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Wales Online
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Steffan Thomas

Malcolm Wall outlines his vision for Welsh rugby, deals with the call for three regions and explains how things will soon improve

The past few months have been some of the most turbulent in the history of Welsh rugby with the game in complete and utter disarray.

But over the past fortnight there has been significant change with the governance of the Welsh Rugby Union getting completely overhauled at an extraordinary general meeting, while a six-year financial framework was also agreed between the governing body and its four professional sides.

However, there has been outcry from supporters due to the impending pay cuts and the lowering of the regional playing budgets.

READ MORE: Welsh rugby boss expects Wales star Joe Hawkins to be ineligible for Rugby World Cup after Ospreys exit

WalesOnline sat down with one of the most powerful men in Welsh rugby and a figure who played an integral part putting together the new six-year deal.

Malcolm Wall, chair of the Professional Rugby Board in Wales, lifts the lid in this exclusive Q&A on why Welsh rugby has to go through some short-term pain and the long-term plans to ensure a thriving national game.

Q: Why do wages and budgets have to be corrected?

A: "I think you need to look at it in a wider context not just in terms of Wales.

"Wales has some very particular challenges but lets have a look at what's happening in rugby across the piece. You've seen two clubs go bust in England. On average over the last few years, and obviously it's been distorted by Covid, private investors have put £40m a year into the English game.

"I say investors but let's be realistic about these people because a lot of them are hugely generous benefactors.

"Some are expecting to get some form of return but they are doing so not in the classic form of investment with very specific expectations of financial return.

"We've got a different structure in France but from my information the level of investment from benefactor investors is close to £30m a year.

"The situations in other countries are obvious for all to see. Scotland has moved to a model which only supports two professional clubs, and they've accepted a very different model.

"Ireland is a very successful model but one that sees rugby union as the primary sport in the country. They don't have professional football clubs like we do in Wales nor do they have the proximity to the football Premiership.

"In terms of GDP and any other economic measures they are a wealthier country than Wales. They also have more corporates who will support their rugby whereas we don't in Wales.

"We don't have very large banks in Wales, we don't have brewers of the size of Guinness so they've got everything going for them for a good economic model.

"To their credit they've also worked their pathways really well and they've bought discipline to the way they've approached it so they start from a good position."

Q: Why are we in this situation? Where have we gone wrong?

A: "I look at Wales and we have had significant challenges.

"First of all the original PRA which was established in 2017 and came into effect from 2018 looks at an annual agreement between the WRU and the professional clubs for funding. That doesn't give you any chance of forward planning.

"It also assumed there would be no need for benefactor or investor involvement and the wonderful work the likes of Peter Thomas had done over the years was recognised but they said it wouldn't have to go forward.

"In the short termism you had at view that there was no need for external revenues, you had much worse commercial revenues than is enjoyed in other Northern Hemisphere countries like Ireland, England, and France.

"We also had rising player inflation so even before Covid I would argue that the PRA was not likely to be sustainable. We then had Covid which hit lots of organisations for six.

"We had a situation where a delicate infrastructure was very badly impacted and emergency money had to be put into the individual clubs. The Welsh Government helped by putting in long-term loans.

"It should be recognised those long term loans immediately needed a £500,000 a year servicing by the clubs as a mixture of interest and repayment. So, whilst they saved the clubs in the short term it also caused a long-term issue."

Q: So, why are players having to take pay cuts?

A: "When I arrived last year I did a thorough investigation of what the situation was. My conclusion was technically the clubs were either close to or technically bust.

"There was a funding gap in the current financial year against what the WRU had pledged to put in. There was a lack of cost control in terms of the amount of money the clubs were playing the players but also the other areas.

"I just want to deal with that amount of money the clubs are paying the players. I'd never blame a player or any employee for accepting an offer or negotiating their best offer, and then taking that money.

"They are not then at fault if the employer runs into financial difficulty. For each player, who has a short career, it's entirely right for them to accept and to push for maximum remuneration during their terms as a player.

"We've had some significant legacy issues and I think we've miscalculated our ability to perform commercially. We were overpaying and our cost of running was too high."

Q: Many people have suggested we can only afford three professional sides. What do you say to that?


A:
"We then had considerable debate about the actual structure of rugby which has raged in the media. Should we have two pro teams, should we have three or should we have four clubs?

"The PRB debated this long and hard and concluded that if at all possible four clubs was in the best interests of the long-term goals of Welsh rugby in terms of achieving success for the clubs but also in terms of providing quality professional players for the national side which itself generates so much of the money through the Principality Stadium which gets redistributed to the clubs.

"There's been a bit of an irony for me that people were shouting pay the players more and close a club. We've made that decision to try to sustain four clubs if at all possible as a rugby decision.

"We also made a decision to bring greater discipline to the way we approach the management of the rugby so we introduced salary caps. We've also seen that as a country rugby participation is still very high and it's higher per capita than it is in England.

