'If I'm to put a timeline on where this takes us back to, it's years... we face severe challenges'
Nick Johnston is well versed on the rugby scene. Northampton, Worcester and Sale are all clubs he has worked at in a lengthy career where he successfully branched out into high-performance sport and business consultancy. But he has never known a week like the nine days just gone.
Twenty minutes notice was all the head-ups the Coventry managing director received that the RFU were pulling the plug on the Championship season last Friday week. With it, plans meticulously laid last summer when he first came on board at Butts Park Arena went up in smoke.
Bad enough having to come to terms with the RFU’s snap February decision to halve its annual £530,000 second-tier club grant. Now a hole burned right through the midlands club’s financial projections, the governing body terminating the 2019/20 season with Coventry still having four homes matches to go.
They had been on track to encouragingly grow business revenue to £2.5million, up about £500,000 on a year ago, but the coronavirus-enforced shutdown has caused revision. Last weekend alone, the loss of the Newcastle Falcons fixture at Butts denied them around £120,000, anticipating takings they cannot claw back with a refixture due to the RFU’s season-ending declaration.
Add in how their insurance broker has also refused to stump up on a policy that provided business interruption cover for notifiable diseases and it makes for quite an extraordinary headache. “It has been difficult because you’re dealing with people’s lives,” said Johnston to RugbyPass.
“With the uncertainty that comes with that – and the uncertainty out there in the world because we’re learning about this situation on a daily basis – it’s about keeping people informed as much as we can and keep communicating. It’s been challenging, a long week, but I can’t speak highly enough of people who work at Coventry Rugby Club and their understanding, response and collectiveness to get through this together.
“It just tells us we have the right people on the bus moving forward. They have said, ‘Look, let’s just get through this together’. I’m sure other clubs are like that because that is what the game tends to bring, good values and good people, and we haven’t had one negative comment. We’re really proud of how our people have responded.”
Brass tacks: is the Coventry business model sufficiently robust to cope at a time when even the Championship’s leading club Newcastle have placed their players and staff on a furlough, a period of unpaid leave? “We have taken similar steps,” he volunteered. “We know what it’s going to look like for the next four months minimum and we will just work through that period of time, but there are some clubs I hope who get external help.
“I hope we all get some external help because I would hate… it would be disastrous for the game if we lost clubs during this period because there is undoubtedly some clubs at risk here, including ourselves to a certain extent. We’re not outside that bracket. We’re right in the middle, but you have just got to work through it methodically, make the right decisions – and some of them are hard decisions because you’re dealing with what the club looks like post-coronavirus.
“It has put us under huge strain. I’m not going to hide away from that. We have been pretty open and have managed to keep things going, paying everybody properly this month fully. But moving forward we have to be honest with them, things may change. It depends on the level of support from the government, helping us around wages, but we are yet to hear unfortunately from the RFU.
“We don’t even know if there is a next season because we haven’t signed a participation agreement because we haven’t agreed on funding yet – we’re still in dialogue as a group of clubs and that’s still ongoing. The RFU cuts were bad enough. There was a level of restructuring going on as it was but now we’ve no income, simple as that.
“We’re a proper rugby club with a great fanbase, great supporters who have been brilliant in the last couple of weeks around this matter in particular and the funding. But the business has just stopped to a halt. If I’m to put a timeline on where this takes us back to, it’s years. We’re trying desperately to keep hold of everybody, but we face severe challenges.
— Coventry Rugby (@CoventryRugby) March 20, 2020
“We’ve written a plan for our recovery strategy that keeps the business upright, keeps it going, but dependant on time, our liability will have to reduce. Our main cost base is salaries, so we have to look at that on a monthly basis and that is what we’re planning to do. Then we have got to plan beyond that because we envisage an economic downturn. We have a duty to our community to make sure when we are open, they can come and watch rugby and there isn’t a financial hurdle to stop them from doing that.”
For a once-proud club drifting in the National League set-up not so long ago, Coventry’s rejuvenation has been one of the recent success stories of English grassroots rugby. Johnston’s appointment last summer to target further commercial growth was reflected in how a now generally winning team – Coventry had reached fourth place with seven games remaining – had become a popular drawcard, the midlanders only behind Newcastle and Bedford in the cumulative home attendance figures when the season terminated.
Shrewdly picking up the pieces will be a monumental task. “You had a feeling something wasn’t quite right, you could see what had happened around the world in Asia and the close down. You had to err on the side of caution, so we started planning but ultimately to where we are today [lockdown] it’s hard to imagine and really unprecedented. We have had to work quickly and quietly to keep the ship steady, but we still haven’t had an offer or any communication around what RFU help looks like.
