APPENDIX 13
Memorandum submitted by Moseley Football
Club
1. INTRODUCTION
1.1 This is a response to Press Notice No.
16 of Session 1998-99 dated 11 May 1999.
1.2 Moseley FC is a member of the Rugby
Football Union ("RFU") and currently competes in the
Allied Dunbar Premiership—Division 2. Accordingly it is
a member of English Second Division Rugby ("ESDR").
1.3 Moseley formed in 1873 is the premier
Rugby Union club in Birmingham. It currently organises recreational
sport (amateur rugby) for children from seven years old up to
16 years old, for children in the Birmingham area. The 1st XV
Squad, however are semi-professional, rewarded through:
2. SUMMARY OF
THE ISSUES
— Relationship between Rugby Union
and Rugby League;
— Modernisation of Grounds and Facilities;
— Promotion of rugby; and
— Other issues of interest.
3. FINANCIAL
STATUS OF
AFFAIRS
Moseley has experienced a very difficult period
in its financial affairs as it has tried to come to terms with
the changes in Rugby Union football since the sport went professional
in August 1995. These financial difficulties were mainly as a
result of the club attempting to maintain its status as one of
the premier rugby clubs in England by gaining promotion to Premier
League 1. These efforts resulted in the club being placed in administration
in January 1998. As a consequence of this action it had to forfeit
ownership of its ground and is currently in negotiation with Birmingham
University and the City Council for a new playing site.
The club was purchased from the administrator
in May 1998. Losses continued through the 1998-99 season and the
club remained in business through the generosity of its Directors.
It is now planning to continue its activities through the 1999-2000
season in a breakeven position based on its financial experiences
in 1998-99 with a degree of confidence. One of the consequences
of its financial position is that it no longer plans to employ
any full time professionals.
3.1 It is generally accepted that professional
Rugby Union at club level is not sustainable at present levels
without the support of one or more of the following:
— The allocation of nationally negotiated
sponsorship monies;
— Deep pocketed investors who seek
to secure a franchise for the future professional game;
— Individual emotional investors; and
3.2 Moseley has since the advent of professional
rugby in 1995 made a cumulative operating loss of in excess of
£1.5 million.
3.3 The principal reason for the unsatisfactory
present state of affairs arises from a number of factors, including:
(a) The desire of individual clubs to survive
at elite level until there is a more realistic structure for club
rugby.
(b) Player aspirations to maximise earnings
given their short playing life.
(c) Administrative and financial chaos within
and between the governing bodies in the United Kingdom.
(d) With few exceptions, unattractive outmoded
grounds and stadia.
3.4 A culture is developing in Rugby Union
where the only Clubs that can survive as professional clubs are
those financed by multi-millionaires many of whom were persuaded
that they could obtain a return on their investment. Their failure
to achieve any return to date and their increasing awareness that
a return on their investment is unlikely has been a major cause
of the conflicts between the owners and the governing body in
recent years. There is now a realisation that to have any chance
of success there will have to be a major financial restructuring.
It is doubtful if the recent decision of English
clubs to participate in European Competitions will solve the underlying
financial problems.
3.5 The initial investors in rugby clubs
were individuals whose previous experience had been in soccer
clubs. They completely overestimated the income potential of Rugby
Union and the size of its spectator base. The consequence was
that player contracts were set at a totally unrealistic level.
Serious arguments arose over club and RFU contracts which in effect
meant that international players were to all intents and purposes
being paid twice. It is now evident that salary levels of all
players will have to be reduced and that the vast majority of
clubs will only be able to employ part time players.
3.6 Rugby only attracts substantial numbers
of spectators for international matches. Therefore the RFU is
able to negotiate major sponsorship contracts from TV sponsorship
for its international matches. In 1996 the RFU entered into a
contract with SKY TV for the sponsorship of its home internationals.
