The following is a letter which has been sent to all member club secretaries of the Welsh Rugby Union in response to the call for an EGM.
It is also re-iterates messages delivered to clubs during a tour of all districts by the President (Dennis Gethin), Chairman (David Pickering) and Group Chief Executive (Roger Lewis), who all co-signed the letter sent to the clubs.
Dear Club Secretary,
You will be aware that the WRU has received a request to host an EGM with applications from 43 clubs, including the four Regions and a further three clubs related to the Regions, to debate a number of issues.
As those concerns have been raised directly by member clubs it is vital we provide you with the relevant information to help and inform your deliberations ahead of the meeting.
This letter will therefore serve as our initial communication related to the nine points raised by clubs in the notice for the EGM.
You will be aware that in recent months we have refrained from responding to a number of public attacks on the WRU from a small but vociferous number of individuals and organisations.
It continues to be our view that to respond to some of the insulting, inaccurate and downright venomous comments expressed would be beneath the required dignity of a governing body representing your interests.
Of course there is no doubt the visibility of those making the comments and accusations have achieved on a variety of media platforms has served to inflict damage on the reputation of Welsh rugby.
Now our clubs want direct answers and within the terms of our remit to nurture and develop all rugby in Wales we are pleased to enter this debate with vigour and honesty.
The specific areas of concern raised in the notices for an EGM are as follows with our initial responses and explanations below.
NATIONAL LEAGUE STRUCTURE
You will have today received a full draft of the new league structure which names all the clubs including the league you have been allocated. In addition to promotion and relegation.
It is important to note that a working party was established to consider league reform following a request by clubs to the WRU Club Census in 2012. There were strong concerns about travel cost and time related to the distances between clubs in some leagues.
These concerns were addressed in a new format which was shared with the clubs by letter in August 2013.
Concerns about the league structure began emerging through 2014 especially during District visits by our President, Chairman and Group Chief Executive.
These were put before the full Board of the WRU and it was concluded that the best course of action was to prepare the full detail of the changes for the clubs to see.
We are now at that stage and you are now in a position to make an informed judgement on the new structure.
The WRU net debt, which at one stage totalled more than £70m, was below £19m as at 30 June 2013 and under the current repayment schedule could be completely repaid by 2021.
The terms of the loan are well below market rate and provide the governing body with a low cost of borrowing. Not so long ago interest payments annually amounted to some £3.5m while they now stand at closer to c.£0.8m annually. The interest savings are re-invested in rugby and are reflected in the increased re-investments into the wider game over recent times.
If the WRU now sought to renegotiate the loan, notwithstanding that the consent of Barclays would be difficult, in order to fund other activities the interest rates would rise and a large amount of annual income would be lost to rugby.
By continuing to repay the debt in accordance with the term of that agreement and meeting banking covenants the WRU is ensuring that £10m of the original loan will not have to be repaid. So, ensuring another direct saving of £10m for the game in Wales.
The WRU has dealt in full with this issue related to loan repayments in a separate document to clubs. The basic principle is that the current loan arrangement delivers the best deal for Welsh rugby in terms of term and interest rate with the aim to free up more annual income for investment directly into the game.
TICKET COSTS AND MANAGEMENT
It is vitally important to take a realistic view on why ticket prices are maintained at a commercial level. The income derived from the sale of tickets to people who want to watch a successful Wales team in action is crucial. This funding is used to support our declared priorities of the elite game, the community game and the upkeep and development of the Millennium Stadium.
Ticket prices for matches at the Millennium Stadium are broadly lower than at all other stadia where RBS 6 Nations games are played.
The WRU operates to a banding structure which means that some international matches are always substantially cheaper than other, premium, games.
The lowest price for an international match ticket at the Millennium Stadium for recent games has been £10 and the highest has been £85 for a premium match. The new ticketing schemes that have been presented to the clubs via the district meetings see the introduction of a commission scheme and new offers to help enhance and revive sale of International match tickets through member clubs. As well as the introduction of these new commission schemes the WRU has taken on board the feedback of the clubs across many different aspects of administration around match tickets and has implemented operational changes resulting from direct feedback, again many of these have been presented at district meetings.
