A scary report released suggests that more Premiership clubs are ‘heading for disaster’ having amassed £300m in net debt.
According to The Telegraph, London Irish are considered “high risk” due to low turnover of, at best, £10 million, while Harlequins are “concerning” due to their high borrowing of £48 million in the 2021 financial year.
Private equities director Mike Ryan has been investigating the league and made some interesting findings.
He said: “The club structure has historically been on an unsustainable footing. It has never made a profit. The combined losses for the clubs over the last six years, excluding the payment from CVC, has been £300 million,
“At the moment, this is heading for disaster. I would like to see the fiscal-year 2022 numbers to be more comfortable with the call, but I would be surprised if they were any better than FY19 [financial year 2019]. The overall competition is still losing money.
“It is professional on the field and semi-professional at best off the field. That is the biggest problem that rugby is facing globally, in my view.”
Read the full report from The Telegraph here.
Three clubs in trouble:
Harlequins
They wrote: “They borrowed £48m in FY21, maybe through £50m on the back of FY22. If you look at operating profit per employee, they are paying £60,000 per employee and going backwards. It’s the structure of the business – big property investments, borrowings.”
London Irish
They wrote: “They have never made a profit, have £30m worth of borrowings. It’s one club that’s potentially at high risk because of very low turnovers, at best in a good season of £10m.”
PREMIERSHIP CLUBS RANKED BY TOTAL DEBT:
#13. Exeter Chiefs – £13m
#12. Gloucester – £27m
#11. Northampton Saints £26.5m
#10. Worcester Warriors – £26.5m
