Wasps report £3.8m losses and rising £43m debt

[scrum1/2]

Taken from the Coventry Observer

RICOH Arena owner Wasps has recorded a group operating loss of £3.8million with rising debts of £43million, newly published accounts show.

The worse than expected operating losses increased from £2.4million the previous year.

Wasps Holding Limited’s group accounts for the year ended June 30 this year also report a 44 per cent upturn in revenues, to £30.9million.

It includes £11.9m for Wasps; £5.2m from stadium company Arena Coventry Limited (ACL): and £13.8m for IEC Experience Limited (a joint venture on events and conferencing with catering company Compass).

But substantially rising costs – of staging events, management and salaries – explain the negative bottom line position.

Cash balances were recorded at just £300,000.

Pre-tax losses rose from £6.3million to £9.3million. But income tax credit of £7million, not used the previous year, has been used in the accounts to improve the bottom line losses.

Despite the losses and limited cash flow, the company has to pay annual interest payments of £2.3million on £35million of the debt residing in a retail bond scheme.

Wasps state it has retained its covenant pledges to bondholders, including that its assets cover its debts. The Ricoh Arena’s valuation on its 250-year lease is unchanged at £48.5million, based on the company’s own self-assessment this year. A revaluation due this year has been pushed into next year.

Wages and salaries rose by £5million to £17million, with the highest paid director receiving £407,255 for the year.

An accompanying statement in the accounts by chairman Derek Richardson partly attributes the losses to “delays in acquisitions and partnerships” and an “indifferent” MTV Crashes event. There is to be a review of the costs of hosting stadium concerts which “fall below expectation”.

It was also a year of investing “both on and off the pitch”.

Administration expenses, which include the costs of managing the business, nearly doubled to £14million, while investment in players is at the top of the league’s salary cap with the acquisition of players.

Average crowds for a successful season on the pitch – finishing third in the Premiership and semi-finals of European Champions Cup – are recorded in the accounts as up to 16,916, from 11,401 the previous year.

The gates are partly attributed to “solid links with new fans, businesses, clubs and schools”, which received thousands of free tickets.

Season ticket sales were up by a quarter, and hospitality and sponsorship by 86 per cent, the accounts state.

ACL’s highlights are listed as the hotel’s conversion completed to DoubleTree by Hilton, the railway station’s completion, the return of concerts, increased casino trading and tenant Coventry City Football Club’s attendances rising above 10,000 last season.

The accounts statement makes no reference to uncertainty over where the Sky Blues will be playing after 2017/8, or potential legal action by the football club’s owners, Sisu, over the council and Higg’s charity’s Ricoh Arena sale to Wasps in 2014.

Lucrative naming rights for the Ricoh Arena have been delayed but are “nearing completion” for next year, a statement in the accounts claims.

Of ambitions for the team, the accounts state: “Wasps will further take advantage of the fact that the Company now owns its own ground for the first time in over 19 years which will continue to lead to enhanced revenues and profits.”

Net debt from loans (less cash balances) was £43.4million (£27.7million the previous year), which comprised the retail bond scheme’s Wasps Finance Plc £33.8million, Derek Richardson £9.1million, and HSBC Plc £0.7million.

Looks like Wasps have increasing losses and have debt close to their asset value (and the revaluation has been pushed to next year that may be indicative that its even closer?) and a player salary level that is at the cap - don't think this is a surprise but does beg the question of how long this can be funded for?

[ourla]

It's early days.

Speculate to accumulate.

[ourla]

Wasps fans seem fairly relaxed about it all..

http://www.rugbynetwork.net/boards/read ... 8,15798603

[ellis9]

It's not really unexpected or surprising is it?!

For rugbys sake you'd like to think that they will turn it around and eventually start making a profit but the way their fans were shafted and treated and the way they are throwing money around left, right and centre, I'd have no sympathy for the club if they were to fold.

[MurphysLaw]

Aren't Sarries and Bath running similar losses, and increasing debt levels?

S'pose it doesn't matter to them whilst the money men are happy to fund it.
Meanwhile, the rest, including Tigers, struggle to compete.

[ellis9]

At least we will have a club to support for many years to come!

Who would have thought when Wasps were winning all those trophies in the mid 2000's that 10 years later their fans were going to have to choose either to travel to Coventry for home games or choose another club to support?!

[jgriffin]

"Wages and salaries rose by £5million to £17million, with the highest paid director receiving £407,255 for the year."

