The Six Nations is about to kick-off and the spotlight will be off the Welsh regions. But Geraint Powell believes the pause should give time to consider whether the entire regional framework of Welsh rugby should be dismantled and rebuilt.

 

This diagram is of the desired virtuous circle in Welsh rugby and is taken from the recent WRU strategy document (link).  The term virtuous circle refers to a complex chain of events which reinforce themselves through a feedback loop, continuing in their direction of momentum until an external factor intervenes and breaks the circle.

Economists absolutely love a virtuous circle, because it contributes to a multiplier effect upon the original expenditure.

To say that the Welsh Regions have failed to develop such momentum, in marked contrast with the Irish provinces in particular (with their multiple Heineken Cup successes), since 2003 would be putting it very mildly indeed.  Only Neath/Swansea RFCs truly recognised the problem, seeking to by-pass it as much as possible through the Ospreylia concept.  The “One True Region” concept annoying to others, but needs must.  4 Pro12 titles.

Let’s remind ourselves that in 2003-04, immediately upon the long overdue resource concentration in the lower (non-Test) tier of Welsh professional rugby, the (then) five Welsh Regions occupied five of the top six places in the Pro12.  We have since witnessed serious relative decline, whatever absolute improvements have been achieved through the 2003 resource concentration.

There are obvious and multiple structural and systemic causes and blockages, most of which were sadly all to foreseeable upon creation on 1 April 2003, a set-up upon creation that would inevitably lead to chronic under funding through persistent non-alignment, which we shall analyse and go through in this essay.

The very fact that the WRU CEO, Martyn Phillips, and the WRU board are strategically thinking in terms of a virtuous circle, strategic thinking in terms of a totality, will ultimately impress upon them the need for significant pyramidal correction and modernisation to remove these various longstanding fundamental blockages.

We have seen previously how Welsh rugby was caught unprepared by professionalism in August 1995, the WRU strategically, managerially and financially focussed on redeveloping the WRU Stadium and hosting the 1999 World Cup.  The legacy of the £75 million borrowed from Barclays to do so has dominated Welsh rugby’s landscape ever since and with the final £11 million scheduled to be repaid over the next few 4 years.

We have also seen how the attempt to play catch-up and to belatedly embrace the full regional rugby package in 2003 went hideously awry, without intellectual and conceptual buy-in at many of the leading historic clubs and under an avalanche of obstacles including a then impecunious WRU, vested club self-interest and director’s duties, legal threats/writs and a deadline to enter teams in Europe for the 2003-04 season.  Regions, one too many in the first season, but in the guise of a hybrid “super” club mess.  Not universal club neutrality, not universal central player contracting, not even union shareholdings in the Regions apart from an emergency reaction to events in Gwent.

We have seen how things were done differently in Ireland, primarily due to Tom Kiernan and (former IRB/World Rugby Chairman) Syd Millar.  The 1st class club game being discarded as a vehicle for professional rugby, the little used provinces becoming the unifying and resource concentrating vehicles instead and the last link in the supply chain to “Team Ireland”.  Rugby in Ireland is now ever more a full national strategic project (link).  Scotland initially moved in that direction but the SRU failed to bring in private investment, to offset their own stadium redevelopment liabilities, and needlessly lost two of the four districts.  As in Wales, although not quite to such an extreme extent, limited union resources were stretched across too many non-Test teams in the late-1990s.

In fairness to Terry Cobner, Pooler legend and WRU Technical Director 1996-2004, he did have a strategy and one (if implemented) that would have avoided most of the structural problems of the 2003-17 era.  4 new company provinces or regional businesses, North/South/East/West, with centrally contracted players and HQ’d out of Cardiff, Newport, Llanelli and Wrexham (this was long before the mostly state aid, either directly or through land sales and property developer “taxes”, funded Liberty Stadium and Parc y Scarlets).  The historic divisive tribalism 100% preserved and contained below it at club level, but not fatally imported into the new regional game.  Whatever criticisms are levied against Terry Cobner, being a “back of a fag packet” type of man is seldom one of them.  Hence why, as a player, he was the de facto forwards coach of the dominant 1977 British Lions pack in New Zealand.  David Moffett initially adopted this plan, but had no bargaining position to maintain it in the face of vested self-interest (link).

