8 hours ago
WRU reveal strong UK and overseas interest in Cardiff Rugby as more than five bidders emerge
WRU reveal strong UK and overseas interest in Cardiff Rugby as more than five bidders emerge
The union is looking to sell the Arms Park club have acquired it out of administration in April
A general view of Cardiff Arms Park
(Image: Huw Evans Picture Agency Ltd )
The WRU says it has received strong early interest as it seeks to sell Cardiff Rugby having acquired it out of administration back in April.
The union said that more than five credible potential bidders for the club emerged ahead of a deadline set last month for submitting expressions of interest.
While for reasons of commercial sensitivity their identity cannot be disclosed, they include UK-based and overseas parties. The union has also launched a process to appoint a new independent chair of the Arms Park-based club.
The assets of the club were acquired by the union in a pre-pack deal with joint administrators from PwC Rob Lewis and Ross Connock. The club was put into administration by its former board following the failure of its owners in the directors Helford Capital, as regional principal investors, to make up a trading shortfall of around £1.2m.
The WRU commissioned a fit and proper person and financial assessment of the directors of Jersey-based Helford Capital, in Neal Griffith and Phil Kempe, before they acquired the club back in January, 2024.
While that assessment, which cost around £50,000 and was carried out by London-based advisory firm Thorium, concluded they had the necessary financial liquidity, they failed to adhere to the legal agreement by underwriting funding losses as the assigned benefactors under the funding deal between the union and the regions in Professional Rugby Agreement (PRA) 2023.
Article continues below
The WRU has launched a structural review of the professional game, which could potentially see the number of regions reduced from the current four, to three or potentially two. Cardiff, who are privately owned, and the Dragons, agreed to the new five-year funding deal with the WRU under the so-called PRA 2025. The Ospreys and the Scarlets declined to sign, citing concerns over the WRU would turn Cardiff into a "super region", which will require the union to have to inject an additional projected £1.2m over the next year as its now assigned regional principal investor.
While the Dragons and Cardiff will see their funding from the WRU increase incrementally over the next five years having signed PRA 25, the Ospreys and Scarlets will remain on the inferior funding deal of PRA 23, which has two more years to run.
It is understood that the Ospreys and the Scarlets are now considering legal action against the union. Their argument would hinge around a claim of an abuse of power with the union providing more favourable financial treatment to Cardiff and the regions not being consulted ahead of them acquiring the assets of the collapsed club out of administration at a cost of £780,000. Under the PRA 23 agreement if one of the regions collapsed the remaining three were liable to take on debts owed to the union, although benefiting from an increase in funding. However, any legal challenge could cost millions of pounds.
Richard Collier-Keywood.
(Image: Ben Evans/Huw Evans Agency )
On the strong interest in Cardiff, which doesn't mean interested parties will make formal bids, chairman of the WRU Richard Collier-Keywood said: 'There are more than five and quite a broad spectrum of people who have indicated interest. This shows that quite a few people are seeing this as a valuable opportunity, which is very positive for Welsh rugby. As well as being UK-based, there is also some international dimension. We are really interested in people who want a vibrant rugby club and people with a proven ability to put Welsh rugby first.'
A formal sales process, which is expected to see the union appointing a corporate advisory firm, will not be launched until the union is able to set out a new structure for the professional game in Wales and a window for any improved counter bid to its takeover of the assets of Cardiff to the joint administrators, expires.
Any improved offer deemed in the best interest of creditors, would have to be lodged by July 9. It is understood that Mr Lewis and Mr Connock have not received any counter bids with the focus being on the WRU's own sales process. As a secured creditor the WRU could block any improved offer to the administrators that didn't take on the £6m in debt finance from NatWest that the WRU had arranged and passed through to Cardiff before its administration.
Mr Collier-Keywood added: 'I wouldn't buy Cardiff unless I knew what the future structure for Welsh rugby was going to look like. That process will take place after we have made a determination on what the right structure is going forward and the counter bid deadline with the joint administrators expires. The current Cardiff company, which we own, does not have any precedent in that process so has no inside track in relation to it.