NO BUSINESS PLAN
Since 2007, the WRU has operated to a five year rolling financial and strategic plan which aims to ensure maximum income generation and the best use of funds. This has been distributed to our clubs.
The turnover of the WRU has risen in the past seven years from c.£45m a year to the current level of c.£60m a year.
From this, record levels of re-investment in all areas of the game in Wales have been achieved. In the last financial year the WRU distributed £22.1m across the game in Wales.
The WRU recognises that a successful Wales team is the principle financial driver for the game in Wales. Money generated principally through broadcast contracts, match ticket sales, hospitality and merchandise sales is distributed accordingly across the game in Wales.
This is the income which forms the basis of the money distributed into the community game in Wales.
Over the past seven years the WRU has enhanced the national team structure by employing world class coaching and backroom staff, established the WRU National Centre of Excellence and boosted the investment in age grade and academy rugby, building up a fixture schedule against the world's best teams. The success of the national team is unparalleled.
The accusation that the WRU has withheld funds from the game is based on the ludicrous and inaccurate assertion that the governing body has £11m in cash reserves.
The WRU does not have a multi-million pound cash reserve and never has had. This claim is wholly incorrect.
The WRU Annual Reports show that re-investments to the game in Wales have never been higher.
The Annual Report is an accurate, audited and transparent reflection of the accounts of the WRU. Please note that in 2007 the new management team at the WRU forensically examined the accounts of the WRU and found that £3.2m in claimed assets had to be written off due to inaccuracies in previous annual accounts.
There is no doubt that there has been a damaging attempt to discredit the WRU publicly (financially and otherwise). We hope some of the information provided above serves to discount these claims. Any specific questions directed through district meetings to the board of the WRU will be answered.
It may be worth noting that just two years ago the IRB pinpointed two unions in the world game which were seen to be punching above their weight. They were New Zealand and Wales. We should be proud of that.
EVOLUTION OF RUGBY
The WRU has worked constantly and vigorously to nurture and develop the professional game in Wales.
Since 2009 the direct allocation of funds from the WRU into the four Regions has risen from £3.2m a year to its current level of £6.7m. The WRU is currently negotiating funding levels which will be increased substantially.
All competition income from the European and Pro12 competitions are passed to the Regions in full including recent increases in these tournament incomes.
The WRU also funds all the regional academies and the regional age grade competitions.
Under the current round of negotiations the WRU is proposing a National Contract structure in order to help retain key international playing talent in Wales especially given the recent exodus.
The community game has been identified as a priority and the WRU now has more than 50 staff focused entirely on grassroots rugby. This includes development and participation officers as well as a Rugby Operations Team.
In recent years when the WRU has been able, it has re-invested substantial extra funds into the community game in one off schemes. The Participation Points Scheme distributed £1m extra with facilities grants over recent years approaching nearly £2m.
It remains the priority of the WRU to continue to seek ways of further strengthening the community game. Following a review of WRU Rugby Department activities by the new Head of Rugby key initiatives aimed at boosting schools and junior rugby with the direct aim of driving more participation into the club game have been launched.
BOARD BEST PRACTICE
In 2012 the WRU launched a governance review under the chairmanship of the High Court Judge Sir Robert Owen. This has now been completed and its recommendations are being evaluated before being presented to the WRU Annual General Meeting later this year. A number of key changes in governance are being considered. These will, in due course, be discussed with member clubs.
We are aware of a so-called alternative manifesto which principally reflects initiatives and changes already in place or being made. Some of the claims in the document are also clearly based on confusion about the operational management of Welsh rugby. We are prepared to answer any specific questions related to this document and will address all questions at the forthcoming EGM.
We have attempted to keep this initial letter concise while also striving to answer directly some relevant points ahead at the EGM.
Please be assured that we will fully engage with all our clubs on these issues before the EGM is held.
In the meantime the WRU will not be diverted from its day to day business and will continue to work towards the success of the game at all levels.
We remain confident that the wider reputation of Welsh rugby can be repaired and enhanced as soon as we all work together with common aims.
Yours sincerely Dennis GethinWRU President David PickeringWRU Chairman Roger LewisWRU Group Chief Executive
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