Many Welsh rugby fans are all too aware that there are 3 big fundamental geographical exclusionary structural problems at this level of the WRU pyramid, and these should be borne in mind before we even start to look at the virtuous circle and work through it.

(A) Disenfranchisement

That a large proportion of the Welsh population in North Wales, a geographically isolated and discrete consumer market with no historical club baggage or alienating brand to their regional team, has no pro region they can go and watch within a reasonable distance.  They are restricted to the semi-pro RGC1404 project, and they cannot financially contribute.

(B) Alienation

That a large number of committed rugby fans and historic rugby localities, predominantly but not exclusively in the South Wales valleys, have been alienated by club-partial and club-centric regional branding/identity at Cardiff and Newport alien to and incompatible with Welsh rugby’s club heritage and tribalism in eastern Glamorganshire and Monmouthshire.  This leaves these regions with low lying affinity caps in relation to a large number of rugby fans and wider localities, which cannot be overcome by any on-field success in isolation and without also a more inclusive identity.

These Regions are trapped into a vicious circle of low crowds, relieved only by income generating one-off events such as Judgement Day that are themselves unlikely to produce future attendees for the regular fortnightly product.  And this is not a generational thing, this is just about as permanent as you can get.  Whether the young are being educated or indoctrinated, that’s just semantics.  It’s happening.  This will simply cascade down the generations, until remedied.  Until an external factor breaks the momentum.  Regional inclusivity.  Regional affinity.  Regional equity.

(C) Duplication

That we have 2 regions in competition for retail and corporate consumers within the limited Port Talbot-Neath-Llanelli triangle where there should only be 1 region (the extent of this problem has been disguised so far by the alienation issues further east, but market forces will unsatisfactorily “resolve” this problem if it is simply allowed to drift on unremedied).  The opportunity cost, to use the language of economists, of this duplication around Greater Swansea in West Wales is the loss of practically all potential income from North Wales into this tier of the WRU pyramid.

So let’s look at the impediments and blockages within the desired virtuous circle itself:

(1) Secure the best players & coaches in a high performance environment

We immediately have a structural problem, to even try and kick start the virtuous circle at this tier of the WRU pyramid.   Commercial income is fixed, and will not be markedly changing upwards relative to Pro12 and European Cups competitors.  It is more likely to relatively decline, until the Canal+ and BT Sport bubbles burst.

We have no major new “hobby horsers” looking to play rugby chairman, and no unreformed system is likely to produce a return (monetary or otherwise) for more commercially minded fresh private investors in corporate wrappers that are already historic debt laden.

We do have an entity with the cash, or at least with the potential loan finance to fund the initial triggering investment in the circle.  The 300+ WRU member clubs collectively, albeit wary of the financial risks involved in this tier of the WRU pyramid.  But they have no shareholdings in the regions (beyond the sleeping 50% at the Dragons) and there is no system of universal central player contracting.  Just the very limited system of marquee dual central contracts investment called “National Dual Contracts” in Welsh rugby and capped at £2.5 million (formerly £2 million) per annum.

So we currently have a systemic non-alignment, with no satisfactory business shareholding or player contracting solutions to provide a conduit for additional WRU strategic investment into this tier.  Hence the need for either a permanent business shareholding solution (the WRU member clubs taking control of the negative value businesses in the regional game, as per the opening quote from Brian Moore, then probably with a view to bringing in at least some shared private ownership at the devolved level on the NZ model) or a player asset purchase solution (a universal player central contract system, including dual central contracts as a temporary sticking plaster).

