Seismic new Welsh rugby deal offer revealed as WRU seeks unprecedented control
The Welsh Rugby Union and its four professional sides - Cardiff, Dragons RFC, Ospreys and Scarlets - will meet this week to try and break the deadlock on negotiations over a new Professional Rugby Agreement.
For the first time, WalesOnline can reveal the full details of the offer the WRU has put on the table, which the pro clubs are so far unwilling to agree to. The impasse has forced the Union to delay announcing the details of their five-year strategy for Welsh rugby as the game is engulfed by unwanted headlines on and off the pitch.
If the deal is signed, it will give the WRU unprecedented greater control of rugby operations and players at all four sides. The WRU will take on the debt of the clubs in return but it will also require funding directors at the clubs to take on financial risks to underpin a deal they are currently unhappy with.
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The WRU will distribute £120.1m to support each club's squad and academy costs over five years, provided clubs operate within the defined 'cap and collar' mechanism put in place. The Union funding is fixed for the first three years of the deal in what is termed a "rolling three-year funding model", while the final two years will be determined by the WRU's commercial performance.
As far as funding goes in the first three years the WRU will guarantee 80% (£96m) worth of payments but, crucially, 20% will be distributed to clubs provided they meet certain requirements. This will depend on the amount of Welsh players each club has on its books along with how many players of national interest come through each academy.
Also, if a club spends less than the agreed squad cost or academy cost then they will get penalised. For example, if a club spends £100k less than the agreed figure in a given season, the WRU will deduct £90k the following year. They will also be penalised if they go above the cap, although two marquee players are permitted, while there is a clause in there that would give the WRU control if RPI commitments are not met.
The salary cap will rise slowly over the next few seasons as follows:
FY26 - £5.1m
FY 27 - £6.6m
FY 28 - £6.7m
FY 29 - £6.8m
The WRU will take the Welsh Government debt off the clubs in return for a non-controlling equity stake in all four sides. If this deal is agreed the clubs will realise a £3.6m interest saving benefit through the refinancing of debt, as well as £7.8m benefit in debt repayment.
But there will still be a huge amount of reliance on the benefactors at all four clubs, who are taking most of the risk. The WRU require the benefactors to put in a minimum of £22m between them to bridge the funding gap over the next five years, but effectively want control over key appointments such as a CEO, head coach and S&C staff. But the biggest change is the amount of control over each side's rugby operations the WRU are proposing.
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The new powers WRU would have
The Professional Rugby Committee (PRC) will replace the PRB but the real sea change is the creation of a Centre of Excellence (CoE) and a National Contracting Panel which will replace the current Clearing House. Each club will have defined responsibilities and many will be linked to the incentivised funding model.
The CoE, which will include the Wales head coach (currently Warren Gatland) will be able to:
Request to clubs over playing positions and playing minutes of 'Players of National Interest'.
Request to clubs that a player of national interest should move to another Welsh club if it is in the best interest of the national side, although the final decision lies with the player. If a club agrees but the player rejects it the club in question won't get penalised.
Influence decisions over overseas signings.
They will have a say over a club's squad composition with the regards the number of home grown players and NWQ players.
A say on S&C programmes and individual player plans with players of national interest
Approval of a club's shortlist for a new DOR, head coach, head of S&C
Be able to request a club releases coaches to work with WRU age grade teams.
The clubs will get paid the full amount at the start of the season but if they do not meet the agreed targets they will have money taken away from them in what is essentially a fines-based system. For example, if the CoE agrees with a club prior to the season that a certain player should figure in midfield but he is played on the wing then the team in question will be penalised by missing out on funding. However, the CoE would be unable to make a request mid-season which could impact on that club meeting its requirements to unlock extra funding.
The delivery of the CoE's remit will lie with the WRU's executive director of rugby, the national men's head coach, WRU head of player development, men's national medical manager, men's national team's head of physical performance and head of performance analysis.
With regards players' salaries, the National Contracting Panel (NCE) will set the market salary rate in Wales to avoid wage inflation. The NCE will have a veto over the worth and length of all player contracts but if there is a disagreement between the NCE and the club in question which cannot be resolved the WRU CEO will make the final decision.
The WRU will also receive 'B Shares' created through the debt for equity swap which would give the governing body the following shareholder rights.
Approval of major transactions including new shareholder loans along with the acquisition and disposal of significant strategic assets.
Approval of new equity investors providing they satisfy the WRU's fit and proper person test.
The right to have a WRU observer at all board meetings at each club.
Approval of shortlist for a new chair or CEO.
Requirement for formal quarterly two-way business reviews between WRU and clubs executive teams.
The ability for all B shares except one B share to be purchased by the club and if that happens all of the governance rights would cease.
Asked about the negotiations going on behind the scenes at the recent WRU AGM, CEO Abi Tierney said: "This isn't about Warren Gatland running the clubs, this is about creating a system. I think the WRU's job is to be a system leader here, look at the system as a whole and, therefore, what leavers to pull.
"It's so important to me that the four clubs remain independent and have their ability to be entrepreneurial. I've learnt how different they all are, with different histories.
"Hopefully when the fans see what it means in practice, they won't be worried this is about the WRU. It's actually been one of the things that has rightly made the clubs really cautious in this process.
"What we're trying to do is absolutely be clear about what are the small things we need to collaborate on. This isn't a takeover or moving to the Irish model. What are the small things wee need to collaborate on as a system that will give us the outcomes we need.
"That will benefit the regional clubs and it will benefit the national team. We've mutually agreed outcomes that we're all trying to work to there."
