The Truth Is Out There…

Who said that AGMs are boring? Well last night’s meeting of Cardiff Blues Ltd. was for around half an hour until it came to the Q&A session when the Chair of the Board, Peter Thomas, revealed to the club’s shareholders that the WRU will take over the franchise of Cardiff Blues from 1^st July this year. To say that he ‘revealed’ this information is an understatement; it was basically dragged out of the Board and only answered after the question had been asked three times. The look on the faces of other Board directors said it all- a spectrum of expressions from ‘I didn’t know that’ to ‘Oh my God he’s let the cat out of the bag!’

At a meeting where you would expect the Board of Directors to be open with the owners of the club and to put their thinking on record, they were planning to say nothing – absolutely zilch. That’s a pretty disgraceful way to behave and not only shows a lack of transparency but a lack of respect for shareholders and for supporters who are major stakeholders in the club. Needless to say, some of the Directors exited quickly, embarrassed we suspect by the unplanned revelation and the poor PR which was likely to come their way.

The fact that we were a ‘franchise’ was news in itself, but of even greater concern was the complete lack of detail as to what any of this this actually means in practice- which is somewhat astonishing given that this tectonic change is less than two months away. Furthermore, though last night we were assured that this was a temporary move, congruent with information that we’ve received previously, today the news is that it could be permanent.

Mr. Thomas said that they were ‘asking the WRU to ‘babysit’ (whatever that means) the franchise’’ while they got on with the redevelopment of the ground-which perhaps makes sense given the decreased income that would result in the interim-but the question then becomes why July 1^st 2017 when an agreement with CAC has yet to be signed? The answer lies in the fact that Cardiff Blues have, are and are almost certain to continue making heavy losses. In the year to June 2016 they lost £1.45m compared with £667,000 the previous year. We suspect their losses to June 2017 will approach £1.5m and who knows what the situation could be next season with the loss of BT sponsorship. The Board of Directors is understandably no longer prepared to carry these losses and they have no significant assets like a ground as this is owned by Cardiff Athletic Club.

Now £1.5m doesn’t sound like a lot of money, but it is when your turnover is less than £9m. But these are just accountants’ figures which are fairly meaningless to the person who comes through the turnstile. So let’s do some simple Diane Abbott maths and assume the only way to generate more income is through attendances.

If we assume that there are 15 home games which could make a meaningful dent in the £1.5m loss then this means that you would have to raise £100,000 extra in income from each game. If we assume that average ticket prices are £20 (just to keep the arithmetic simple) then we have to get an additional 5,000 people through the gate. Given that we already have this number (and more sometimes) it means that every game next year would have to be a sell out just to break even (as the current capacity is just over 10,000). Ouch!

So now you can see why the Directors are keen for the WRU to ‘babysit’.

Last night, Mr. Thomas also said that when the WRU take over ‘Richard Holland and his team will continue to run the club and the Board of Directors will remain in place’. You have to ask the question, ‘So what’s changing and why would the WRU want to continue with the same regime?’

Well here is the rub. The WRU’s view is different. They have agreed to take the ‘franchise’ back (because they need four professional clubs to underpin the national team and they have TV contracts to fulfil) but on condition that a new Board is put in place and staff move across on TUPE (EU Transfer of Undertakings Protection of Employment Regulations).

So which version is true? Let’s be clear, we don’t believe that anyone is lying. They may not be acting transparently, but we do believe they are acting with integrity. It’s not uncommon for two people to enter a room, have a discussion, come to a conclusion and then leave with different views. Until a formal contract is agreed then we suspect that there is still a lot of detail to be resolved.

It could be that Cardiff Blues are simply tendering out the management of their operation to the WRU, who will bear all the risk, something akin to a local authority tendering out its leisure facilities. In which case a Cardiff Blues Board would still be required to oversee the contract and an operational WRU Board would need to be established to run things. Only time will tell what the structure will be.

So should supporters be worried? We suspect that the gut reaction of many supporters, given what is seemingly about to happen at Newport, will be to react badly-and today’s activity on social media certainly seems to confirm that. Despite assurances from Mr. Thomas and the Board that the Cardiff name and tradition are protected under the proposed deal, the deal is with a body that is just about to wipe the name ‘Newport’ from our old rivals in Gwent in the asinine belief that this is central to developing a successful regional programme in that area. That would leave one regional entity with a historical team reference in its name. Are we really expected to believe that we’re about to enter into a potentially permanent relationship with the WRU and that its Chief Executive won’t also then be gunning for the name ‘Cardiff’? It’s simply not plausible to suggest otherwise.

At the same time, we should not automatically rise up against the idea. Since the advent of regional rugby in 2003, Cardiff has progressively fallen from grace. The team that remains the only Welsh representative in the European Cup Final and which won the tier two Amlin cup is consistently languishing in 7-8^th place in an unloved league and rightly anxious about being unable to compete with the money bags if we were to secure a return to Europe’s top table. Just as there are multiple reasons (apparently) that people use food banks, there are multiple reasons for this decline - the most critical of which is the growing funding disparity between the Welsh sides and those in the rest of the UK and Europe. To a large degree, the previous psychopathic regime at the WRU created the very financial instability that the present one is seemingly about to take over. However, we cannot claim that this is the only factor in our demise given that our current organisation has repeatedly failed to cover itself in glory and has in fact made some disastorous decisions (including an almost fatal ground relocation) during this time.

Knee-jerk claims that we must hang on to our independence don’t really stack up when the benefits of that independence are hard to identify. We therefore have to be open to the possibility that WRU involvement could bring benefits (for example in terms of better marketing, improved coaching links, fairer allocation of NDCs, further reduction in administrative costs and maybe even increased investment) - but at present we simply do not know what is being proposed and therefore have to remain agnostic and essentially unconvinced. What else can we do in the informational vacuum that fans have been placed?

The worrying thing for fans of Welsh rugby is that the changes in Newport and Cardiff are unplanned and are not part of any strategy. The WRU is having to react to events on the hoof on a daily basis and that’s not good for anyone, including the Ospreys, Scarlets and all member clubs -but that’s a discussion for another blog.

One thing that is clear. Regardless of whether you’re a shareholder in the company, a member of CAC, a season member, or someone who just comes along when they can, you deserve more information about what is planned for your club –the club that is 140 year old this year-than we’re getting at the moment. The mantra of ‘We’d like to tell you but it’s all subject to a confidentiality agreement’ is beyond wearing thin. It’s ironic that at least Newport shareholders are having a vote on their future; we seemingly will not (eventhough there is a clause in the company articles of association that suggests that the approval of the Heritage Shares may be required if there is an intention to ‘sell or dispose (either directly or indirectly) of the undertaking or business of the Company or any substantial part thereof’). Like the rest of us, the board at Cardiff Blues are only the temporary guardians of a fantastic heritage. Anyone underestimating that heritage does so at their peril.

Last night, some of the Board knew that they had dropped a bollock (if you’ll pardon the phrase). They looked very silly having information dragged out of them. To quote Gerry Adams:

‘One man’s transparency is another man’s humiliation’.

Let’s hope they learn from that and start treating spectators and shareholders with the respect they deserve.

In the words of Mulder and Skully, the truth is out there…somewhere…we’ve just got to find it.

More on this shortly.