Chartered Governance Institute responds to financial failure of Wasps and Worcester rugby clubs

Commenting on the DCMS select committee special evidence session into the state of rugby union since the collapse of Wasps and Worcester rugby clubs, The Chartered Governance Institute UK & Ireland (CGIUKI) said:

Rugby clubs are an important part of sporting, cultural and community life and must be protected from inadequate and damaging stewardship.

The safeguards in place to ensure appropriate ownership and responsible financial management in these clubs were insufficient and must be reformed to prevent future maladministration. Rugby is not the only sport to face these issues. Lessons could have been easily picked up by looking at the travails of football to predict the dire consequences of poor oversight and financial mishandling.

Stringent application of a robust fit and proper persons test, along with periodic reassessment of the suitability of owners and directors to continue in their roles, is essential. The criteria which form this test and the sanctions available to the bodies charged with its application will be key to its efficacy.

As high-profile clubs can also be seen as attractive assets internationally, rugby clubs also need to anticipate their attempted acquisition by owners whose suitability may not be addressed by the standards stipulated in a directors and owners test.

Rugby should look to recent experience in football. A club could be purchased by individuals who become subject to sanctions imposed at a government level rather than by a league, national governing body or regulator. Consideration should also be given to a subjective test of whether an owner or potential owner may present a reputational risk for the club or the wider game.

We welcome the independent review to improve financial sustainability in the game. It is essential that clubs are run prudently, transparently and with accountability. We await with interest the outcome of this review and hope that its recommendations will help to place rugby clubs on a more secure financial footing.

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For further information, please contact David Mortimer, Head of External Affairs:

dmortimer@cgi.org.uk
+44 (0)7950 276 648

Notes to Editors:

1. The Chartered Governance Institute UK & Ireland is the qualifying and membership body for governance with over 125 years’ experience of educating and supporting governance professionals. With a Royal Charter purpose of leading ‘effective and efficient governance and administration of commerce, industry and public affairs’, we provide professional development, guidance and thought leadership, and work with regulators and policy makers to champion high standards.
   
   The Institute has divisions in Australia, Canada, Hong Kong/China, Malaysia, New Zealand, Singapore, Southern Africa, the United Kingdom and Zimbabwe. The division headquartered in London represents and supports members in the UK, Republic of Ireland, Crown Dependencies and associated territories, which include the Caribbean, sub-Saharan Africa, the Middle East, Mauritius and Sri Lanka. Website: www.cgi.org.uk