (remember, that £200,000 is the same as the whole annual income to CAC at the moment).

BUT – why get rid of shares in a company that is obviously going to be sitting on the income of a 7 acre city centre redevelopment?

There are those within CAC who think that having Cardiff RFC back ‘in house’ is a positive. However, let’s look at the business plan for this team:

  • it has only a few hundred supporters, many of whom are of a ‘certain age’
  • it has no mechanism of attracting new support as the next generation will follow “the Blues” and those interested in community rugby will watch local Cardiff sides such as St Peters, Canton etc.
  • the WRU are planning on reducing funding to this tier of rugby in the future. Therefore, the team’s ability to pay players and its place in Welsh rugby will be greater under threat.
  • If the Ground Redevelopment leads to a successful concert / conference venue, there is no commercial value in Cardiff RFC using that facility. Simply put, if there is a choice between hosting a weekend conference or Cardiff RFC playing semi-pro rugby in front of 300 people, it’s quite obvious which will take preference.
  • The number of rugby section members will steadily decrease if there is no hard link between Cardiff RFC and Cardiff Blues. In turn, this will make the other sections within CAC relatively stronger and soon that £200,000 income will go to making the cricket and hockey sections even wealthier.
  • Cardiff RFC will, no doubt, be left to die a slow death in front of an ever ageing and decreasing in number support base, in the Athletics stadium in Leckwith.

Therefore, for me, outside of Cardiff Blues, the team branded Cardiff RFC has a 5-10 year lifespan maximum before its playing full community rugby.

That means that I believe that those who wish to protect the future of Cardiff RFC must look very, very closely at the final proposal offered to members of CAC to ensure they are happy with the terms.

There is also the issue as to whether the Steering Committee of CAC who have been negotiating this deal have done so with the correct mandate from members. If, for example, a Rugby Section EGM was called and it was decided that members would NOT support any change to the Heritage Shares that allowed a split between the teams, or allowed any future potential change of ownership to a group or individual who did not value the Heritage of Cardiff Rugby, any negotiations undertaken so far could be a complete waste of time and money.

Those who don’t want the WRU to own and run Cardiff Blues must also consider closely how they will vote for any change. If they are against such an option, they too must vote against the lease deal unless it protects from such outcomes.

This soap opera has a long way to run yet and its storyline has fluctuated significantly since it started. This blog, despite being over 2500 words, has tried to remove the emotion from the research undertaken behind it and no doubt more will come out in the coming days and weeks, so this will be just Part One of my summary of the story.

Some hope for 2017

I’m going to write a list, of sorts, of some hopes / dreams / never will come trues for professional rugby in Wales in 2017 and beyond. There are major issues within the game, at all levels, so here are some ideas for going some way to curing them:

Split The Pro & Community Games – properly

In fairness to Martyn Phillips, he’s started this process by replacing Lewsey with Jones and John but – as ever with the WRU – they’ve got it half arsed so, by result, have got it wrong. I’ve banged this drum to the point of boredom but it’s obvious that the Community game needs its own executive, with its own rolling and long term budget (paid out of proceeds to the professional game) in order to properly meet its needs and demands. Whilst Ryan Jones is no doubt a great cheerleader and figure point to encourage participation, he needs an Executive behind him to run that exercise as a full and proper business. Clubs need help beyond participation and into facilities, business links, school links, set ups and more. A small Executive board, reporting back to the WRU board, will see Community clubs properly catered for and properly funded by the Pro Game. It will also stop the ludicrous idea of Community clubs having a say over the professional game, which is key. The two elements of the game are now very separate.

Ben Jeffreys of Pontypool RFC has some tremendous ideas on this and you should all follow him on Twitter.

The break between the Pro and Community game should be easy to define: the Welsh Premiership should be the top of the Community game and should not be influenced by the Professional game at all. No professional players should play in the WP. And by that I mean players paid by the professional clubs, not by their own employers at Merthyr….

The Professional Game & A Teams

Of course, removing the Academy players from the WP will mean that they will need to play somewhere. At present, the BIC is offering them a huge step up from the standard of the WP but that is only a minimum of 6 games a year. There should also be a PRW A team league, offering another 6 games a year. Add in 3 Anglo-Welsh Cup games and we’re up to 15. A few well timed friendlies with the English clubs and, if some money can be found, more games against the Irish A teams and we have enough games for the season (especially when you consider how many of these kind of players will be involved in Wales age grade teams).

More Money

At present, the WRU pays pretty much the same for the services it receives as does the RFU if you take it on a per team basis. In effect, it works out (on average) at about £2.3m per year per team by the team  you add on national qualified player payments etc. However, there are three times as many English teams as there are Welsh, so it’s quite obvious that PRW teams are working three times as hard for the same payment. During the international breaks, the Os lose over a dozen players and that has an obvious knock on effect on results, attendances, sponsorship and income. In short, the WRU do not compensate enough for the services they receive.

Why? Here’s the truth: because Lewis accelerated payments to Barclays and the WRU are tied in to his contracts, despite him having had the boot a year ago. He tied the game in with Barclays, with Gatland, with UA, with Principality, with the BBC. He’s given Phillips nothing to work on.

Those who try to tell you the money is to do with ‘structures’ or ‘models’ or whatever are just lying to you, by the way.

The comparison above is with the RFU. It gets worse when you look at the SRU. They spent enough for Glasgow to have a squad containing 37 international players (thanks to the sum of money from BT as sponsorship during the EPRC negotiations. If only Roger Lewis had been able to conclude such a deal, eh?). The IRFU spend more per team again. Some will say it’s because those Unions own their pro teams. The less ignorant will point out its because those Unions have more disposable income so spend it wisely.

