Wasps chief executive Stephen Vaughan says that the troubled Premiership club were simply “timed out” in their bid to be saved from administration.
Coventry-based Wasps officially went into administration on Monday after the reality of their financial problems began to come clear over recent months.
But Vaughan says they have been making losses ever since moving to Coventry.
“I knew when I came that the business has continually made huge losses since coming here,” Vaughan told BBC CWR.
“But the past has caught up with us.
“We did a great job in terms of cutting some of those losses. We brought Coventry Building Society to the Arena and brought Coventry City back to the stadium.
“Some wonderful deals and things were going great. We broke even for six months for the first time in the club’s history but then Covid hit. And the underlying debt from the previous six years proved too much to handle.
“All rugby clubs make a loss but we don’t have a benefactor to plough money into the organisation.
“We’ve been trying everything we can to get a deal over the line to save this fantastic club, but we’ve been timed out.”
Covid ‘accelerated’ the Wasps losses
Wasps were helped by a £13.4m loan from Coventry City Council when the former London-based club first arrived in the city in December 2014.
When the Ricoh Arena, as it was then known, was completed in 2005 it was Championship football club Coventry City’s new home.
But the ground was standing largely empty, following the Sky Blues’ rent row with stadium owners Arena Coventry Limited (ACL), when the city council’s loan enabled Wasps to move from High Wycombe to buy the ground nine and a half years later.
That loan still needed repaying, along with a £10m loan from Wasps owner Derek Richardson – and the club chose to do that with a seven-year bond scheme in April 2015, at £2,000 per bond, paying a fixed gross rate of interest of 6.50% a year, which helped to raise £35m.
It was an initial success, as Wasps’ healthy early crowds in Coventry continued to turn up and star players arrived.
In the summer of 2016, South Africa international full-back Willie Le Roux, Australia back Kurtley Beale and England internationals Danny Cipriani and Kyle Eastmond all signed for then boss Dai Young.
But the expected trophies did not materialise, crowd numbers dwindled once Wasps’ initial cut-price ticket offers had come to an end – and they lost two years of revenue when Coventry City departed to play in Birmingham following another rent row, at the start of the same 2019-20 season which ended with the Coronavirus pandemic.
Bondholders should have been repaid in May this year, but Wasps announced that they would have to push the repayment date back until the end of June.
“The refinancing was a huge part of what we needed to achieve,” said Vaughan. “But sadly, in the middle of an economic crisis, with the debt that we already had piled up, Covid accelerated that process. And we just didn’t get there quick enough.”
Wasps Holdings Limited has now ceased trading and is under the control of Andrew Sheridan and Raj Mittal, partners at specialist business advisory firm FRP, who on Monday afternoon announced 167 immediate job losses at the club, including the entire playing staff, head coach Lee Blackett and Vaughan.
‘Dialogue is still going on’ – Vaughan
Now Wasps have gone into administration, like Worcester Warriors, they too face automatic relegation to the Championship, unless both clubs can exploit the ‘no fault insolvency’ loophole in the Rugby Football Union rules which might allow for their financial woes to all be blamed on the pandemic.
Worcester have appealed against their relegation and administrator Sheridan has already said that Wasps will too, but Vaughan remains optimistic that the six-times English and twice European champions could still find new buyers.
“We’ve gone into administration but that doesn’t mean there is not still dialogue going on and that we’ve not been having conversations,” he added.
“People are aware that we’ve been on the market for a long time now.
“We understand that we will probably have to go down to the Championship but a lot of the players would like to stick with Wasps.
“If it means six months to bring it back with good solid honest leadership, and the core group that’s in there now, then we’d have taken that.
“There are lots of tears and some very upset people.
“It’s Wasps now, it was Worcester three weeks ago and there will be other clubs in the future.
“But we want to stay in Coventry. That would be our first choice without a shadow of a doubt.”
What happens in the short term?
One of the first things made clear on Monday was that the CBS Arena will still be open for business, as ACL has not gone into administration.
The Sky Blues will still host Wednesday’s Championship home game with Sheffield United and Friday’s Rugby League World Cup pool game between world champions Australia and Scotland will go ahead.
Also, the Wasps women’s team should still be able to function as most of the players are part of Wasps amateurs. Very few of the players and coaches were among the 167 on the Wasps Holdings Ltd payroll who have lost their jobs.
Meanwhile, the Netball Players Association said the impact on Wasps’ Super League netball side was “yet to be fully understood” after their players and coaching staff were among the redundancies.
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