And, without either a shareholding or a player asset solution, it will get worse.  There is no overall strategic control and direction over player and coach acquisition, with 4 nominally independent regions (if mostly struggling and debt ridden).  Even disjointed coach development becomes difficult, with only 4 regional berths.  The “A” teams are currently embryonic, the WRU Premiership a long way from where it needs to be in coaching integration terms.

(2) Achieve success in the best competitions

So the structural issues at (1), unless overcome, won’t naturally lead to success at (2).  It currently needs Regions to “punch above their weight”, to achieve success despite their current player budgets and weak business balance sheets.

The financial gap is probably currently insurmountable at the Dragons, who really do need a period of complete restructuring under Martyn Phillips and Stuart Davies within full WRU member club ownership before returning to an active joint WRU and private ownership model with clearly delineated responsibilities and risks and with real KPIs.

The Blues are better resourced, but their season is at a crossroads.  The promising early start now a distant memory, an injury crisis and longstanding cultural shortcomings including over player development progression having badly hurt them.  A Top 4 finish in the Pro12 looks unlikely, the European Challenge Cup hardly a “best competition“.

The Scarlets are already punching well above their precarious financial weight, and that’s just the financials we know about and not including any further bad news since 2014-15, out of Europe at the pool stage and it is still hard to see them, if they finish in the Top 4, beating two of Leinster, Munster, Glasgow, Ospreys to win the Pro12 play-offs.

The best Welsh hope of a Pro12 win still remains from the Ospreys.  The supreme irony of the era.  The “super” club that embraced regionalism, successfully playing at the Brewery Field in Bridgend again on Saturday, might prove to be the biggest single impediment to Welsh rugby in future adopting the full Regional Rugby Package as a direct result.

(3) Attract more supporters, more often

If we could ever get to (3) without fundamental conversion to representative North/South/East/West regions or provinces with universal central contracting, then those 3 big geographical structural problems kill all momentum.  They slam in to the virtuous circle from the wrong direction and with a greater force and weight than a North American transcontinental freight train.  We are talking the size of a Canadian Pacific freight train at Banff, not a Valleys lines 2 coach sprinter.

Disenfranchisement.  No matter how well the 4 Regions do, rugby fans from North Wales are not coming in any meaningful numbers to Regions along the South Wales coast.

Alienation.  It doesn’t matter how well some Regions could do, thousands of ideal rugby fans, young and old, current and lapsed, will not engage with them in their current identity/brand.  It didn’t need Mick Dawson, the Leinster CEO, to point this out to Welsh rugby (link).  This then leads to requiring the conversion of eventers at something like Judgement Day into regular attendees of a radically different fortnightly event, the hardest possible task and one unlikely to succeed in any significant numbers.  And, to cap it all, it would need much more of the rugby fraternity present, i.e. many of the currently alienated (now also sadly lapsed from club rugby attendance), to create the initial critical mass of crowds with which to attract the eventers to another event in the first place.

Duplication.  There are a finite number of rugby fans in the Port Talbot-Neath-Llanelli triangle and rural hinterland to the west.  The per head of population penetration is already good and there is limited growth potential for success to fuel.  Only the relegation of soccer’s Swansea City would be a likely external boost.  3 of the 4 big clubs in that triangle were constituent clubs of the formed Regions, only Aberavon outside of the tent.  The best way to achieve success and further penetrate the market would be to concentrate all resources into 1 West Region.

The poor crowd levels, other than for Judgement Day and Christmas/New Year derby events, now a running joke way beyond the inner Welsh rugby fraternity.  £12 to watch Llanelli v Pontypool in the WRU Cup but, if you watch the Scarlets play Zebre and Edinburgh and Treviso in the Pro12, the price falls to £10 per ticket.

(4) Secure higher value sponsorship and investment

So, as the virtuous circle can never be triggered and gather momentum at this tier of the WRU pyramid with the structures currently in place, we see the implications from (4).

