Chief commercial officer of the Welsh Rugby Union, Leighton Davies, said a greater focus on ‘sweating the asset’ of the Principality Stadium, including installing frictionless technology to significantly speed up food and drink sales, would form a key part of a five-year turnaround strategy implemented after it had breached banking covenants.
Mr Davies, who first joined the union as chief finance officer in the spring of 2024, said despite some commercial headwinds facing the game more widely, such as reducing valuations on broadcast deals, the union is tracking to deliver record revenues of £117m in the current financial year to the end of June 2026.
With the WRU overseeing a live consultation on the number of regions going forward, where its current preferred option is reducing the number from four to two, Crynant-born Mr Davies said the union, having achieved financial stability, was now looking to drive commercial revenues, having taken measures to cut costs, including a smarter approach to procurement, as well as a reduction in headcount.
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He also confirmed that with a projected retained profit of £400,000 in its current financial year, the Parkgate Hotel, next to the Principality Stadium on Westgate Street, in which the union has a 75% ownership stake, was now in a position to distribute cash back for investment into the game.
He also revealed that the WRU is close to refinancing around £30m of debt, including its own facility with NatWest and loans from the Welsh Government it has passed through to the four regions, with two new lenders for a short-term facility of up to four years, before striking a new long-term debt agreement. There is also the potential for the union to draw down new funding through a securitisation deal against ticket incomes.
Reflecting on joining the union in spring 2024, Mr Davies said: “I knew it was going to be a challenging role. They had refinanced in June 2023 and just six months later they had gone so far adrift from their plan that the bank (NatWest) covenants were breached. I knew that when I joined, but what I didn’t realise was this business was on a trajectory to overspend by £11m in year, even after including the CVC money.
"So the new board got their arms around that and took action, and we reduced it to around a £7.8m outflow in the year to June 2024. Turnover for 23/24 was £102.7m and for 24/25 £104.4m, which is exactly in line with our plan. The new board really challenged me in terms of setting a plan that was ambitious for what was a turnaround and drive growth and getting the business back on track.”
He added:“Our cost base in 2023/24 was £75.2m and we reduced that by £7.3m to £67.8m last year. We did that just by applying that commercial acumen and really trying to run it as a business. That was also set against around £900,000 worth of inflation on the stadium through utility and general inflation costs running a stadium.
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“Year on year we have achieved the first leg of the transformation in stabilising and getting the finances under control. We were in a crisis and survival mode. I kept talking to people about running this business with a commercial lens and getting people accountable for the topline and costs. The challenge I had is that we are more than just a business but a governing body, and I get it. But it is only viable if it is underpinned by having a successful business to reinvest back into rugby.
“I came in from a private equity business (Purolite based in Llantrisant) where I helped to grow it from a start-up business to £80m in five years. That was my background, and previous to that GE Aviation, where processes and structure was absolutely key, so I brought that level of discipline. However , as soon as we communicated where we were, the team responded brilliantly to the challenge and they have bought into the call of action in terms of getting this business back on track.”
He said that trading profit, before funding back into the game, grew from £27.6m to £36.5m in the year to June 2025. Mr Davies added: “That is a 32.5% increase which is a significant turnaround in the first year. The company is still making losses on the bottom line but has reduced by £10.9m to £4m (24/25). The underlying trading is a significant turnaround. Ebitda (earnings before interest, tax, depreciation and amortisation) was £36.5m for the year just gone, but it will be more than £41m next year (25/26).
"I am pretty confident on that as most of that revenue has already been locked in when you think of the concerts we’ve already confirmed with Metallica, Take That just announced, and another big act still to confirm. So our calendar for next June is already pretty busy for events at the stadium. With the growth coming in this financial year we are looking at a record turnover for the WRU of £117m and generating cash.”
However, it has just received its last payment (£8.6m) from the WRU’s share of the 14% sale (with the other unions) of the Six Nations to private equity firm CVC for around £40m. While reinstated back to the time of the deal in 2021/22, that was just an accounting procedure and it still benefits from the last cash payment in its current 2025/26 financial year. However, with the CVC proceeds now fully accounted for, there is no financial cushion to offset its reduced equity in the Six Nations.
With the introduction of the higher rate of employer National Insurance contribution, this will also impact the union negatively to tune of several hundred thousand pounds in the current financial year. It is also facing a £6.7m repayment this year with the maturity of some stadium debentures.
Mr Davies said: “We are actively engaging with the debenture holders to ask them to extend them and we have already done £1.4m worth for between ten to 25-years.” The union’s current debenture liability is around £48.9m.
