Englands biggest rugby clubs face the very real risk of going bust unless the uk government eases restrictions on fans entering stadiums, according to the head of the countrys leading league.
Darren childs, chief executive of premiership rugby, the top tier of english club rugby union, called on ministers to come to a pragmatic solution for the reopening of grounds despite concerns to public safety due to the coronavirus pandemic.
Mr childs told the financial times that financial losses from rugby matches that restarted in august without paying spectators, as well as an expensive testing regime for players, is costing clubs tens of millions of pounds.
These shortfalls are devastating to rugby clubs, which are more reliant on match day income than wealthier sporting competitions such as footballs premier league, which derives more from broadcasting deals. last season, exeter chiefs was the only one of premiership rugbys 13 shareholder teams to turn a profit.
Its becoming increasingly more alarming, the longer it goes on, said mr childs. were not expecting to open up every seat, but just getting some back in will help to alleviate some of the financial downside...were trying to keep the show on the road.
His warning comes as the uk government has scaled back plans to allow the gradual reopening of sports grounds following a rise in coronavirus cases.
Pilot events taking place this month have been restricted to just 1,000 spectators, while plans to allow stadiums to be up to a third full from october have been placed under review.
Sports industry executives have expressed frustration at the governments restrictions on fans attending open-air stadiums, believing they have done more to adhere to social-distancing requirements than other industries such as airlines and restaurants.
Mr childs said reopenings should be made on a location-by-location, game-by-game basis. it would be helpful if we could get the government to come along with us on that journey. some clubs are in parts of the country where there is very little infection, but we still cant get fans into those stadiums.
Premiership rugby made revenues of 75.5m in the year to june 30 2019, mainly from a television rights deal in the uk with bt sport, and a sponsorship contract with us insurance company gallagher.
These revenues are split between the clubs, with a third of their income from central distributions from the league and the majority gained from their own sources, such as match day income and sponsorship deals.
Financial strain is being felt even after premiership rugby sold a 27 per cent stake in the league for 200m in 2018 to cvc capital partners, the european private equity group.
Some rugby clubs are spending the roughly 15m each received from the cvc deal during the pandemic to help stay afloat rather than investing in infrastructure and marketing spending. mr childs said there were no plans from cvc to provide additional funding, leading to a greater focus on cutting costs.
Many clubs have cut player pay by up to 25 per cent. premiership rugby has also reduced its salary cap for next season the limit on how much any team can spend on wages to 5m, from 6.4m.
These measures have proved controversial. in june, mark lambert, chairman of the rugby players association, the union, said they showed an absolute disregard for players who initially considered strike action.
We had a cost base that, had we not dealt with, would have brought risk of losing clubs, said mr childs, adding the lower salary cap could remain in future. all salaries are linked to financial performance of any business. sport is absolutely no different.
Further pressure on revenues is likely. sports broadcasters have demanded rebates to compensate for the loss of live action during this years lockdown, with the premier league returning 330m to its tv partners such as sky. premiership rugby is undergoing similar talks with bt sport, but no agreement has been reached.
These are also concerns pay-tv providers will seek to recoup coronavirus-related losses by paying less for sports deals in future.
Premiership rugbys deal with bt sport expires next year, with mr childs saying it was considering launching a competitive tender process for its broadcast rights, hoping to gain interest from digital groups.
This includes amazon which has acquired the rights to most matches for the autumn nations cup, a eight-team national rugby tournament taking place in november.
Mr childs said the league would consider creating its own subscription service to screen matches to fans over the internet.
There are people that just live and breathe this sport, he said. i think theres definitely an opportunity for us to look more at our media output as a way of engaging with fans on a more regular basis than we currently do.