London Irish has become the third team to be ejected from the Premiership in less than a year amid long-standing financial issues, with the Rugby Football Union (RFU) stating that the current situation reflects the “fragile business models” in place across the club game.
The RFU confirmed yesterday (Tuesday) evening that as a result of Irish and its potential buyers, a US-based consortium, being unable to provide reassurances over the club’s financial ability to operate in the Premiership in the 2023-24 season, it will not able to participate in any league next season.
On May 31, Irish, which is said to be around £30m (€34.8m/$37.2m) in debt, was given a final deadline of June 6 by the RFU. To avoid suspension, Irish needed to either complete the takeover or provide evidence it had the required funding to operate for the entire 2023-24 season.
The RFU yesterday said the club has failed to meet its commitments to pay staff and players in full for May, while a takeover from current owner Mick Crossan, who today announced Irish has filed for administration, has not materialised.
The governing body said the decision was taken to provide certainty to staff and players, thereby allowing them to seek alternative employment. The RFU said it also provides clarity to other Premiership clubs and prevents a situation where Irish could have potentially gone into administration part way through a season, as in the recent high profile cases concerning Wasps and Worcester Warriors.
The RFU, Premiership Rugby and the Rugby Players Association (RPA) have announced the launch of a hardship fund for players and staff who are most in need of financial support. Funded by the RFU and PRL, the hardship fund will be administered by Restart, the official charity of the RPA. The fund will also be available to those in need following the Wasps and Worcester insolvencies.
Bill Sweeney, RFU CEO, said: “This is desperately sad news for everyone who is part of the London Irish community as well as all the players, fans, staff and volunteers for whom this club means so much.
“Working alongside Premiership Rugby, the RPA and London Irish over recent months, our collective first priority has been to do the utmost to secure the long-term viability of the club and the protection of its players and staff.
“To achieve this, it was imperative that transparent evidence of funding be presented to us. This would have been either by the proposed buyers undertaking to provide all required working capital to meet the club’s obligations for at least the 2023-24 season; or the club providing evidence that it would continue to fund its operations throughout the 2023-24 season.
“Despite requesting this evidence over the last six months and receiving assurances on multiple occasions that we would receive proof of ownership and funds; it has not materialised.
“In the event that it would ultimately not be possible to save London Irish, our second priority has always been to avoid the club entering an unplanned insolvency mid-season. This was to prevent the huge disruption to players, staff, and fans, as well as on the remainder of the league and sporting integrity of the Premiership and Championship, that we witnessed with the demise of Wasps and Worcester.
“In the absence of transparent proof of reliable long-term funding, and for the duty of care for all involved at the club, the sad decision has now been taken to suspend the club from RFU leagues.”
Irish finished fifth in the Premiership last season and their demise reduces the top division to a 10-team competition for 2023-24. Irish returned to London in 2020 following the completion of a deal with Premier League football club Brentford that saw the team move to its new stadium.
Irish had played at Select Car Leasing Stadium, home of League One football club Reading, for the past two decades. The lease deal with Brentford saw Irish move in to Gtech Community Stadium as the secondary tenant from the 2020-21 season, but another move had been mooted of late.
Irish acknowledged yesterday’s decision in a brief statement, stating that it “continues to remain in active discussions with the RFU as to any circumstances that may result in the suspension being lifted”.
Yesterday’s news came after the government appointed two independent advisers to help address rugby union’s financial crisis. Former Rugby Football League (RFL) chief executive Ralph Rimmer and UK Sport board member Chris Pilling were appointed by the Department for Culture, Media and Sport (DCMS) as independent advisers to support the RFU and Premiership Rugby Limited (PRL) in their work on the future sustainability of the sport.
Friday’s announcement came as winding-up petitions were filed on the same day by HM Revenue & Customs (HMRC) against London Irish Holdings Limited and London Irish Rugby Football Ground Limited over an unpaid tax bill.
Commenting on the wider situation for the sport, Tom Ilube, chair of the RFU Board, said: “London Irish is a proud and storied institution, and this is an outcome no-one involved with rugby wanted to see.
“Rugby has an underlying need to professionalise its management off the pitch, just as it has done on the pitch over the past 25 years. COVID-19 accelerated the impacts of underlying structural challenges and had a major effect on PRL clubs and the RFU. Given the cost-of-living crisis, the post COVID-19 bounce-back has been weaker than expected, and that has meant clubs with unsustainable business models have gone out of business – regrettably so for players and their fans.
“To thrive, rugby clubs need to have a wide-ranging offering and varied revenue streams. All three clubs that have failed this season have had fragile business models for many years. The structure and ownership of a stadium is a factor alongside reliance on a single funder, challenging societal trends, financial mismanagement, and an insufficiently large fan base. “Not all three clubs had all these issues, but they faced a combination of these factors over many years before COVID and the current economic downturn.”
Crossan fires back
Crossan, who acquired Irish in 2013, has today expressed his “extreme disappointment” with the RFU’s decision, adding that it has resulted in the club filing for administration. He said: “Over the last seven months, I have been working closely with the RFU, PRL and representatives of NUE Equity to complete a widely publicised deal to acquire the club.
“Negotiations have been complex from the start, further complicated by issues regarding our tenancy at Brentford’s stadium and unrealistic demands from the governing body. But throughout, I have remained confident a deal could be made that would secure the long-term future of London Irish.
“As we neared the completion of the deal, I continually received promises, from both NUE Equity and Redstrike, that the acquisition would be completed imminently, and that funds would arrive within days. Right up to yesterday’s final deadline, we continued to receive verbal assurances from the group.
“I have trusted that these were not hollow promises and agreed to financially support the club throughout to ensure it could finish the season and give the group time to conclude the deal. Sadly, the promises have failed to materialise, and, despite our very best efforts, it was not possible to meet the conditions set by the RFU Club Financial Viability Group yesterday afternoon.
“Its subsequent disappointing decision to force our suspension has proved the tipping point where we will not be able to meet our current and future financial obligations. And after assessing our options last night, we agreed that administration offered the safest path forward for the club.”
Crossan stated that after a decade of supporting the club financially, it is “not feasible” for him to continue absorbing the multi-million-pound losses of the club each year, indefinitely. He has also pointed the finger at rugby stakeholders for their role in the demise of Irish, and other clubs.
He added: “The comments from the RFU chair, Tom Ilube, last night completely overlook the precarious situation other clubs are currently in. Collectively, owners of clubs are working very hard to transform their models, but the lack of real support, at times, is non-existent. And it speaks volumes that Ralph Rimmer and Chris Pilling have been appointed by the Government as independent advisers to work on the future stability of rugby union in the UK.
“The professional game in this country needs to be radically transformed. And the current leadership must urgently review its practices from top to bottom if it has a desire to see professional rugby continue in England.”