Wasps owner hits back at 'ill-informed' rumours about club
Speculation continues to mount regarding the future of Wasps Rugby this weekend as their financial outlook looks increasingly grim.
Wasps have now failed to meet three deadlines on bond repayments, having raised £35 million in bonds on the London Stock Exchange back in 2015. An initial May repayment day was missed and they subsequently missed a second pushed-back date in June.
On Friday they reportedly missed their latest deadline for the bond repayment, much of which is owed to fans of the club who availed of the bonds in 2015. They will continue to pay interest on the bonds, which is 6.5 per cent per annum.
Irish owner Derek Richardson has said that the club are not going into administration, despite rumours doing the rounds on the internet.
“Contrary to some ill-informed speculation, we are not in administration and we are not going to be,” Richardson told The Times yesterday. “We made a statement on the bond repayment on May 13, we’ve been very transparent with the market and the bond-holders. We’ve paid the interest on the bond and will continue to when it is due.”
Defaulting on bondholders can have significant financial implications for the company that issues the bond which could in turn leave financial institutions reluctant to lend them money.
Wasps are currently in the midst of trying to refinance the debt but any refinancing would hang on the valuation of the Coventry Building Society Arena. One source told RugbyPass that Wasps were looking at a valuation of between £50m to £60m for the arena and hotel. The problem for Wasps is that they in effect have one realistic buyer for a sports stadium in Coventry, that being Coventry City FC. Another third party could theoretically buy Wasps, the stadium and their debt, although this seems unlikely.
With three deadlines now elapsed, it doesn’t appear that Wasps have reached an agreement with HSBC, despite appearing to suggest that they had in a May statement.
The problem for bondholders is that the bonds are not protected by the Financial Services Compensation Scheme (the FSCS).” As a result, according to Wasps documentation “neither the FSCS nor anyone else will pay compensation to you upon the failure of the Issuer, the Guarantors or the Group as a whole.”
Put simply, the fate of the bondholders is more or less entirely reliant on Wasps’ financial viability. If the club went under, they would be looking at a significant haircut after preferred creditors were repaid.
On the playing front, money has been saved. Significant saving on salaries have been made at the end of last season, with 11 squad members heading to the exit – including three All Blacks. Malakai Fekitoa, Vaea Fifita, Jimmy Gopperth, Thomas Young, Cameron Anderson, Michael Le Bourgeois, James Gaskell, Rob Miller, Pieter Scholtz, Jeff Toomaga-Allen and Marcus Watson have all left the club.
Against this eight players have signed ahead of the new season, with Springbok prop Vincent Koch the most high-profile hire.
With relegation not returning to the Gallagher Premiership until season 2024/25, if Wasps are looking save money on player salaries at the cost of league position, now is as good a time as any.
Axing of salary overheads would also certainly help when it comes to servicing the £2,275,000 owed in interest to bondholders per annum.
Despite speculation and unlike in association football where clubs are deducted points for going into administration, RugbyPass understands that Premiership Rugby Ltd would not look to punish Wasps further. There is a precedent for Gallagher Premiership sides going under, with Richmond and more recently London Welsh falling to that fate.
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