Sponsors currently know that the Welsh Regions are unlikely to win anything significant.  The European Champions Cup knock out stages way beyond the reach of any Welsh entrant, realistically still only the Ospreys in with a shot at winning the Pro12 without it being widely considered a major upset.

Potential sponsors only operating in in North Wales markets are excluded, and still deterred if primarily focussed upon North Wales but with some limited South Wales interest or exposure.  Most sponsors are aware of the divisive issues in South East Wales, before committing their brand to association at all or agreeing to the level of their financial commitment.

The Pro12 is now primarily reliant upon the IRFU’s building relationship with Sky Sports (Test match coverage, apart from the Six Nations) and with Guinness, the Welsh angle limited to the WRU’s traditional close commercial relationship with BBC Wales.  No increase in central competition platform incomes, sponsorship or broadcasting, are currently being driven from within Welsh rugby.

And Welsh rugby at this tier is a complete bystander in Europe, marginalised even in competitions where others have singularly not delivered on promises of a stable of 5 main sponsors.  In 3 seasons, Turkish Airlines have been added.  That is all who have joined Heineken in this brave new world of Anglo-French club commercial hegemony in Europe.  The BT “money pit” blinding some to the wider financial reality.

Fresh investment is equally structurally impeded.  The Regions now synonymous with lower WRU subsidies than from other similar unions not suffering such structural blockages, the WRU having no integrated subsidiary companies to invest in and only a limited means of player asset purchases.  And an ever growing historical debt mountain at the regions to deter any new private investors.  The Scarlets having accumulatively lost £15 million by 2015, notwithstanding nearly £20 million of state aid on their Parc y Scarlets stadium.  Nearer £40 million, if you include the Pemberton land in the equation.

A vicious circle to break, let alone a virtuous circle in operation.

(5) Re-invest in the game

No virtuous circle is driving income upwards.  But if it was?

The WRU member clubs have no subsidiary Regions, no player assets to purchase beyond the £2.5 million towards dual central contracts.  This is why it is becoming increasingly urgent from 2020 that the WRU implements a business ownership and/or a player asset purchase solution if increased WRU investment in required.  In the meantime, if there are any objections to universal dual central contracts, a full takeover of the Dragons.  The other 3 regions can await 2020.  The Dragons cannot.  They are already off the pace.

The Regions have debt mountains to re-pay or at least to service, for much of it has so far not been written-off as merely a gift that was tax efficiently originally given as a loan, rather than re-investing in playing squads and player development.

(6) Attract, grow and retain potential talent as players, coaches and on committees

Attracting marquee Southern Hemisphere players is now financially impossible, for they are relentlessly heading towards the Canal+ “money pit” in France.  If not, to the 2 non-salary cap marquee players per club of the BT Sport “money pit” in England.

With no major resources from within the Regions, or the private wealth behind them, the only mechanism to retain Welsh players is the extremely limited marquee dual central contracts system.  That in itself was insufficient to retain Taulupe Faletau and Liam Williams, and was undermined completely at one point by a truly senseless bidding war between the Ospreys and the Scarlets over Scott Williams that simply could not be permitted to happen under the superior New Zealand and Irish models.

In terms of developing young players, we clearly have a player progression problem at one of the Regions in terms of their cultural ability to undertake this requisite task.  The entire future of another Region now depends upon retaining a promising group of young and promising players that they have developed in recent years, with little money to do so.

The WRU is making efforts to improve coaching at all levels, but there are many Welsh rugby fans who would be extremely nervous if the WRU announced a Welsh successor to Warren Gatland in 2020.  The first sign of choppy waters, and the parochial daggers would come back out.  Why has parochial Welsh rugby done well under Kiwi coaches?  It’s not just their superior technical ability.  They are outsiders.  They have never been aligned to sectional vested interests.  They don’t see some politics.  They can turn a blind eye to some politics they do see, without it ever being provable that they did see it all along.  They don’t start with 25% of regional fans wanting them to succeed, but neither do they start with 75% of regional fans wanting them to fail.

