WRU boss Steve Phillips on funding for the game the CVC deal and Wayne Pivac

Chief executive of the Welsh Rugby Union, Steve Phillips, said the union has secured its ask in terms of support for the game to help steer it through the pandemic, but said additional backing could be sourced if crowds aren’t able to return into the autumn.

The union boss also confirmed that a deal with the other unions for private equity firm CVC Capital Partners to take a minority stake the Six Nations tournament is on track to be confirmed this month.

This could see the WRU receiving £50m from an overall deal of around £365m.

The deal is predicated on CVC helping to drive commercial opportunities for the benefit of all parties and not one that just results in the windfall received by unions being clawed back by CVC with no overall revenue uplift.

Carmartheshire-born Mr Phillips stressed there is currently no preference on a new TV deal for the tournament from next season whether with a pay-per-view provider or remaining with terrestrial broadcasters.

The current deal between the Six Nations company and ITV and BBC expires this year.

Last autumn the WRU secured a £20m loan through the ��Ƶ Government-backed Coronavirus Large Business Interruption Loan Scheme (CLBILS), which it has passed through to the four regions, which have seen their funding allocation from the union cut from £26m to just £3m due to economic impact of the pandemic.

Administered by the Westminster government’s economic development bank, the British Business Bank, the lending came via scheme accredited lender NatWest, who are the union’s existing bank.

Under the agreement, with backing of the Professional Rugby Board (PRA) – the body that runs the professional game in Wales – the regions are liable for the interest and capital.

The split of the £20m is effectively equitable between the four.

Last week it was confirmed that the Welsh Government, via a process overseen by Sport Wales, has agreed a £13.5m grant for the game,

The funding, which is non-repayable, will see the four regions receiving £2.7m each with the union also receiving the same amount. The funding is expected to be distributed shortly.

However, Mr Phillips accepted there is a looming parity issue with the pandemic-related funding expected for the professional clubs in England.

Last year the ��Ƶ Government, through its Department for Culture, Media and Sport, announced in principle funding of £135m for the game in England, which includes a £59m package for Premiership Rugby.

While the mix between a grant or loan element has not been disclosed, it is understood that the repayment of any debt drawn down by the English clubs will run for at least 10 years.

As is stands CLBILS has to be repaid in three years, which would put the Welsh regions at a cash flow disadvantage to the professional clubs in England.

Mr Phillips said after discussions with the Welsh Government starting last May, it was agreed at the time that the best route was to go to the marketplace to secure new pandemic response debt funding.

The interest rate on the £20m loan has not been disclosed, but is understood to be below 3%.

Mr Phillip said: “We concluded at the time with Welsh Government that the best thing was to land a loan in the commercial marketplace, so we ended up doing a deal with NatWest on CLBILS.

“The way that is working is that we are drawing the £20m on a monthly basis, which runs until June.

“Then last week the Welsh Government announced £13.5m in granting fund, which is what we asked for. I have said before something between £30m and £40m (funding target).

“If you take out the community game you are down to £30m to £35m and conversations with the government was they do quality for their other funds. So we are happy with that, along with the ringfenced funding we are providing for the community game.”

The £20m loan passed onto the regions will expire in June 2023.

Mr Phillips said: “We have structured it so there is a £10m bullet repayment, so effectively then you pay £5m in year two and £5m in year three. If you equate that to £5m average region loan, that is around £1.5m of repayments next year.”

On the loan element of yet-to-be-signed off funding to Premiership clubs in England, he said: “I have heard they are 20-year loans, but also 10-year.

“Either way that is where the challenge comes in. I am not sure how far they have got with that, but let’s assume it will be 10-year loans to Premiership clubs in England.

“That is when it would be unhelpful to our professional regions as their repayment profile (on CLBILS) would be far more acute than the English clubs.

“What we are trying to achieve here is an equal playing field on and off the pitch because the consequential of this, if we are repaying earlier if you like, is there is a disadvantage. So, that is the issue we have got to face and those conversations are live and ongoing.”

He said one route where parity could be secured is if the ��Ƶ Government, having already increased the repayment term period for the Coronavirus Business Interruption Loan Scheme (CBILS) – which provides funding up to £5m – to six years, also looked at extending CLBILS.

Mr Phillips added: “There is definitely a school of thought that the ��Ƶ Government’s reaction to the pandemic could see the life of CLBILS, like it has done with CBILS, also extended.

“It is a ��Ƶ-wide scheme and there are already corporates in England, who have received funding, calling for an extension as the pandemic has gone on longer than first thought.

“So, a good solution could be if the three years becomes say 10 years, then we are back to parity (with English clubs).

“If that doesn’t happen we could have a conversation with the Welsh Government about refinancing (the CLBILS loan), but the options are still all open. In terms of timing, we are pleased with how we have worked this out so far and landed the £33.5m.

There is time to address the remaining challenges before this bites, I which I suppose is in July (repayment starts on CLBILS).”

If the issue of no crowds extends into next season, or only partial ones are allowed, Mr Phillips said that the Welsh Government had indicated a willingness to provide further grant support, as well as potentially long-term repayable loan funding.

The Welsh Government could use so-called financial transactions capital. This is capital from the ��Ƶ Government in its block grant which it has used to help fund the Development Bank of Wales’ lending activities.

The Welsh Government is only liable for repayment of 80% of financial transactions capital, which is not interest bearing, back to the Treasury. It could potentially lend to each region on an individual basis.

However, could an option be for the union to take on the capital and interest for the CLBILS loan currently falling on the regions? If for any reason a region defaults, the WRU would be liable for repayment to NatWest.

Mr Phillips said: “The way that PRA works is a sort of risk-reward type of arrangement.

“So, the minute we started struggling with revenues it manifests itself through the PRA, which is why we reacted very quickly through a cash flow point of view, both ours and everybody else’s, through the £20m CLBILS loan.

“We have mitigated a lot of our costs, whether that is through furlough, or looking at employment costs, so we have done our bit if you like and not just passed the whole problem onto the state. And I am quite proud of all of that.

“We have done this together (with the regions), but I am the lead on it because it is easier if we deal with Welsh Government, However, we don’t do this in a vacuum.

“When we had to submit our papers to Sport Wales that was a collective document.”

On end year financials, despite the impact of lost international match day revenues, Mr Phillips said: “I am hoping we are going to be around break even, which is always our objective because the loss of revenue manifests itself through the PRA and we have saved that through CLBILS.”

On the Six Nations deal with CVC, he said: “It is going quite well and if I was being positive that is something we could look to resolve this month. As for the pay-per-view question we are about to approach the market and will go from there, but we are not minded to go either way (pay-per-view, terrestrial or a blend). So, until we get the responses of what the media market looks like, it is difficult to say.”

He said if a deal was struck that saw the tournament going behind a paywall the ambition would be for Welsh language channel S4C to still be able to broadcast Wales games live.

Mr Phillips confirmed that the Welsh Government didn’t consider the grant support being conditional on Six Nations games involving Wales being broadcast free to air in the future.

On the target he has set with Wales coach Wayne Pivac for Wales in the Six Nations, which starts this weekend, he said: “Wayne and I have discussions regularly and we are aligned on what we are seeking to achieve.

“I am not going to share what that is, but one thing I can say it doesn’t need anyone to tell Wayne and his team of the expectations here.

“The Autumn Nations Cup was a period of development, but this now is performance rugby as it is the Six Nations.”