Two-time European Challenge Cup winners Cardiff Rugby are set for an emergency takeover by Welsh rugby’s governing body the WRU.
Players and staff at the United Rugby Championship club were informed on Tuesday by chief executive Richard Holland that the club were poised to go into administration.
The decision by Helford Capital Limited, whose investment in the Cardiff Arms Park-based side last year saw it take a 84.55 per cent holding, is set to file a notice of intent document in court to appoint an administrator.
The WRU said: “We are aware Cardiff Rugby have confirmed notice of intention to appoint administrators, and we are working closely with the Cardiff Board and the administrators to safeguard the future of professional rugby in Cardiff.”
Cardiff administration a huge blow
It is a huge blow to Welsh rugby, whose national team is on a dire streak of 17 matches without a win. The domestic game, too, is under enormous pressure with budgets often lower than rival clubs in other URC nations.
It is hoped that the decision for the WRU to step in, which will not happen immediately, will save the iconic club from going under permanently and stop it joining the likes of English trio Worcester Warriors, Wasps and London Irish in disappearing from the top tier of European rugby.
Cardiff were in action last week, in defeat to Irish province Connacht, in the EPCR Challenge Cup and do not have a match this weekend.
Symptomatic of rugby
Sports finance consultant James Paul, formerly of Blackstar Capital, insists this is a bad look for rugby, adding that finding a buyer could take years.
“It is symptomatic of the financial issues throughout rugby union, and the WRU has had its own financial difficulties,” he told City AM.
“The economics of club rugby outside France simply don’t seem to be there, and so if your owner either can’t or doesn’t want to bankroll the team into perpetuity then clubs will fall into administration.
“Cardiff seem to be particularly vulnerable as it’s unclear how wealthy their owners actually are and they don’t own their own stadium, which is typically the one major revenue stream teams have a lot of control over.
“The club needs a new investor with cash to spend and a proper plan to profitability. The WRU ended up having to keep control of the Dragons for six years before they found an acceptable buyer. This could be similar – or worse.”
Investor worry?
Cardiff’s demise is yet another blow to the financial outlook of rugby union in the UK, with URC investors CVC Capital Partners seeing a second league – after the English Premiership – have clubs fall into administration.
There have been talks in the past about merging two of Wales’ four regions to form three stronger clubs but those discussions have not progressed.
Ospreys are downsizing their stadium due to a lack of control over the ground they share with football side Swansea City and their inability to fill it, while Llanelli-based Scarlets – the last Welsh side to win the domestic URC, in 2017 – have their own attendance struggles.