'If you count Derek's loans in there as well, it's over £100m'
Wasps CEO Stephen Vaughan has explained the staggering nine-figure level of debt that left the Gallagher Premiership club in need of a minor miracle to escape the financial turmoil that ultimately resulted in 167 players and staff being made redundant last Monday. With the club now in administration, it is currently suspended by the RFU and unless a takeover quickly happens in the next few weeks, Wasps will only re-emerge in the 2023/24 Championship if they manage to eventually get back in business.
It has been a harrowing time for Vaughan, the former CEO at Gloucester, who arrived at the Coventry-based Wasps in 2019 tasked with cutting costs. He became group CEO in May 2020 just two months after the pandemic caused the shutdown of rugby in England.
However, despite the club going on to reach the Premiership final when the 2019/20 season was restarted, it never recovered financially and it left Vaughan delivering the dreadful ‘we’re to cease trading’ news at the training ground at the start of this week.
Since then Vaughan – who himself was made redundant – has been in explanation mode, trying to get across his side of the Wasps demise story and he was a revealing guest when he appeared on The Rugby Pod for a 38-minute interview with Andy Goode and Jim Hamilton.
He carefully explained the club’s business model, outlining that it had broken even for the first time ever in the six months prior to the pandemic, but legacy debt became a noose around its neck when the world reopened and the lack of investor interest in rugby eventually proved unsustainable at a club where the debt in the Derek Richardson-owned business exceeded an astonishing £100million.
A very frank, honest conversation with Wasps CEO Stephen Vaughan as we get the full story on what happened in Coventry.
Listen now on Spotify ?https://t.co/aBNQn6lYxQ pic.twitter.com/gVKowEyLK4
— The Rugby Pod (@TheRugbyPod) October 19, 2022
“The model makes sense, it’s not rocket science,” insisted Vaughan, the now out-of-work Wasps chief, shortly after his introduction on the show. “The model is you have a venue which has lots of concerts, events, exhibitions, Rugby League World Cup this week, Commonwealth Games recently, we have got Harry Styles, Arctic Monkeys. It’s a great venue, brilliant. A fantastic venue, really, really fantastic. A great part of the world. Council, great supporters.
“So you bring a rugby club in there then, the excess pays for the sports business and it goes around, around and around. That’s fine in the normal world but just go back into history a little bit: when the organisation decided to take the bond out six or seven years ago it immediately put a £35m debt onto the business.
“Then you add on all of the other debts over the years, whether it is pre-covid or not. You have seen the numbers. If you count Derek’s loans in there as well, it’s over £100m. Unfortunately, it would take a minor miracle to sort that out. Don’t get me wrong, before covid I came in and had to do a lot of changes around the playing department. Dai (Young) went and a lot of his staff went, Lee (Blackett) came in, we made it to the final and things were starting to go well.
“We broke even for six months, which is the first time in the club’s history we have ever done it, proving that the model works. However, the noose around the neck was this huge debt pile over the years. When I was at Gloucester, I used to look in and think how on earth are they making those enormous losses every single year whilst professing to be the biggest club in Europe or the richest team in the world, whatever it was.
“It used to get our back up a little at the other clubs. You’re thinking, ‘It’s okay saying you are the biggest club in the world but you are losing an absolute fortune’. So effectively that has rolled on and rolled on and rolled on. The question around why the two (the rugby and the stadium businesses) had to be split? Eighteen months ago we went to refinance the bond and we were doing quite well with lots and lots of interest, covid kicked in, the whole banking model went down the tubes and everybody backed out.
“It became quite obvious throughout that process that everybody wanted to buy the venue, very profitable and all the other things I have spoken about. But unless you are a real rugby nut and a real philanthropist around the game itself or Wasps, there was nobody interested in the sports side purely based on the numbers.
“Covid scared everybody because they realised that as it kicked in all sports business just shut down immediately and it had to take on more debt with Sport England and everything else. So as the process went through, we actually got led down the aisle by a large high street bank. The bond was going to be done and then they backed out, they literally jilted us on the altar, and that kick-started the impact of where we are now.
“What has happened since then with the advisory group and the administration, it has become fairly obvious if you are the ownership group for example and you are the board at Arena Coventry Limited that there is still a good prospect and a lot of excitement with people financially backing the venue because it is extremely profitable and it has got a great covenant and it is backed up by the council and all that good stuff whereas the rugby piece is clearly more niche.
“If there were more people out there with fortunes who were into rugby, we would have found them by now I can guarantee you that. So that is why they have been split to give the venue the best opportunity of being able to salvage something.
“Wasps have gone into administration. It had to go into administration because by nature administration takes away a lump of the debt so therefore it becomes more attractive. It went into administration and it has allowed us to have different conversations with different organisations, so that is why they were split.”
