New Scarlets investors defend credentials and insist they should be the ones to survive

Wales Online

17 hours ago

New Scarlets investors defend credentials and insist they should be the ones to survive
The inside track on new Scarlets investors House of Sports and Entertainment
House of Sports & Entertainment's chief experience officer Simon Kozlowski
New Scarlets investors House of Sports & Entertainment are adamant they should be the team in the west if the Welsh Rugby Union cuts to two professional clubs.
‌
House of Luxury (HOL) have recently began an investment partnership with the Scarlets and its sports section House of Sports & Entertainment have assumed day-to-day control of the club's off-field activity. Over time they aim to take a 55% share of the club.
‌
The company facilitates off-market deals for high value assets, focusing on both private acquisitions and confidential sales. It's owners insist they have huge passion for Welsh rugby and plan to be involved for the long haul.
‌
Over the next couple of weeks the WRU are set to begin a formal consultation if what they see as the optimal structure is agreed by the board. It is an open secret the WRU are expected to push for a reduction to two teams, with one based in the east and another in the west.
Unless a merger is forthcoming, which has so far been ruled out by House of Sports & Entertainment, it could well put the Scarlets in a two-way battle with the Ospreys for the right to become the west Wales team, with a tender process to follow. Sign up to Inside Welsh rugby on Substack to get exclusive news stories and insight from behind the scenes in Welsh rugby.
"I think three things are important here," said HOL's chief experience officer Simon Kozlowski.
Article continues below
"Firstly we need the budget to pay for all of this stuff.
"That is only going to come from a solid economic model where you are switching on your revenue streams, integrating the community and you are creating good revenue flow.
"Without that, all of this stuff falls apart.
‌
"The second thing you need is a talent pipeline. I can tell you that Scarlets, even in the current constraints, are heavily investing in talent pipeline development.
"We don't even need to touch that because they are already going in heavy on them.
"In terms of how they are bringing that talent through there is room for improvement. We believe we have the expertise to assist with that.
‌
"The third thing you need and this is the big elephant in the room - a facility.
"Even with the new redeveloped St Helen's they (the Ospreys) still won't have the seating capacity we have."
Naturally, the Ospreys would have a different view on the best way forward if Wales does drop to just two sides, and WalesOnline has approached the club for interview. They have their own ambitious plans, having recently been granted planning permission to redevelop St Helen's.
‌
Phase one of the redevelopment will include a roof over the terrace, a new and repositioned 3G pitch, refurbishment of the existing clubhouse, a new fan zone, and the installation of new stands.
Among these new stands is a proposed permanent South Stand, which will feature three hospitality suites, while phase two of the redevelopment will include a training facility and a gym.
WalesOnline also understands those within the WRU would like to build a new centre of excellence moving forward where the remaining teams would be based.
‌
Kozlowski believes there is logic in a new centre of excellence being built at Parc y Scarlets.
"What needs to be asked is if everybody is so cash-strapped in this ecosystem, where exactly does the money for this performance centre come from?," he told WalesOnline.
"If you are trying to create a performance centre like St George's (football) performance centre in England. If you take that as a reference point and ask where can we create that in Wales, you need some space and foundations on which to build that because you are certainly not going to build that from scratch with the budgets bandied around in the Welsh ecosystem.
‌
"My point is you need the money and we know how to switch on revenue streams and you need a talent pipeline.
"Importantly we have the facilities on which to build a solid foundation and the land around it to expand and make this fantastical performance centre everybody is envisaging.
"If I was Dave Reddin and looking at the ecosystem I would expect you to sell me on the value that is going to get me to my goals.
‌
"We need money, a talent pipeline and we need facilities not to start from scratch, and tell me what you are going to do in the future.
"We are already doing it and what we are bringing is just the missing leg on the stool that broke off, which is the economics. We've cut that off and are sticking a new titanium alloy leg of financial vibrance onto that stool."
House of Sports & Entertainment have come in for some vitriolic criticism on social media from Welsh rugby supporters in recent days, with many questioning their credibility.
‌
It is important to note they do not own a single share in the Scarlets business yet but are working under a management contract across marketing and commercial while the current board remains in place.
If the Scarlets survive the radical restructuring of the professional game then they will assume a 55% shareholding in the club.
In order to do this it will need to pass a fit and proper test with the WRU.
‌
"HOL expects to work with the WRU on due diligence as they become a shareholder," said Kozlowski.
"A two way process clearly makes sense for all parties. As of right now, HoL is not a shareholder and current scarlets directors are still in place - however, over time HoL will become a majority shareholder and as a result we will need to work with the WRU accordingly."
Kozlowski is also quick to defend the company's credentials, although could not provide figures for how much money they intend to invest.
‌
"So, have we put any money into the Scarlets yet? The answer to that is yes but we are not at liberty to say how much," he tells WalesOnline.
"In terms of our credentials I will say that our quarterly profit is more than five times the Scarlets' annual budget.
"We are having conversations across countries and continents. We are speaking to English football clubs, American football clubs and other sports.
‌
"This is a new domain for us in terms of taking ownership of a sports club.
"I was a business turnaround consultant. I have done business modelling innovation at national government level. I've worked for some of the biggest advertising agencies in the world and I've had an innovation consultancy agency.
"I've written my own IP around it by just studying the case studies. I know of the parts, the models and the methods in terms of what works in transforming businesses.
‌
"In the last three years, House of Motorsport, which ultimately became House of Luxury, has sold no less than 10 football clubs.
"In order to sell those clubs we had to get in deep on the economics, the financial models, the opportunities to really dig into the investment capabilities, the profitability potential, the success, the longevity and sustainability of those clubs."
Despite his confidence in the plan to turn around the Scarlets, he says Welsh culture does need to change to embrace such a radical change.
‌
"In all of the deals we've done in terms of the sale of a sports club for a client we have never encountered the level of overreach in any vertical that the WRU has," he tells WalesOnline.
"When you go and look at other governing bodies, even in rugby, there are very few with the level of invasive control that the WRU has, which actually suffocates the initiative, autonomy, creativity and the general stuff you need in business to thrive.
"They now become so dependent on the union that it becomes very difficult.
‌
"What has been created is something of a socialist culture where in tough times the only thing to do is act like Oliver Twist, put your hand out and say to the union 'I want some more'.
"A subset of that culture is where benefactors came in. 'We can't get more money from the union so we need benefactors'.
"It's a word we've banned in our organisation. We will not be considered benefactors. We see ourselves as investors and business regeneration specialists.
Article continues below
"The Welsh eco-system is by far the most challenging. When I talk about eco-system I mean the WRU and the social culture of Wales and how it resists change and bites the hand that tries to feed it while it also turns and attacks itself.
"These are things which make it very difficult for Welsh rugby to rise up and meet the objectives and the vision that the WRU have said they are pursuing.
"We need to work on our relationship with the WRU. I'm aiming it as a shot across the bow of the entire ecosystem."