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Finance

Wasps set to follow Warriors into administration

Coventry Building Society Arena in Coventry, England

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

Coventry Building Society Arena in Coventry, England

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

Wasps have today (Wednesday) announced they are set to follow Worcester Warriors into administration, and ultimately relegation from the Premiership, the top tier of English club rugby union.

The embattled Coventry-based club have said they will withdraw from Saturday’s Premiership trip to Exeter Chiefs having all but admitted defeat in efforts to secure fresh investment before a deadline of Monday.

A statement from Premiership Rugby later confirmed that the club has been suspended from the competition. Premiership Rugby will continue to work with the club and the Rugby Football Union, as well as any administrator or investor, to find the best possible outcome for Wasps.

Wasps have already twice filed notice of their intent to appoint administrators, firstly last month, with Wasps Holdings Limited stating today: “Since filing a notice of intention to appoint administrators on 21 September, we have been working tirelessly to secure the long-term future for Wasps Holdings Limited, and all of the organisations and clubs that sit within the group.

“Negotiations to secure deals that will allow the men’s and women’s rugby teams, netball team and the arena and associated business to move forward are ongoing. However, it has become clear that there is likely to be insufficient time to find a solvent solution for the companies within the group, and it is therefore likely that they will enter into administration in the coming days with a view to concluding deals shortly thereafter.

“While the companies within the group all represent strong and viable businesses, the reality is that they have insufficient cash at this time to continue to fund operations until these complex negotiations have concluded. We have therefore been asking potential funders and investors to provide bridging finance to provide enough time for a solvent solution to be found. Regrettably, this has not been possible to date, although we will continue to pursue this until the very last opportunity.

“In light of the current situation, we have therefore taken the decision to withdraw the Wasps men’s team from this Saturday’s league fixture against Exeter Chiefs. This was an extremely difficult decision to make and we recognise that this will not only impact on our players, staff and supporters, but also Exeter Chiefs and the wider rugby community. However, we strongly believe it is the right course of action when, at this time, we are unable to meet our regulatory requirements in the absence of fully concluded deal negotiations.

“We understand that this news will be disappointing and concerning for everyone involved. Our immediate focus will be on ensuring that all of our players and the staff of Wasps and the arena are fully updated and given the support they need. While these are challenging times, we remain confident that new owners will be found that will allow the clubs and businesses within the group to move forward.”

The Guardian reports that Wasps owe £35m (€39.8m/$38.6m) plus interest to bondholders as part of the agreement that financed their move to Coventry in 2014, along with £2m to HMRC. Owner Derek Richardson is also said to be owed nearly £20m, while Wasps also took part in the government’s COVID-19 sports survival package. This accumulation of debt has seemingly presented insurmountable challenges in landing fresh investment without administration.

It emerged yesterday that Birmingham-based live events business NEC Group is one of the parties interested in purchasing Coventry Building Society Arena, home of Wasps and Championship football team Coventry City. Sky News reported that NEC Group, which operates the National Exhibition Centre, Utilita Arena Birmingham and Resorts World Arena, lodged a bid for the 32,000-seat stadium, which is owned by Wasps, last week.

Sixways Stadium is also set to be without top flight men’s rugby union until at least the 2024-25 season after the Rugby Football Union (RFU) last week confirmed the suspension of Worcester Warriors from the Premiership and Premiership Rugby Cup for the remainder of the current campaign.

The decision, following a meeting of the RFU’s Club Financial Viability Group, triggered the Warriors’ relegation from the Premiership, and therefore, if investors can be secured, the club will restart in the Championship in season 2023-24.  The club can appeal the decision if it can show there was no fault insolvency, with this pathway now likely to be followed by Wasps.