“I’m presuming they are working on it but if you look at Super League, they put a plan together and have gone to the government for a bailout. Then you get the precursor unfortunately of the RFU getting it out there early that this (coronavirus) is going to cost them £45m/£50m. That’s drastic and unfortunate like it is for us all, but I’d like to look at those numbers a bit more carefully.
No holding back here…https://t.co/rbyeldBI0d
— RugbyPass (@RugbyPass) March 20, 2020
“The average RFU wage is £71,000, in the FA it’s £53,000. They have significant costs but they’re a big union, probably the biggest in the world, and have a duty of care to the whole game, not just elements of it. Hopefully, they will come to the table. That is one of our frustrations.
“We have also got huge frustration around our insurance. We think it’s morally wrong what our insurance company are doing to us in particular and thousands of other businesses because we have a policy that has got business interruption for notifiable diseases.
“They are stating we can’t claim because we haven’t had a proven case of Covid-19 on the premises. We have self-isolated so many people who have been on our premises in the last month with all the symptoms, but no one can physically get a test because they aren’t available so where does the burden of proof lie?
“We can’t prove we had one, they can’t disprove we haven’t had one. That may come with an antibody test, but they have a moral obligation. They take the premiums and should be good corporate citizens. That is why we have launched a petition on change.org to get some attention because we’re one of tens of thousands of businesses, including other clubs in the league, like this.
Hundreds of people have signed our petition, but more importantly other small/med businesses have contacted us to say their insurers are not honouring their business disruption clauses. So sign at https://t.co/q33dAW0mT3 and share with your friends!
— Coventry Rugby (@CoventryRugby) March 27, 2020
“It’s just wrong, fundamentally wrong, and the government should intervene on this at the highest level. We just can’t see the logic on why they aren’t paying out. Our insurance policy is £3,000 a month and by definition, they should pay out, but it’s an insurance company and they seem to be wriggling out of all angles and in all directions at the moment.
“We have now got legal opinion and think we’re in a strong position as it stands, never mind if we get a positive test. That inevitably will come because of the mass infection, but it’s a strange position they have taken and we will pursue it vigorously. We aren’t rolling over. Even if it drags on into next year, this is a point of principle and morality for us.”
Mention of next year, before the coronavirus stoppage happened there were moves afoot to formulate a plan to make the Championship more self-sufficient given the funding cold shoulder received from an RFU in a climate where the gap between the haves of the Premiership and the have-nots of the second tier are stark.
“The gap has been created for obvious reasons. It’s financial ring-fencing rather than performance ring-fencing. The game needs to have a long, hard look at itself in this country. Hopefully, this will be the jolt that everybody stops, dusts themselves down and says, ‘Let’s just do things properly going forward and make sure things are equitable if you get up’.
The Championship clubs – which will include Saracens next season – have asked Griffiths to find a way of making the twelve-team second-tier division a viable operation.
— RugbyPass (@RugbyPass) March 12, 2020
“The team that comes down keeps their central funding and gets a parachute payment of £1.3m. You rate that against our current central funding – you’re never going to win that race to the top, are you? You go up and you’re not even a shareholder. They get £6.5m, you get £1.4m approximately. That has all got to change.
“We’re still working on a plan with Ed Griffiths. He phoned me up, offered his services, so I passed it onto the league and the clubs have taken it on. It’s a piece of work that has gathered pace for obvious reasons and it’s positive. It’s not finalised and it isn’t about breaking away. It’s about working closer with the union and with PRL but having an element of independence and control. We just need to get all the ideas on the table and if we do that we will come up with something good that is right for eleven clubs.
“One of the ironic RFU statements when they cut our funding was a return on investment and financial viability, then quoting £265,000 of average debt which is normally mopped up, like most sports club, with a benefactor. We’re no different at Coventry. We have Jon Sharp. His choice is to fund that club because that is his passion, that is his life. He loves Coventry and loves the people of Coventry. That is why he does it. He doesn’t do it for his ego. He’s not driven that way.
“But when you start looking at financial viability, the average debt of a Premiership club is £3.8m or thereabouts, so the argument is flawed… let’s just hope the game gets sorted out now. We shake ourselves down, get on and work together because that is the key, working together. Ultimately we want to produce good English rugby players, good English coaches, physios, strength and conditioning coaches so England are good.”
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