The other three home unions took exception to this action preferring
to enter into a TV contract with the BBC. Although this contract
was considerably less attractive than the SKY deal. The arguments
that followed culminated in the RFU being threatened with expulsion
from the Five Nations Championship. This was only resolved when
the RFU agreed to compensate the other three unions. Compensation
was to be agreed through arbitration which is still proceeding.
3.7 One of the major impediments of rugby
clubs achieving financial stability is the poor quality of their
grounds and facilities. The largest club rugby ground in England
is Leicester with a capacity of 17,000, followed by Harlequins
with 10,000. The remaining grounds in Premier 1 and 2 do not have
seating capacity in excess of 2,000. Unfortunately Rugby Football
does not have the benefit of an organisation such as the Football
League Trust which has financed a major proportion of the costs
of rebuilding of Football League grounds. Rugby union football
is currently coming to terms with its status as a professional
sport and does not seem prepared to finance major capital development
schemes at the expense of financing its playing activities.
4. RELATIONSHIP
BETWEEN RUGBY
UNION AND
RUGBY LEAGUE
No problems currently exist between Rugby Union
and Rugby League. Free movement is allowed between both codes
subject only to the restriction in place through registration
of players and contractual commitments.
5. MODERNISATION
OF GROUNDS
5.1 Currently no rugby grounds come under
a licensing authority as defined by the Taylor Report following
Hillsborough. The majority of rugby grounds do not warrant such
treatment. The poor standard of rugby grounds in general is a
major obstacle to establishing rugby as a professional sport.
There is currently insufficient financial resources in clubs to
invest the level of capital investment necessary to improve the
current situation. Few clubs are prepared to put their playing
performance at risk in order to improve their facilities. While
this is a misguided attitude it is not difficult to appreciate
the reasons for this view.
5.2 Currently the deficiency in ground facilities
is being overcome by some clubs by making arrangements to play
on football league grounds. This policy while expedient is self
defeating. If rugby clubs manage to successfully market themselves
and attract a bigger following it will inevitably lead to conflict
between the parties over priority of use.
5.3 What is required if Rugby Union football
is to succeed as a professional sport is financial assistance
to develop a national network of small (say 8,000 capacity) modern
facilities for multi-sporting occasions including rugby.
6. PROMOTION
OF RUGBY
6.1 It is of considerable concern the recent
announcements that the Government will no longer support team
sports after the age of 16 years old, preferring to encourage
the more individually based sports. This policy combined with
the selling off of school sports fields will have serious long
term effects. It is our opinion that competitive team sports is
a fundamental element of any education system and should be designated
a core subject in the annual school curriculum.
6.2 Far greater use should be made by schools
and community organisations of club facilities including coaching.
Club coaches should be encouraged to visit local schools and community
projects in their area to supplement existing facilities.
6.3 Very many clubs already organise rugby
for 7 to 18 year olds, usually on Sunday mornings to encourage
people to play rugby. There is tremendous demand for these initiatives
especially where schools are failing to satisfy the demand.
6.4 The current RFU policy of employing
Youth Development Officers jointly with Constituent Bodies should
be reviewed and consideration given to fund these developments
through the establishment of professionally staffed academies
located at the premier clubs.
6.5 There needs to be far greater involvement
of clubs at every level in rugby. However this would only be possible
if adequate financial support was made available.
6.6 A policy needs to be established which
sets out concise and clear relationships between the various levels
in Rugby Union football which ensures that there is an equitable
division of both finance and playing resource at all levels of
the game.
7. OTHER CONCERNS
7.1 To deal with the financial constraints
and establish a viable professional club game proposals have been
made for a franchised system of elite clubs, similar to that established
in American Football. The traditions that exist in Rugby Union
would suggest that this would be "a bridge too far"
and allow Rugby Union to become a hostage to fortune of rich business
men.
I hope that these comments will make a worthwhile
contribution to your deliberations, representatives of the club
would be available to attend your Committee sessions if that was
considered appropriate.
June 1999
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