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Falcons' experience underlines deep challenges for Premiership clubs
Leonard Curtis director and ex-rugby player Alex Cadwallader issues stark warning over Premiership club finances
1. With Newcastle Falcons’ top-flight future in doubt, Cadwallader, who played for the northeast club during a ten-year career, says the team’s financial difficulties underline deep challenges facing Premiership clubs.
2. The warning comes after last year’s publication of the Leonard Curtis Rugby Finance Report. Co-author Prof Rob Wilson has said that more clubs will face similar threats “without significant revenue diversification and improved financial governance”.
Alex Cadwallader, a Leonard Curtis director and former England U21 rugby union player, has warned that the difficulties facing the Premiership’s bottom club Newcastle Falcons highlight major concerns about the finances of the professional club game as a whole, which he says “are not sustainable” at present.
Earlier this month it was reported that the nine other Premiership clubs and the league’s private equity backer CVC Capital Partners are in advanced talks to fund a loan worth around £4 million to Newcastle to help it meet financial criteria allowing it to play next season.
On March 18th, Newcastle’s director of rugby Steve Diamond said the club has frozen player recruitment for next season amid an ongoing search for fresh investment into the club, which is up for sale, and confirmed it may have to negotiate a potential short-term loan to participate next season.
“Finding players is not the problem — making sure we can pay them is the problem next year,” he admitted to reporters, adding that for any new investor, “it needs to be a 10 to 15-year plan. … There’s no point solving the problem for a year, as this time in 12 months we’ll be in the same boat.”
Cadwallader, who played professionally for Newcastle, as well as Bristol, Newport and London Welsh over a 10-year career, said the north east club’s plight illustrates the extent to which teams across the Premiership depend on funding from their owners.
“The current model relies upon the generosity of owners to pour their resources into the clubs,” he said. “We have to be so thankful for what they have done to date, but it is not sustainable.”
First-ever comprehensive index
Cadwallader’s comments follow the publication last September of the Leonard Curtis Rugby Finance Report, which featured the first-ever comprehensive index of the financial health of clubs in the Premiership.
The report found that in 2022/23, seven of the ten clubs could be classed as balance sheet insolvent, meaning they were reliant on financial support from their owners, as they were also loss-making.
Clubs racked up total losses across the league of £30.5 million during the year, with no team posting a profit, while the combined debt level across the Premiership amounted to £311.5 million.
Newcastle made a loss of £2.4 million and closed the year with debts of £39.1 million and a negative equity position of £20.6 million. The club is expected to file its accounts for 2023/24 in the coming weeks.
Reflecting on the Leonard Curtis report’s findings, Cadwallader said: “The part that was most depressing was the financial performance of clubs like Newcastle and Sale Sharks, not based in the traditional rugby union heartlands.”
The two teams based in the north of England had both the lowest annual revenues and average attendance figures in the Premiership in 2022/23, according to the report.
Newcastle earned £11.2 million and had an average gate of 4,501, while Sale generated £11.7 million and attracted 5,385 spectators on average.
“These two metrics really highlight that a business model for clubs in these types of regions especially has not been found,” said Cadwallader. “I would have hoped that over 25 years there would have been some green shoots of growth and progress by now. But sadly not.”
He also observed that the struggles have come “despite the clubs previously having two of England’s greatest ever players in Jonny Wilkinson [Newcastle] and Jason Robinson [Sale].”
Assessing the impact of the report, Cadwallader added: “What I have noticed since it was published is that the level of understanding and transparency in the game has increased. The first step is often being able to see that there is a problem, and the next one is accepting it.
“Listening to Steve Diamond being honest and forthright is refreshing. You can see why he has had success as a leader in his day job. It also shows that hopefully some lessons are being learned at club level at least.”
Structural challenges
The Premiership clubs’ financial data for 2023/24 will be included in the next edition of the Leonard Curtis Rugby Finance Report, due to be published this autumn.
Prof Rob Wilson, who is a professor of applied sport finance and co-author of the report, said: “The league’s structural challenges, including limited centralised income distribution and rising operational costs — exacerbated by a salary cap that is too high — place significant pressure on clubs outside the most commercially viable markets.
“Newcastle’s difficulties exemplify how clubs with smaller fan bases and limited commercial reach are particularly vulnerable, reinforcing the need for broader financial reform across the competition.”
The Premiership salary cap was reduced to £5 million for three successive seasons in response to Covid but returned to the pre-pandemic level of £6.4 million for the current 2024/25 campaign.
The cap is set to be reviewed for the 2025/26 season, and other measures include an independent Financial Monitoring Panel (FMP) which has been introduced to monitor financial stability across the Premiership.
However, Prof Wilson suggested that the prospect of a £4 million loan from fellow Premiership clubs and CVC to Newcastle “underscores the precarious financial position of several teams.”
“While such a measure could offer Newcastle short-term relief, it does not address the underlying revenue-generation issues facing the club or the league at large,” he said.
“Without fresh external investment, the reliance on emergency financial support will only serve to delay, rather than resolve, Newcastle’s long-term sustainability concerns.”
‘Deeply concerning’ position
The fears over Newcastle’s future have emerged following the departure of Wasps, Worcester Warriors and London Irish from the Premiership due to financial difficulties in 2022 and 2023.
Prof Wilson believes Newcastle’s current position is “deeply concerning”, and “bears similarities to the financial crises that led to the collapse” of those three clubs, “in that it reflects the systemic weaknesses within Premiership Rugby’s financial ecosystem.”
He added: “However, Newcastle has not yet reached the point of insolvency, suggesting that intervention and strategic planning could prevent a repeat of past failures. The fundamental issue remains that without significant revenue diversification and improved financial governance, more clubs will continue to face similar threats.”
Cadwallader said: “The main difference here is that Newcastle is taking a sensible approach. They have been seeking investment for a while and being realistic in their approach to next season, the aim being to avoid a mid-season collapse like some of the other clubs.
“The Premiership FMP will be working overtime now to determine the next steps and we will see how strictly they follow their own rules. The challenge is that there aren’t any potential new owners banging on the door to be given a chance. However, this scenario was a very predictable one and one they should be fully prepared for.”
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