WRU explains Cardiff takeover in Arms Park address

Cardiff Arms Park is owned by Cardiff Athletic Club

A late evening address in the famous Arms Park clubhouse highlighted the magnitude of what Cardiff Rugby has witnessed this week.

The famous club, which has boasted legends like Sir Gareth Edwards, Barry John and Jonah Lomu, has this week been battling for its very survival.

So moments after the seismic news that Cardiff had entered into temporary administration before being taken over by the Welsh Rugby Union (WRU), key figures emerged to explain how this remarkable process had occurred in another turbulent week for Welsh rugby.

WRU chief executive Abi Tierney and chair Richard Collier-Keywood, and Cardiff duo Richard Holland and Alun Jones addressed the media, surrounded by pictures of some of the Arms Park greats of the past.

In a tense, sometimes emotive hour, the quartet laid out the funding shortfall which led to Welsh rugby's governing body riding to the rescue and helping secure Cardiff's future through administration rather than liquidation.

A prospective future was mapped out, concerns addressed about players staying, while positions of both the present and now past bosses were also on the agenda.

Jones reflected on leaving his role, while Holland was non-committal on his future which will eventually be decided by Cardiff's new owners. That description of the WRU will take some getting used to.

How did this happen?

Former Cardiff investors Neal Griffith and Philip Kempe attended a match against Bath in December 2023

Cardiff's long-time benefactor Peter Thomas died in 2023 with the organisation looking for new investment.

In January 2024, Cardiff looked to have secured their long-term future when Helford Capital Limited's acquisition of a majority shareholding was approved at a general meeting of club members, with a 99.99 per cent majority.

The investment group, led by businessmen Phil Kempe and Neal Griffith, acquired an 84.55 per cent shareholding.

"Cardiff, as most professional teams in rugby and in Wales, remain reliant on private investment," said Holland on Wednesday night.

"Peter Thomas' family made it known to the Cardiff board they wanted to release themselves of their shareholding and instructed the company to find new majority owners.

"Helford acquired the shares of the family, as well as from Paul Bailey, Martin Ryan and the Smart family.

"This gave them the majority shareholding of the company, along with its liabilities and upon completion they entered into a legal agreement committing to funds."

Holland, who has been chief executive of the region since 2011, added: "There aren't a queue of people wanting to buy a professional rugby club and we thought finding investors at the time was a significant achievement.

"But we have a company that entered into a contract to support Cardiff and while some funds have been received, the required amounts haven't.

"This led to the board of directors taking the decision we had this week.

"I am sad and disappointed. We expected a level of funds and they will have their reasons for being unable to provide it."

Where was the due diligence?

Questions have been asked about what checks were made on the backers with fingers pointed at Cardiff and the WRU.

"Due diligence was carried out by an independent company," said Jones, who ceases to be the club's chair following the move into administration.

"The WRU carried out that on behalf of Cardiff Rugby. The scope of that due diligence included both financial and a fit and proper person testing.

"That was a process handed over to the independent company. We didn't have any input into that, neither did the WRU. All those tests came back clear and there were no red flags."

Holland added: "We received a report that gave a clean bill of health for Helford to be funders for Cardiff.

"That included a liquidity test linked to expected financial requirement. That gave us confidence, along with the other parties, to agree to the acquisition."

Collier-Keywood said the company would not be used again to assess potential suitors.

"If new investors come forward I am sure lessons will be learned and the right due diligence will be done to ensure there will be no repeat," said Holland.

Will this happen again?

Tierney admitted there were no guarantees this could not happen again to another region as she pointed out the Welsh model involves wealthy benefactors.

She believes the new Professional Rugby Agreement (PRA) currently being negotiated will help ensure there are more opportunities to safeguard the future of organisations.

In light of the WRU's takeover, Tierney's challenge now is persuading the Scarlets, Ospreys and Dragons to sign the PRA with the landscape having changed, although she insists the WRU will aim to make Cardiff an almost independent subsidiary.

"We are talking to the other three clubs regularly and they understand the reasons why we have done this and why rugby in Cardiff is so important," said Tierney.

"They have questions about what it means for them and funding but I am confident we will get the new PRA deal done.

"It is a better deal on every front than the current PRA and we must get it signed."

Tierney had said it was "unthinkable" to allow the demise of professional rugby in the Welsh capital. She was asked whether the WRU would have done this for the other regions.

"We would have taken each situation on a business case basis and looked at every one independently," said Tierney.

"I would not want to look into a crystal ball and say if it had been one of the other clubs, we would have made a different decision.

"We did take all three options for Cardiff to our board. Do nothing, try and find new funds quickly or do this. We had about 20 hours on this, so it's not something we said 'let's just do'."

The final decision also demonstrated the desire to maintain four Welsh professional sides.

"One of the the things that helped make the decision is if Cardiff were to go into liquidation and not exist, we would have been facing significant penalties from the United Rugby Championship (URC) for losing our slot and not providing four clubs," said Tierney.

"That would have cost us more than buying Cardiff."

Cardiff look for new investment

Collier-Keywood outlined some of the financial figures of the deal.

"It brings over the existing debt which is owed by Cardiff to the WRU which is about £9m," said Collier-Keywood.

"On top of that we are paying about £480,000 for the business and assets of Cardiff which includes business, stocks, debtors, etc and we have assumed liabilities of about £300,000.

"The good part of what we have been doing over the last 18 months is the WRU finances have been massively strengthened and we are confident in our ability to fund this."

That does not mean the WRU want a long-term venture.

After stepping in to help the Dragons in 2017, the WRU ended up owning the side until the team was returned to private ownership in 2023.

"We are open in moving Cardiff back into private hands quickly," said Collier-Keywood.

"I would prefer not to hold it for five or six years. That does not feel like the right answer and in the new model we are creating, we will be able to attract investors so we can exit [in a] much shorter period of time."

Tierney is outlining a period of ownership until the end of the 2025-26 season.

"We have an agreement and want to do it for this season and next season to give that security," said Tierney.

"I do see a situation where somebody would want to invest in a rugby club. I believe that, otherwise I would not be sitting here."

Contract concerns

Cardiff are currently ninth in the United Rugby Championship

Cardiff's players have been assured all contracts will be honoured but an immediate concern is keeping all of the players.

Some current deals can technically be declared void because Cardiff entered temporary administration.

"That is a risk, it is part of their contracts," said Tierney.

"We're working closely with the players to reassure them.

"The only reason they'd want to do that is if they don't feel there is a strong future here at Cardiff. We've done everything we can to provide that reassurance.

"We want it to be business as usual and it's important we secure the players."

Tierney has spoken to Matt Sherratt's squad while Holland says they have tried to protect the players.

"One of our priorities was to swiftly minimise the impact and concern it would create on our main priorities, which is the players and staff," said Holland.

"I hope we've done that. We've reached a conclusion where they can go home with their families, sleep well and be rest assured of their futures and contracts will be honoured.

"Everyone can be assured Cardiff Rugby will continue at Cardiff Arms Park.

"It's business as usual from a rugby calendar perspective, with everyone coming into work as normal. With that, it's as seamless as you can make it under difficult circumstances."

Some Cardiff supporters have an historic distrust of the organisation that now owns their side. Holland hopes they see this development as a positive.

"I would urge them to and see no reason as to why they wouldn't," said Holland.

"It's an ownership change, but other than that, it's business as normal.

"It's their club. They should keep supporting it and I hope they do."