I keep going on about this, sorry.
Richardson hasn't taken any more debt repayment (£10m at bond issue to defray £20m loan), but exactly how much are the directors taking???
The problems include bondholder confidence - but this, to me, looks like a very slow train wreck that almost certainly IMO lead to a sugar daddy or conglomerate buyout as bonds are snapped up and Richardson walks with a profit OR a sudden collapse.
Why any on here would want us to follow the Sarries/Bath/Wasps path, well to me it beggars belief. I'd rather be watching Tigers in ten years, despite not as many pots as some would like, rather than a Wasps fan, being part of history.

[Soggypitch]

Scary finances - no way do we want to get involved in all that rubbish.
Simply not sustainable.

[Southerntiger]

Naming rights in the 7 to 8 figure region are about to released for their stadium

Attendances are sky rocketing and they are starting to give less free tickets and people are beginning to pay for tickets they used to get free

From my local rugby club about 30-40 people have signed up for season tickets this year vs getting free ones last year

Their marketing department has done a great job.

Wasps are starting to dominate the Midlands on the pitch and over the next few years off it as well

[tigercaspian]

Naming rights in the 7 to 8 figure region are about to released for their stadium

Attendances are sky rocketing and they are starting to give less free tickets and people are beginning to pay for tickets they used to get free

From my local rugby club about 30-40 people have signed up for season tickets this year vs getting free ones last year

Their marketing department has done a great job.

Wasps are starting to dominate the Midlands on the pitch and over the next few years off it as well

So, you'll be joining this success story then?

[Southerntiger]

No but when you look at the pedigree of Leicesters marketing and sales staff vs Wasps on LinkedIn, its like comparing Harry Thacker to Dane Coles

The club needs to sort itself out.

The club off the field is falling into in the classic trap of paying peanuts and getting monkeys.

Good sales and marketing stuff more than earn their keep if you incentivise them properly

[ellis9]

No thanks, we don't want or need 1000's of people coming for free. It generally attracts the wrong sort of people. The kind of people that come for a booze up and have a get together.

Wasps need to market thinks at a higher intensity than us because we have the high numbers of support but Wasps don't. They are still giving loads of free tickets away by the way.

Oh and they may be doing things bigger with marketing but they are running at a loss and a big one too. Tigers however, is run properly. I would take less success and a sustainable club than a loss making club who haven't won anything in years and a future which relies on a sugar daddy even if starts to bring consistent success. I will support Tigers forever wherever they finish and no matter how many trophies are or are not won. Wasps on the other hand may no longer have a club in 10, 20 or 30 years time. They have already shafted their fans by moving them to Coventry.

I will continue supporting Tigers because they are a fantastic, well run club. If trophies start to become few and far between then it makes no difference!

[tigercaspian]

Scary finances - no way do we want to get involved in all that rubbish.
Simply not sustainable.

On page 9 of the Wasps Holdings Ltd report, you will see the loss for the year is actually £9.3m.......
Should be freely available at Companies House for those willing to search

[BFG]

I don't know about the salary cap in the future when it goes up but aren't Leicester able to reach the salary cap at present?
I seem to recall an article saying Leicester did spend up to the cap limit at present.
I agree it's a doubt that it is sustainable in the future and risky to try and keep up financially if the numbers don't add up which could mean less success, but at the present time aren't things equal?
I ask because some seem to attribute this to any lack of success for Tigers right now.

[Southerntiger]

No thanks, we don't want or need 1000's of people coming for free. It generally attracts the wrong sort of people. The kind of people that come for a booze up and have a get together.

Wasps need to market thinks at a higher intensity than us because we have the high numbers of support but Wasps don't. They are still giving loads of free tickets away by the way.

Oh and they may be doing things bigger with marketing but they are running at a loss and a big one too. Tigers however, is run properly. I would take less success and a sustainable club than a loss making club who haven't won anything in years and a future which relies on a sugar daddy even if starts to bring consistent success. I will support Tigers forever wherever they finish and no matter how many trophies are or are not won. Wasps on the other hand may no longer have a club in 10, 20 or 30 years time. They have already shafted their fans by moving them to Coventry.

I will continue supporting Tigers because they are a fantastic, well run club. If trophies start to become few and far between then it makes no difference!

Can you elaborate on Tigers is a fantastic, well run club?

I think most can clearly see Bath, Wasps and Saracens off field plans are light years ahead.

I think Tigers let tradition block progress. Surely you can see Wasps are starting to dominate the Midlands?