Comments on RugbyPass
It’s going to be Scott Barrett. He’s the coaches mate and captain of a previously elite team. Ardie a great option but scooter has worked with the coach and Ardie still as big a leader as needed.
22 Go to commentsI commend Colin Scotts bio All Balls. He was the first Aussie to make it to NFL. But he was poached and did a full apprenticeship at the University of Hawaii. He was 130kgs surfed played 1st grade cricket etc. big guy by normal but not NFL standards and a top athlete. Even then the nfl were picking up Tongans and Samoans for their natural size and explosive power. They want explosive power not cardio from the big boys so a guy like Taniela Tupou would have been good if picked up young enough. He has fast twitch and they’d bulk the little lad up and give him something to do. soccer teams set up academies and look for Over Sara’s talent eg Messi was at Barcelona since a teenager and harry kewell went to Leeds as a teenager like 16 or something.
11 Go to commentsThe article alludes to the fact that this isn’t about picking a captain. But picking a great captain. So who would make for a great All Black captain - not just an obvious or safe shoo-in? I’m not sure Ardie’s the guy and Barret doesn’t stand out either.
22 Go to commentsI guess we may all agree on the fact, that the ABs and Boks are the two in contest for No 1 in rugby history (the triple-A sort of) …. the Wallabies, England and France are the next tier, with Ireland being the new kid in town (AA) …. in my view it makes little sense creating imaginary competitions (unless you have too much time to waste)
45 Go to commentsWhat a joke. Total joke and the pundits commentating, all of whom know a bit about the game, could barely disguise their contempt. Reaching for the card then pulling back when he realised a red card would carry further match suspensions is simply not his decision to make. A clear and obvious influence on the outcome of this match and indeed, the championship path.
4 Go to commentsI like the idea, in NZ the Ranfurly Shield and NPC coexist, both having their own bragging rights. The World Cup would be the pinnacle, but the competition and travels of these trophies would be interesting.
45 Go to commentsDon’t worry Sonny bill Williams leave that awkward situation about the curfew in the pass whoever it was it doesn’t matter its no big deal we back our All Blacks through the storm and the thunder until we see the Sun light again.
42 Go to commentsWho listens to this retard? He was a massive liability as a player but obviously a media sensation
42 Go to commentsI’m not surprised by such ‘virtue signalling’ by Sonny Boy. Butter wouldn’t melt in his mouth. He’s such a pious Islamic muppet, imo.
42 Go to commentsI’ve actually never heard of the guy (then I don’t watch League as it is boring). But if he is good enough.. then good luck to him. If not, well, he can always return to league.
2 Go to commentsIt is pretty clear that by almost any measure that NZ are a more successful rugby nation than South Africa. Quite aside from the distasteful events during the last RWC final. NZ lead SA in all significant measurements.
45 Go to commentsDickson went to his pocket for a card, saw who it was, changed his mind and spoke at length to TMO. One angle clearly shows Care diving over a Saints player to kill the ball. 1st yellow, reason given for not Red was player was falling backwards. He was only falling backwards after contact with Lawes. Graham try should have stood. Mitchell did not have both hands on the ball, ball went forward from a Saints boot dragging over it. 2 intentional knock-on's. One of which had an overlap on the outside. If Quins are happy to win by intentional foul play, then it does not say much for them. Would appear to be a bad day for Karl Dickson, also for the RFU in appointing a Ref who spent 8 years as a player at one of the clubs.
4 Go to commentsLet’s not forget about Ardie Savea just yet.
7 Go to commentsThe URC and the Euro Championscup can’t run at the same time, basically dilutes both competitions.
2 Go to comments“While Sotutu should start at No.8 for the All Blacks against England, but it’s only in that arena that he can prove just how good he really is.” And that my friends is where simply hasnt shone despite multiple opportunities. Even in this performance you can see what did him in in the test arena..he almost always still runs at the opposition almost ramrod upright making him easier to stop than it should be.
7 Go to commentsShould have been 0-0 and a message from SR CEO to both teams - “don’t worry about turning up next year”.
4 Go to commentsGreat work Owen Franks. A great of this team, scoring his first try for the Crusaders since 2010.He was beaming, justifiably. A fine win, he and the rest did the job up front.
1 Go to commentsDanny Care. Lang in die tand.
1 Go to commentsBig empty stadium does nothing for atmosphere but munster are playing well with solid performance
1 Go to commentsYes, Fiji can win the World Cup! With that belief plus their christian faith🙏 and hard work it is achievable. Great article. Ian Duncan Fiji resident 1981-84
2 Go to comments