That and a fear in some quarters that, without Warren Gatland, that the Welsh Test team might revert to pretty but soft.  Regions, Region “A”, 6th form colleges.  Pleasing on the eye rugby, but physically bullied into submission by non-Welsh Test teams.  No happy medium, the pendulum swinging from one extreme to the other.

So there we have it.  The numerous structural blockages to the desired virtuous circle, most if not all of them probably on the extensive “to do” list of some at the WRU.

I sometimes get asked for my “business plan” for Welsh rugby, as if the current structures and “system” was based upon any 1 April 2003 business plan!!!  As opposed to blinkered power politics and vested interests.  Any business plan I drafted would be far too long to put on this blog, as anybody who has ever seen a proper business plan will attest to.

But, unlike the status quo, I have at least set-out a clear and concise WRU pyramidal vision and one that does not dramatically vary from what real experts knew required doing 15 years ago (link)(link). I understand why Graham Henry favoured 3 regions, and why 1 at that time was required in the Glamorgan valleys if there were to be 4 regions, but now we need to include North Wales.  The external forces upon Welsh rugby have changed.

4 representative regions or provinces, North/South/East/West, club neutral and with full central contracting of players and coaches from the central competition platform income sources and the WRU member club funding.  The West initially “super”, the North initially “development”.  Preferably with WRU governance fully aligned to these entities.  I don’t think David Moffett was far off the mark in 2014 when he was talking in terms of Regional Rugby Boards or RRBs.  I am very open to better regulated private investment, existing and new, in renewable franchises adding devolved value under rigorous KPIs.

Each region or province with a gradually building “A” team, over time and whilst the WRU Premiership is made more commercially sustainable and viable, tasked with the national player development pathway role and entered in the British + Irish Cup.  And a 16 team semi-pro WRU Premiership, to preserve historic cultural rivalries, to battle harden the academy youngsters, and to sweep up any players missed by the regional/provincial academies at 15/16 years of age.  16 teams would be too many for an exclusive pathway role, due to quality limitations and especially aerobically, but don’t tell me that young aspiring academy professional players won’t benefit from 80 mins head to head against e.g. Craig Locke, Damian Hudd, Daf Lockyer, or Osian Davies.  Many regional fringe players would benefit from playing more against them, if we are frank with ourselves.

And below that, subject to the usual enforcement issues, a strictly amateur game played along regional/provincial lines save for national cup competitions and perhaps several cultural relics such as the Glamorgan Silver Ball.  Maintain heritage where possible, but not maintaining heritage just for the sake of maintaining heritage and as so many are apt to do through thinking with their heart rather than with their brain.

Yes, there are complications.  The WRU stadium was never designed for smaller capacity crowds, with tier curtains, and I suspect a retrofit would be either technologically impossible or prohibitively expensive.  That means getting Glamorgan valleys fans to a rebuilt Cardiff Arms Park, the Leckwith opportunity botched.  Despite the EU funding (and Welsh Government match funding and other domestic monies), Parc Eirias will require further investment and capacity to host professional rugby.

We now have 2 modern stadia in the Port Talbot-Neath-Llanelli triangle, so 2 leases to be obtained and funded if the West is to be impartial between the legacy Ospreys and Scarlets “super” clubs and avoid repeating the mistakes of 2003.  A reconstituted Wales “A” team based at the Liberty (maintaining the minimum match requirements under that lease), Wales U20s to Parc y Scarlets with North Wales no longer excluded as 2nd class semi-pro regional citizens.

But, without significant structural reform to the transformational extent, we won’t break the vicious circle since 2003 at the Regions tier and replace it with any desirable virtuous circle.  That is as certain as the All Blacks qualifying from their pool at the 2019 World Cup.

This article first appeared in The Viet Gwent, a Welsh rugby blog. https://thevietgwent.wordpress.com/