"We should therefore be absolutely optimal in our conversion of those young emerging players into the elite of tomorrow. So we need to put more money into development and pathways, and also measure it better.

"Four clubs, a focus on development, bring squad discipline in not allowing clubs to spend beyond their means, and also stuff around contracts like a clearing house so we can really monitor that.

"Also, we need to balance how many players of national interest are employed by each club and making sure the national issue is looked after as well as the club issue.

"That we regularly audit how the clubs are performing so we don't run into some of the problems we've run into in the past, and we have some flexibility around loans.

"With those principles involved I went round to try to garner as many sources of revenues as possible within the negotiation.

"You've seen the details of where it's all come from. WRU, both short term commitment to CVC monies, and WRU long-term six year outline funding, the benefactors returning to pledge a level of income and that should guarantee that in return of the money coming from the WRU, some new debt and a new focus on commercial revenues.

"So, that's where we come to a six-year commercial framework which is a starting point. We've gone to base camp which is what we've done, and lets now think about climbing the mountain.

"We've got to survive before we thrive. This six-year framework guarantees nothing, it's how we apply ourselves, and how we build out from having some financial certainty and some new rules.

"How do we get new investment and how do we make sure our development pathways are more effective? This will take some time."

Q: With the salary cap coming in and budgets eventually going down to £4.5m it doesn't take a genius to work out regional results will get worse. Why should supporters spend money on tickets?

A: "I think what's taking place in rugby in the Northern Hemisphere, with some exceptions, is something of a reset on people's salary expectations.

"Throughout this process we never reneged on anyone's contract. Worcester and Wasps left some people in bad situations.

"Where we've failed is we've allowed this to drag on for too long and the uncertainty on players has been very hard. I apologise publically for that.

"What we are saying is we will be spending less on the individual squads and therefore per player they will be less paid.

"So, what does that mean? What it means is for the very elite, and you've seen this in the English game, the world class player they do have the ability to go to those four or five clubs in France who pay absolutely top dollar or three clubs in England who pay top dollar.

"That is the elite market. Yes, there are people who can go and do a year in Japan or something like that, but I think they tend to be at the end of their careers.

"There is a danger that we will lose either Welsh qualified players at that very elite level like Dan Biggar who understandably wants to maximise on his rugby experiences and also his income over that period.

"We will lose some of those. How many? I don't know. Given the market I don't think it's 50% of the national squad. We could also struggle to attract some of those non-Welsh qualified players like a Sione Kalamafoni who have made a rich contribution to the Welsh game.

"When I look at it it is a few players per club, and it's not a wholesale exodus.

"To counter that what we are looking to do is to get better at bringing through our youth, getting them to play earlier in their careers, and developing them faster by a new focus with new monies, and new disciplines into the development side.

"I don't see us performing worse albeit Cardiff beating Sale and Scarlets beating Sharks was just sensational results.

"It is a rebuild, and we aren't going to get instant success, but I don't share the view that many people have that we are just going to be also rans.

"We are going to improve how we develop our players in order that we can compete. Over the last 10 years the attendance for the professional clubs have not improved at all.

"We seem to have a set of supporters who are going almost irrelevant to the performance. My own view is that whilst performance does help our prospect to grow attendance it's not the only issue.

"The fact is we've not been smart in comparison to other sports, and indeed compared to other rugby organisations in the use of social media, in the use of marketing our game, and having moved from PRO14 to URC we haven't fully explained that narrative.

"I think there's a great deal we can do in communication and the way we present professional rugby and bring a greater sense of excitement, and that we can grow gradually. It does take time, you don't just wake up one day and get an average crowd of 6,000.

"If you average 6,000 one year, get it to 6,500 the next year, and 7,000 the year after then that's real progress. I've been involved with Harlequins most of my adult life and them getting big crowds of 15,000 has been a gradual thing, and not always linked to success on the field."

Q: You say we are at base camp but what is specifically being done to improve the regions? By year three would you expect the regions to be better on the field?

A: "We are refining those targets now.

"Within three years we want two of our clubs qualifying for the play-offs of the URC and also into the second rounds of both European competitions.

"It's getting involved in those second stages of competition will be our measure. One of the things we've really got to develop is consistency at the clubs. On our day as we've recently demonstrated the clubs can do it.

"It's also about on field leadership. It's been really hard for the national side and the clubs to perform against the backdrop of this uncertainty.

"We've had uncertainty for so many years. I wouldn't undervalue the mental stress some of the players have played under."

Q: A lot of critics say the WRU haven't invested enough into the regions. Is there anyway in this framework they could do more to financially support the regions such as remortgaging the Principality Stadium or taking on the Covid loan themselves?

A: "It's absolutely correct to say the relationship between the WRU and the regions hasn't been right.

"You'd expect a little bit of give and take given the different focuses at times but at times the relationship has been seemingly toxic which is a great shame.

