Martin Ryan is a heavy hitting businessman, probably the strongest on the Board and his views deserve an extended airing - particularly as they echo similar comments from Peter Thomas some months back.
What is now clear is that the participation agreement with the WRU was little more than an Elastoplast covering a critical wound. The Blues lost £1.4m in 2016 and from what Ryan says would need to spend a further £2.5m just to compete with the likes of Gloucester. That essentially means that on a like for like basis they would need to generate a further £3.9m in revenue just to maintain a level playing field. If you add in the £900k pa loan repayments to the WRU we need £4.8m of extra revenue, an increase of over 60% from the current level.
That could be easily addressed if we had a sugar daddy like BT TV knocking on our door but the PRO12 is not a particularly attractive TV product so on its own can't generate the cash we need. Given that Ryan says the commercial side of the Blues is doing as well as it can, the only other source of income is the gate. A back of the fag packet calculation by my reckoning means we need home crowds of more than 20k to compete. I can't speak for the other regions but I suspect their numbers are similar. That essentially means that every week, with 2 home games, 40k people need to attend Welsh Regional fixtures.
This is where we hit the real problem. Welsh rugby is essentially a parochial and tribal club game. The Regions by and large have failed to stretch their brands to reach out beyond their former club support. Ryan implies that they can and hence his belief that 2 regions could work. That however presumes that current Newport, Ebbw Vale and yes even Pohty fans would happily troop along to the CAP to support the Blues. This won't happen. At the same time keeping the Dragons and Scarlets as development regions raises the question of who they'd play and how they'd be funded. I just can't see it happening.
I confess however that while I'm happy to comment on Ryan's views I have no ready solution of my own. 2 regions could work if they were developed within an elite European league (giving it a Wales v the rest flavour) leaving the rest of the pro game to play in a 2nd tier. There was some talk of this a couple of years ago when the European cup competition was being negotiated but the BT and French TV money allowed it to slip off the agenda, I do however think it's the only way forward for us.
People will point to the CAP development as the solution for us but I'd raise the question of whether there'd be any point in doing it. Yes it would see our long suffering directors get some of their money back but do we really want a future where we half our home games are against Zebre,Trevino, the Drayons and Edinburgh. We're already seeing the Pro12 split into the haves and have nots. Even if we become a member of the 'haves' would it be a compelling proposition ?
The CAP development potentially transforms the commercial side and can help underwrite the costs of continuing to remain competitive. CAP can become our benefactor, if you like.
Of course its very difficult to quantify that at this stage where we dont know what the final redevelopment will look like.
From the article, Im not sure whether Martyn Ryan is really talking in terms of reducing to 2 super regions or just talking in hypotheticals. To me, it seems like a bit of thinking out loud which has gone on to become the focus of the article.
My feeling as regards tribalism is that to a great extent, the old club tribalism of welsh rugby is quickly fading into the past.
Is it the case that the majority in south wales have a strong loyalty to a particular rugby club? No. No, that simply isnt the case. A lot of people who take an interest in rugby are simply neutral when it comes to non international rugby. I think that's a reality that keeps getting missed when people discuss these issues.
A 'technical' loss on a balance sheet that includes 'loans' owed to Peter Thomas is not a real operating loss. All rugby clubs are struggling with revenue though which is why TV money is critical not people through the gate. The commercial potential of an indoor arena on site is huge. Also anyone can be in business and it doesn't make you any smarter or give you anymore insight into any other business.
You say that it might work if two regions performed in an elite euro competition. Well all four regions would work if they played in an elite euro league because then of course it would be more commercially attractive with a bigger to deal.
Having the domestic club game run along side the regional game certainly kills attendances. If 5k go & watch their club team over the region that's 5k of people who the region is missing out.
Like in New Zealand we need them to play at opposite ends of the calendar, whether the pro12 move to the SH schedule or the club game moves to the summer (meaning better surfaces & probably better standard).
I personally think what is letting us down financially is a big sponsorship deal, we are the blues, the capital region we should be demanding a big sponsor but results provide cash & second is the non-existing TV deal, even if we got 2/3rds of the Prem we'd be in a better situation.
Lastly we have to come to terms with the fact that we will never compete financially at the top end with England & France but what we can do is heavily fund development & the prem to produce more regional quality players who have the skills & physicality to compete st the top end, as New Zealand do.
Until we start finishing top 4 & competing in the champions cup we won't get a sugar daddy & without a sugar daddy we won't be finishing top 4 & competing in the champions cup, it's a vicious circle
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