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He said the union has made strides in terms of reducing procurement costs, following the appointment of Greg Holtam as head of procurement. Mr Davies said: “We are a £100m business which is broadly spending £50m on goods and services. We had no real strategy or structure on how we deployed those resources, with different parts of the organisation buying from the same supplier. A strategic procurement structure didn’t exist.
"The first job I gave Greg was the biggest contract we have in place here with Compass (food and beverage and stadium hospitality). They have been here since the first game in Principality Stadium. I don’t think there has been a competitive tender over the last 26 years. We are coming to the end of the procurement process which has really opened our eyes to the value that we can unlock in the future to invest in Welsh rugby by doing things in a different way.”
Principality Stadium food and drink contract
Three bidders have made the shortlist for the food and beverage contract, including incumbent Compass. A new contract will be awarded in time for the next Six Nations tournament.
Mr Davies said: “Compass is on the shortlist alongside two others, but we have basically got the best in the world. We have ideas from them in terms of where they want to invest in the stadium.”
The current food and beverage contract is a joint venture between the WRU and Compass, in which the union has an 84% stake.
The chief commercial officer said: “Going forward we are going to switch it up whether as a joint venture or another model. Turnover of food and beverage and hospitality is around £17.5m a year. All the bidders have come in and said with the right investment and focus we can get this up to anywhere between £25m to £30m over the next five years. So there is significant extra value in it going forward.”
He said the new strategy, underpinned by investment in tech and stadium entertainment, would be aimed at getting more people to come earlier and stay longer after games. Mr Davies said: “There will be an investment programme to underpin that growth and part of that will be around technology and the customer experience. We will have frictionless transactions that will reduce transaction times by up to 70%.
"You scan and go through a turnstile and pick up what you want. When you walk out cameras will have seen what you have picked up and it is then charged to your credit card. It is going to be exciting and transformational. We want to create an environment where people can come in earlier and stay after the game and provide entertainment so that they can enjoy what is the best stadium in the world.
“The bowl experience for the players and the fans is unrivalled but when you go out into the concourse then it needs some attention and investment. This is part of my focus on driving the commercials. We have the best asset in Wales and have got to get the most out of it and sweat the asset. And the team has responded to that challenge with Oasis and Metallica, who will be in the round with 80,000 people in the stadium. We are also the process of putting solar panels on the roof. We will save around £300,000 to £400,000 of energy costs a year.”
That will be funded from the union’s current overdraft facility with NatWest and is expected to generate a return on investment in three years.
Parkgate Hotel
The Parkgate Hotel which opened in October 2021, was developed with a £46m finance deal from L&G, which is repayable over more than 40 years with interest pegged to the consumer prices index of inflation. Alongside the union’s majority interest, a minority stake of 25% is held by Cardiff-based property development firm Rightacres.
The business, which is performing strongly on occupancy levels, per-room revenue, and cash generation, is now moving from its start-up stage with the associated costs.
Mr Davies said: “The business is doing really well. Turnover in 2024 was £12.3m and in the financial year just gone (to June-end 2025) was just shy of £13m. Ebitda was up from £3.5m to just over £3.7m. Cash generated in the year was just over £1.1m and the previous £1.6m.
"As of June 2025, we moved into a retained profit position, as when you set a business up there are losses in the first few years. By the end of next year we believe there will be around £400,000 of retained profit and that will be available for distribution. You cannot distribute cash as it is not aligned with distributable reserves.
"And the reason for that is that you need to reinvest to cover the depreciation. So, whilst we are charging depreciation, what that represents is what potentially needs to be reinvested back into the assets. However, we are generating profits so anything in the future will be distributed following an agreement with Paul McCarthy (CEO of Rightacres). We are benefiting from a high occupancy rate (well over 90%) and high revenue per room compared to competitors.”
Cardiff Rugby
Mr Davies is on the board of Cardiff Rugby, which the WRU acquired out of administration back in the spring, following the failure of its benefactors Neal Griffith and Phil Kempe, as agreed under the Professional Rugby Agreement (PRA) 2023, to make up for trading losses. At the time of the administration that liability was around £2m.
The WRU bought the assets of the business, and the debt it passed through to the club, out of administration in a pre-pack deal with the joint administrators from PwC. As a subsidiary business owned by the WRU, having signed the latest funding agreement PRA25 — which the Ospreys and the Scarlets refused to enter into, citing concerns over the acquisition of the Arms Park club - the union turned £3m of the debt into equity.