"In terms of funding at the moment the funding that is included in the six-year framework is the maximum distribution the clubs can receive from the current constitution of the WRU which ringfences a certain amount for the community game and then the majority of the other profits made goes to the professional clubs.

"Over and above that in this new deal they have injected £25m which was previously earmarked for other capital investment, and that's gone into the clubs so there has been a big shift in terms of that.

"Where we need to get more money into the professional club game will be by working with the WRU to help the WRU, and the whole eco-system to generate more revenues.

"The WRU are currently generating £90m a year, the top line which goes down and there are costs associated with it, and then it's distributed.

"We need to work more closely together on sponsorship packages. For example, sponsorship packages are entirely done by the WRU with regards stuff like naming rights, shirts, or the stadium.

"But there's very little local activation taking place within the individual clubs. If you put that framework together I genuinely believe we can generate more money.

"If you work more closely on data, and we've already started to exchange some views on this, there are data pools in the individual clubs, there is a community data pool, there is a Principality customer data pool but we are not joining them up and saying if you've gone to the stadium do you want to receive information and offers on going to the Dragons.

"What do we know about the Dragons supporter and can we push more offers to them. That overall marketing approach with a substantive change should really take place under new leadership."

Q: Last week at the EGM the clubs voted to dramatically change the way the WRU is governed. How will this aid the professional game?

A: "In parallel with this six-year framework we've obviously been going through our governance battles and I kicked myself for my lack of due diligence when I took on this job.

"I knew there were challenges but I really didn't know on what level. Last week was a good week for Welsh rugby.

"One we survived. If the EGM had gone against us and we couldn't have done the six-year framework we'd have been in an incredible mess.

"We had to survive before we could thrive. The EGM victory and the six-year framework were both really important starting points.

"We had already briefed head hunters and they will be coming back on a new list of potential new chairs.

"We will be looking at appointing a new chair as soon as possible. That chair will then be involved in appointing a new CEO.

"The new CEO will make changes and will straight away have a look at the balance sheet.

"Is there merit in taking on debt? I think at this stage any CEO doing that would only do it on the basis there was real possibility of long-term return.

"This is the big difficulty. If I took on debt because I'm running a PLC and I buy a new business I'd do it on the basis that new business is going to generate more cash, and that the sum of the parts is greater than the whole.

"It's harder to do when you are a governing body trying to develop rugby. There are less tangible returns.

"What I am excited about this year is that we've got through some really difficult times, and this is a rebuild.

"We are in a situation where we are going to bring in new management and everything will be looked at in terms of the finance.

"We've got an agreement with the game on the whole, courtesy of some really good work by the Community Game Board, to change the structure of the board.

"I'm hopeful everything you've highlighted will be looked at.

Q: Last weekend in the Champions Cup Leinster faced Ulster at a packed out Aviva Stadium. Can we get to that stage in Wales where Cardiff for example would be able to play a big European game in front of a massive crowd at the Principality Stadium?

A: "We are looking to improve Judgement Day because I think that is an asset we've not made the most of.

"Whatever happens to Judgement Day this year straight afterwards we'll be rebuilding it for the following year.

"The creation of events is really important for rugby. Some of the lessons learnt from the "Big Game" in England which is a sell-out at Twickenham is that there's been 13 of them.

"Over those 13 years it actually started with a crowd of around 25,000 at £5 a ticket. We've got to take a long-term view of some of these events.

"People have got to understand that initially it's not about your yield it's about the numbers you get in.

"Let's discount very heavily, make more of an event of it and we'll gradually build that.

"A couple of clubs are looking at other events they can create. I don't think overnight Cardiff would sell 70,000 tickets at the Principality Stadium because after all that's equivalent to Manchester United.

"However, I do think we can build events which generate greater excitement around specific matches, and over time we will do so.

"The whole way we market our club rugby is important. I keep referring to clubs because I hate the word regions. What is a region?

"There are some countries such as Ireland where people will describe themselves as a Munsterman but I don't think people describe themselves as a Dragons woman or a Dragons man.

"Getting people to have a greater sense of identity within their club is important.

"The answer is yes I can see us having very major rugby events at club level whether they be Judgement Day one-offs or a very aggressively marketed big match in the Champions Cup.

"That should be our objective. It's not just getting into those second rounds of competitions but doing so with a sense of major following and excitement."

Q: Finally, in six years time when this framework ends what will Welsh rugby look like? Will it include four teams or three teams?

A: "If we can't continue to improve the situation with four then obviously other people will start asking whether we are better off funding three.

"But it is our intention to do everything we can to continue funding four.

"At the 2027 World Cup I would very much hope that we should at least be getting to the semi-final, and for us to have done that certainly means we need clubs to perform to the semi-final level of their own championships.

"You don't certainly get a national team performing at that level if your club players are not experiencing that level of competition in their own day to day competitions.

"Five years on that's what we should be hoping for. We are at base camp but now we are going to start climbing the mountain to success."

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