Where will the money come from?

If the WRU can’t earn enough to pay its fair way then it should not ask for so much in return. We can’t go to Harrods and offer £500 for a £50,000 TV, yet that’s in effect what the WRU are doing. If they can’t pay enough, they should cut some slack to PRW.

Maybe they should follow the example of the RFU, again, and allow PRW to negotiate their own competitions and broadcast deals. After all, the major income streams in professional rugby are (in order): broadcast deals, competition deals, Union payments.

In all of this, however, it should be noted that the above mentioned payment to the community game would be guaranteed and ring fenced before any though of money increasing within the professional game.


Well, here is the biggest white elephant in Welsh rugby. It was formed to battle against Roger Lewis and, if we are being honest, has done nothing since then. It should be a pressure group, it should be well funded, it should be leading the way, it should be pushing forward professional rugby in Wales. Instead, it sends out a couple of tweets and has helped to arrange an insurance deal that, seemingly, one of its members is having difficulty keeping up with.

If the four members of PRW want to push forward their businesses then they have to act now and push on. They have to publish the details of what ‘Regional Rugby’ actually is (and it has never been representative rugby, despite how some try to rewrite history to make it so) and how EXACTLY similar it is to the English Club Academy system. Ridding Welsh rugby of the real toxic work – Regional – will be a huge step forward alongside splitting the Pro and Community management.

PRW then has to push forward with what it believes is the best league for its teams to play in that will maximise their income. PRW know that the PrO’12 is an inferior league for broadcasters because it is so skewed, so unequal and not the main priority for half of its entrants. However, when have PRW ever publicly stated this? They haven’t. They are accepting second rate nonsense by their own silence.

PRW need to stop being carried by PRL and start becoming the organisation that it should be. It should be a collective, it should be pretty much harmonious and it should be professional. It should be leading the marketing of the professional game in Wales, it should be seen, be vibrant and be in the public eye. At the moment it is none of those things, it is just a shambles.

And finally….

It’ll be nice to finally see the plans for the Etihad Superdome that CAP may well soon become. If done properly, it should see the club well financed for years to come and should hopefully see it run as a business instead of at the whim of a Chairman who can’t always decide which leg his trousers should go on first.

The Stupidity of National Dual Contracts

Wales Online today have released a story that notes the WRU are only willing to offer £250,000 per annum to Liam Williams, as part of a National Dual Contract. Of course, the article doesn’t go on to note whether that sum is just what the WRU will pay or the total of the annual salary.

National Dual Contracts see the WRU take primacy of contract of the player in question despite paying only 60% of his salary. The other 40% is paid by his club / region / pro team / whatever you want to call them. Interestingly enough, despite holding primacy of contract, these players are not listed in the WRU Annual Report as part of the staff numbers or staff costs. Make of that what you will.

The issue with NDCs is that the WRU have a fixed pot to play with, which means that their 60% is fixed. It cannot be altered. It is maxed out. The other party to the contract, therefore, is limited by what it can offer because of the fixed WRU element.

Think this one through: say the Turks are happy to free up £180,000 per annum of their own salary bill for Williams. However, if the WRU will pay only 60% of £250,000 (£150,000), the Turks are forced to pay £100,000. Williams might walk to play for Saracens for £300,000 and the claim will be “there’s no money in Wales to keep him”. However, in this example, there was £330,000 to keep him in Wales – £150k from the WRU and £180k from the Turks.

This rigid stupidity of contractual terms shows the idiocy of the NDC set up. As was basically revealed in the last WRU Annual Report, Lewis signed up the WRU to be financially run by Barclays for his entire time at the WRU. That crazy agreement saw the talent drain from Wales and the obvious knock on effect of the weakening of our Pro Teams from 2010 onwards. Such was this stranglehold by Barclays, unnecessarily strong, Lewis could not afford to commit to pay more for the services provided by the Pro Teams in Wales. This meant that our four teams were receiving millions less per year than their Irish and Scottish counterparts, whilst receiving similar recompense to the English teams despite there being three times as many of them to share the workload.

The Barclays agreement prevented more money being annually paid out but did allow for any “surplus” to be spent. Lewis called it inventory. Whilst he sharpened his saw. Whilst reflecting whilst looking forward. Clown.

The nature of this ‘surplus’ is what has ended up as NDC money. Rather than using it wisely as a ‘top up’ pot, it has been stuck to this rigid 60/40 model of primacy of contract (despite not being officially listed as WRU employees, remember).

There is zero need for the WRU to hold 60% of the contract. There is zero need for the WRU to be primary employer. There is zero need for the list of NDC players to have to be agreed by Warren Gatland, else you end up with his crazy selections like King, Baker and Thornton.

Instead, Martyn Phillips should be using this NDC pot as a top up. What should happen is that our Pro Teams should be able to go to the WRU, in specific circumstances, to ask for an additional payment to top up the wages of  certain individual players. This will rid the 60/40 split that can see players, as per the example above, actually leave Wales anyway.

And then, once this daft Rugby Services Agreement has finally been thrown properly into the bin, the WRU can move away from this line of thinking and follow the French line: a single payment per year to meet specific targets and a daily rate paid to access players for National Team training.

Once we move to that system, our Pro Teams will finally be properly and adequately rewarded (and recompensed) for providing players to Team Wales.