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Finance

Wasps, Worcester face Premiership exit over financial woes

Featured image credit: Lewis Clarke/CC BY-SA 2.0/Edited for size

English top-tier rugby teams Wasps and Worcester Warriors both face heavy sanctions including possible relegation and suspension over their respective financial crises.

Coventry-based Wasps, who play at the 32,000-capacity Coventry Building Society Arena, said in a statement on Wednesday that it has begun the process of going into administration due to the threat of HM Revenue & Customs action over unpaid tax. Rugby Football Union (RFU) regulations state that a club that enters administration during the season will be relegated for the following campaign as it is classed as an insolvency event, although the union is able to waive or amend sanctions if the event is not deemed to be the club’s fault.

In a statement, the governing body said: “The RFU is in dialogue with Wasps, we will work with them to understand the current action, their sustainability plans and what the next steps will be.”

Meanwhile, the RFU has told Worcester that it must prove it has the required safety certificates and medical provision to host this weekend’s match against Newcastle Falcons. That is the same ultimatum issued last week before Worcester’s match against Exeter that went ahead only because the club’s staff and volunteers gave up their time for nothing.

The RFU has also written to Worcester to confirm it will be suspended from all competitions, including the Gallagher Premiership, Allianz Premier 15s and Allianz Cup, if the club cannot evidence insurance cover in place, availability of funds to meet the monthly payroll, and a credible plan to take the club forward, by 5pm on September 26. The RFU said it is aware that insurance cover is in place only until midnight on Monday night (Sep 26).

The RFU said: “All parties remain concerned that the lack of available funds will not allow the club to be sustainable over the long term.”

The RFU today (Thursday) confirmed that the Warriors have met all the conditions needed to stage Saturday’s match. However, Monday’s deadline remains for the club to provide a viable plan for its future.

Wasps, twice European champions, said it is currently in “advanced discussions” to refinance a bond after failing to repay a debt of £35m that was due to bondholders in May. The decision to file notice was ultimately taken with HM Revenue & Customs preparing a winding-up petition over unpaid tax.

A Wasps statement said: “Due to the impending threat of action from HMRC, Wasps Holdings Limited … have taken the difficult decision to file a notice of intention to appoint administrators in order to protect its interests.

“This measure does not mean the business is in administration but provides a crucial period of grace to continue negotiations with a number of interested parties to secure the long-term future of the group. These negotiations have been going on for some time, are in advanced stages and we are hopeful of securing a deal.”

Posted in Finance