"We are bound to treat it entirely independently. We have also now officially started the search for an independent chair, as we promised we would.'
The union will be looking for any new owner of Cardiff Rugby to take on the £6m debt owed to it by the former club. However, whether bidders would have an appetite to acquire a business that remains loss-making and will require additional investment even with the increased PRA 25 funding, with that debt attached, remains to be seen. While not an administration process, global drinks brand Red Bull have just concluded a deal to acquire the Newcastle Falcons in the English Premiership with its £39m debt liability.
Could a major brand be interested in Cardiff? Possibly. Bidders could also potentially look to acquire development rights at the ground in a new long-term lease with the owner of the Arms Park, Cardiff Athletic Club.
The WRU has projected into its planned refinancing of its existing debt £30m owed to the Welsh Government and NatWest, an option whereby the £6m liability taken on by a new owner could be repaid over the long term. As part of the marketing of the club, the WRU has also been talking to global diaspora organisation Global Welsh.
On the current position with the Ospreys and the Scarlets, Mr Collier-Keywood said: 'We were very clear on the night of April 9 when we did the deal (for Cardiff) that we only intended to hold this temporarily and we have repeated that in all the communications to everybody who has asked us that question. That is why we are going ahead with appointing an independent chair at Cardiff as we are trying to treat it as independently as possible and recognising that we act in two roles under the PRA; one as the WRU, but also under the ownership deed as the regional principal benefactor holder.'
Having not signed up to PRA 25, Mr Collier-Keywood reaffirmed that there would be no rowing back with regards the Ospreys and the Scarlets.
He said: 'That has gone and not necessarily for the reason that we cannot afford that, but it is a system's issue whereby we got four people around a table with you who are meant to wear a Welsh rugby hat first of all, as a fiduciary duty of a sub committee of the WRU board (PRB which includes representatives from the regions) and ourselves. My observation is that has just not worked. And I have sympathy for them and it is not as if they are bad people, but if they are also fighting for survival or to thrive as a club, it is very hard for them to put that Welsh rugby hat on, but that is what the system requires them to do at the moment.
"If you read what Abi (CEO Abi Tierney) said originally about it, we went to four originally because we thought that was the simplest way to get it done quickly, so we could then start to talk about what the future structure of rugby was. Of course if four and the systems had worked then we wouldn't be now looking to do another review of that. However, that has not worked obviously because not everyone is signed up to it.'
On the threat of any legal action, the chairman said: 'We want to take people with us as those people have made huge investments over many years into Welsh rugby.'
The chairman was asked as part of its structural review whether any consideration would be made to changing the current geographical footprint of the existing regions - all located within a 60-mile radius - like moving one to north Wales?
The former UK managing partner of PwC said: 'Everything is on the table as far as I am concerned and key to this is making sure that we get our academies and pathways right. It all has to come together. We were hoping to do this with everyone on PRA 25 originally. If that had worked from December 2024 then fine we would be in a different place today, but it didn't work so then we had to do the review we thought we had to do.'
While stressing that as part of the structure review a WRU-owned Cardiff would not be treated favourably, it is highly unlikely that a team would not have a presence in the capital.
The union's new performance director will have a key role in overseeing the new structure.
Article continues below
The WRU's Dave Reddin
(Image: Huw Evans Picture Agency Ltd )
Mr Collier-Keywood, who was born in Nottingham but whose later mother hailed from Maesteg, said: 'The other person who will be heavily involved in this will be David Reddin, who officially starts on July 1, although that doesn't mean he isn't doing anything with us at the moment. We want Dave fully involved in this process as ultimately that will be a massive part of his role going forward.
"He needs to take a bit of time to get to grips with this. And if everyone agrees with where he and Abi arrive, then it could be done relatively quickly. If we don't agree then of course it will take longer as we will need to make sure we go through a robust data-led process in terms of why we conclude what we conclude. However if we cannot (get agreement) it ultimately would be the responsibility of the WRU board to make a decision.'