A formal sales process of the club will not be undertaken until the end of the current consultation on the number of clubs — although it is highly unlikely that a capital-based club will not be taken forward. However, following an initial expression of interest exercise, the WRU said it was encouraged by interest shown from both 海角视频 and overseas-based parties.
If Cardiff is to remain as one of the professional clubs going forward - and keeping the existing four cannot be ruled out - the union is confident that any new owners will be agreeable to taking on the remaining £6m debt that had been passed through to the former club before it was put into administration. Mr Davies believes the union could potentially benefit from an agreed acquisition price for the club, despite the fact that, like all four regions, it has a long record of being loss-making.
There is currently around £26m passed through debt from the WRU to the four regions. Around £17m of what was NatWest Covid-related funding was refinanced with the Welsh Government.
Mr Davies said: “The clubs really struggled through Covid and it shocked the whole landscape of the game to its foundations. A significant amount of debt was taken on by the regions and the WRU through that period. CVC income was intended to be used to generate other income, but in reality it was used to keep us afloat. We are working through this process of consultation with the four clubs on what mutually agreeable arrangement we can do to manage that debt.
“With PRA25 we were going to convert £12m of Welsh Government debt into equity, so we were looking at that anyway. They (Welsh Government) have been supportive and you can debate the interest rate, but they helped us out at a time when we needed support.”
Asked if he believed there would be an offer not just to take on not just Cardiff’s £6m debt but also an acquisition sum, he said: “Yes, I think so. It has got value and people are coming to us with the perspective that they see value in it. It will be 150 years old next year and has a huge heritage. There is a significant degree of interest and I have been encouraged by it.”
The union is hopeful of concluding the refinancing of its debt with NatWest and the Welsh Government next month to create a new facility.
Mr Davies said: “Ultimately our goal is a long-term debt solution, but at the moment we are looking at a refinanced bridging facility of between three to four years. We are currently talking with two banks.”
Mr Davies said it couldn’t be assumed that the current debt across all four regions would fall on just two if that was the implemented outcome of the current review. Besides, any remaining clubs would be unlikely to agree to have to service potentially around £13m of debt each, even if it was restructured over the long term.
The WRU has just ended its agreement with Wire & Sky to operate its zipwire attraction at the stadium, which was built at a cost of around £4.7m. The attraction was performing so poorly it wasn’t even able to cover its own operating costs. However, it is understood that a new arrangement will be confirmed by the union shortly, which it is confident will significantly improve the marketing of the attraction and its trading position
Mr Davies wouldn’t be drawn on where the union is with any future deal on the naming rights for the stadium. It struck a £10m deal with Principality Building Society in 2015, which was extended due to the impact of Covid. Under the current deal, Principality has the first right of refusal. On the failed agreement with the Scarlets and Ospreys on PRA25, signed by the Dragons and Cardiff, he said: “When PRA25 was on the table last year, all the clubs were comfortable with it and were willing to sign, and then Cardiff went into administration and we stepped in to maintain rugby in the capital city.
“That created issues for those other two clubs, so they didn’t sign. At that point in time we were ready to fund four clubs. Our estimate of owner contribution now over the next five years is £41.5m, but back then we thought it was around £22m. So, what has changed? Well, employers’ NIC for one, which has impacted around £7m for four clubs over five years.
“In addition, competition income from the URC has gone down and that impacted around £6.5m for four clubs over five years. Within the business plans for the clubs over that period, we had stretched them to generate an additional £7m of commercial income. We thought with this new deal performances should improve with more funding. If performance improves, more people would want to go and watch, and as a result more sponsors would want to be associated with it.
"Where we are now is that figure of £7m is probably too ambitious. So you have £7m additional NIC, £7m competition income( fall), £7m commercial stretch — so £21m in addition to the £22m that was already on the table for the owners to put a year ago. You can now see how that has spiked up.
“We are also seeing pressure across the board. Broadcast rights are softening and our team on the field is not doing well. Coming sixth rather than fourth inthe Six Nations has an £800,000 impact.”
The WRU’s two-club funding model shows a funding allocation of around £94m over five years, as opposed to keeping four unequally funded sides (£120m), three unequally funded (£116m), and three equally funded (£121m).
Mr Davies said: “We can do all of these models, but there will be little room for investment in areas like the academies, pathways, women’s rugby and a new centre of excellence. The only system that does provide any room for investment is the two-club model, and that allows us to invest around £25m over five years.”
How that would be broken down between the various elements has not been made public.