The financial predicament of running a Super League club in 2020 told in depth by Michael Carter

In the current financial climate of enormous uncertainty, who would be happy to run a Rugby League club, whether in Super League or at any other level?

I have found that keeping League Publications Limited up and running has been a daunting prospect, so I can hardly imagine how difficult it must have been to keep a Rugby League club going.

Inevitably I speak to a lot of Rugby League owners and chief executives and I’m glad to say that one of them, Wakefield Trinity’s Michael Carter, has given me a personal insight into the decisions he has had to make over the last three months or so when faced with the prospect of the game shutting down.

Michael has said he is prepared to share this information with our readers, for which I would like to thank him publicly.

So here is a chronological account of his decisions from the period just before the lockdown until now in Michael’s own words. Of course every club is different, and no two people’s experiences are the same, but I think this account gives all of us an insight into the difficulties Michael has faced and by implication, the owners and CEOs of every other club.

13 March: We play our Challenge Cup game against Bradford in the knowledge it would be the last game, but nobody really knew how long for!

16 March: I took the decision to make everyone stay at home, and this is when our furlough period started. Who had ever heard that word before?

17 March: We found out we had drawn Featherstone in the Cup. Usually there would be scenes of delight, as we haven’t played them for a while!

20 March: Having realised the severity of what we were facing, I phoned HMRC to say we wouldn’t be in a position to pay the PAYE this month. I was absolutely gutted as in seven years, having brought the club back from the brink of the High Court for owing the Inland Revenue £250k, we have never ever paid it late! The civil servant asked if I would be able to pay in April. I said I would probably be making this call again, so he gave me three months deferment!

Late March: I told the staff that wages would be paid in full for March but that I would have to look at salary reductions going forward. We literally had no income other then the Sky money coming in. Wages were paid in full in March.

April: I started the negotiation with all staff regarding reductions. Clearly some weren’t happy, but the vast majority saw the bigger picture. One or two led by example and I will forever be grateful for that. One or two really surprised me with their unwillingness to co-operate, given the dire straits we were in. That won’t be forgotten either!

I put together our first furlough claim, which came to over £200k, which was obviously a lifesaver. Held an online sale that got rid of pretty much all our stock. Negotiated with agents and suppliers about taking a reduction, which they all readily agreed.

Thankfully in this instance, small can be beautiful, and we’ve always kept a tight rein on our suppliers list. I’m not sure there would be many clubs with debts to suppliers of less then £10k right now!

Spent every day looking at budgets for 2020 and 2021 seeing how we could plot through this crisis. Different days brought different thoughts, but the reality was I was pretty much just guessing!!

Fan support was great and I think the club really engaged with the fans throughout. We have some great sponsors and they have all tried their hardest to help. So far, we have only had 2 that haven’t been able to pay, which I fully understand. They all seem really committed for next year as well, which is great.

One of the big issues right now is whether we will get back to play in front of season ticket holders. If they all want their money back the club goes bust. If they all want credit for next year the club goes bust. I really need them to stay with the club right now and hopefully take the attitude, “I paid for it last November and don’t want anything back. It’s my club and I’m doing all I can to make it survive!”

May: May has been very similar to April, ploughing through meetings and spreadsheets trying to work out how we get through the next 18 months. The whole world is on for a period of austerity and Rugby League clubs are no different.

There was much talk about breaching the Sky contract and how we could fulfil it. It means that next year we will be faced with much less Central Distribution and a big hole in already fragile revenues. It will be a huge mountain to climb, and one that we will touch upon in June.

We also got to learn about the Government Loan. I’m glad it is a loan and not a grant and has paid back. It doesn’t seem right if not, especially given that some clubs can access way more then others.
We can apply for £390k. At this moment I’m not sure whether we will need it or not, but what is clear is that it cannot be used to pay salaries. It needs to be used to get us over this period and then paid back in 2022-2025. Using it to plug massive holes is just kicking the can down the road. We have to re-align our businesses and central costs now!

June: As part of the salary reductions there is a review planned at the end of this month. I don’t suspect anything will have changed for the better in my projections and probably got a lot worse.
I then have to think about next year and in particular a loss of revenue from Sky, season ticket holders and matchday revenues. I have to balance this with remaining competitive in a competition that does have relegation.

Why put myself through all this just to go down anyway? I have opened dialogue with my leadership group next year. Quite rightly, they don’t want to lose anything, but sometimes we all have to feel short term pain for long term gain.

I’ve tried to explain that I think we need a few more bodies, and coupled with the uncertainty regarding match day revenues plus the certainty that the sky money is down, it is inevitable that I have to look at all my costs and 70% of them are tied up in wages.

So I hope we can reach a fair compromise with the staff that allows us to act prudently and safeguard the future of the club.

What I have always said, in 2020 and 2021, is that if staff take cuts, and ultimately we end up making a profit, then all that profit will be given back to the staff to share pro-rata. I think that’s always fair, because as a club we always seek to break even anyway. I’ve never been in this for money and equally, if the players accept cuts, I certainly won’t be bringing in a marquee player!

I just think we need to get to a squad of 25 senior guys and six kids. We are five senior guys short of that. I also think there will be a lot of players off contract at the end of the year, and potentially this gives them the chance to get fixed up.

We still face many challenges over the next 18 months and unless we all work together, governing bodies, clubs, players, staff, sponsors, and most importantly fans, we will not survive as a sport. It’s in our hands, but only if we act appropriately!