It's an unfortunate state when sport teams suffer financial difficulties. This has seemingly come to light for the French national team and a domestic Welsh side that has gotten so low that they have to go into administration.
"Major failures" in the French government's oversight of the 2023 Rugby World Cup had led to heavy financial losses and left the French Rugby Federation in difficulty, the state's financial watchdog said on Tuesday.
The French Court of Audit pointed the finger at the first head of the tournament's organising committee, Claude Atcher, but also said the French Federation (FFR) and the government had to bear some responsibility "because of major failures in the control they should have exercised over the organising committee."
Despite promises that the tournament would generate big profits, it led to heavy financial losses, especially for the FFR. "Everyone won, except the (French) organisers," the court's president, Pierre Moscovici, said at a press conference.
The tournament was an "undeniable success with the public, the media and in a sporting sense," but generated financial losses which could reach up to nearly €29 million once related legal cases have been resolved.
"The financial targets were not met and the legacy resources left behind for rugby are virtually nil," Moscovici said. He said the FFR gave unrealistic commitments to World Rugby to secure the hosting of the tournament.
The international federation "achieved the best financial result in its history" from the tournament while the FFR made "a minimum loss of €19.2 million, rising to €28.9 million," Moscovici said. The government only really became involved in the organisation in 2022 following a crisis in the organising committee when Atcher was removed over concerns about his management style.
Moscovici said he was concerned that "the French government doesn't have a clear, substantiated doctrine for analysing the conditions under which it provides its support" for the organisation of an international competition. He said he hoped the recommendations contained in the oversight of the 2024 Paris Summer Olympics and is expected to produce a report in June.
Atcher, in a formal right to reply to the report on the Rugby World Cup, claimed that "the catastrophic management of the event after my departure deprived French rugby of nearly 50 million euros in earnings."
He said he hoped the recommendations contained in the report would be heeded by the organisers of the 2030 Winter Olympics in the French Alps. The French Court of Accounts was closely involved in the oversight of the 2024 Paris Summer Olympics and is expected to produce a report in June.
The FFR is taking its former kit supplier Le Coq Sportif to court over an unpaid sum of €5.3 million (R115 351 691 000).
The French sportswear brand signed on as the national rugby union governing body’s kit partner in 2017, inking a six-year deal that expired at the end of the 2023/24 season. The FFR announced Adidas as its new kit supplier earlier this month in an agreement that will run for four years.
However, the federation’s president, Florian Grill, has confirmed that the FFR has launched legal proceedings against its former partner, alleging that Le Coq Sportif owes it millions in unpaid fees.
"They owe us €5.3 million in sponsorship contracts, unpaid royalties, and late payment interest," said Grill. "We have made several plans to settle Le Coq Sportif’s debt. None of these plans have been respected and we have reached a point where we are taking them into receivership. If they want to get out of receivership, they should pay us."
The legal action comes amid financial and operational difficulties for Le Coq Sportif. The company has had problems delivering kit and had to take a loan of €2.9 million (R63 068 591 000) from the Paris 2024 organising committee to help it supply around 370,000 sports garments for the French delegation at this summer’s Olympics and Paralympics.
For the 2023 financial year, Le Coq Sportif’s turnover fell by €20 million (R434 706 000) to €121.4 million (US$135.7 million) and it posted a loss of €28.3 million (R608 984 040). Airesis, the brand’s parent company, also registered a loss of 36 million Swiss francs (R848 624 400) in 2023 and said Le Coq Sportif was experiencing, "operational cash flow challenges."
Airesis partly attributed Le Coq Sportif’s losses to a repositioning in the footwear sector. The FFR, meanwhile, was hit by a loss of €17 million (R370 220 220) and had a total deficit of €35 million (R763 567 700) for the 2023/24 financial period, as reported by RMC Sport.
Meanwhile, heading west north and to Wales, Cardiff are set to declare their intentions to go into administration with the Welsh Rugby Union (WRU) in line to take over the club, according to reports across the British media.
The game in Wales is already at a breaking point following the Men’s Six Nations campaign but this is the latest blow to the overall state of rugby union across the bridge. Reports across the British press suggest the club’s players and staff attended an emergency meeting on Tuesday with club chief executive, Richard Holland.
"We are aware Cardiff Rugby have confirmed notice of intention to appoint administrators," a WRU statement read. "We are working closely with the Cardiff Board and the administrators to safeguard the future of professional rugby in Cardiff."
A Cardiff statement read: "Cardiff Rugby can confirm notice of intention to appoint administrators has been filed. "Please rest assured everything possible is being done to protect our employees and the future of the club. We have a plan in place and we will update you as soon as possible."
The news also comes amid a new deal for the professional game in Wales, called the Professional Game Agreement; however, it also follows calls from pundits such as Sam Warburton to reduce the number of regions from four down to three.
The Capital outfit are also regarded as one of the most historic club sides in the world, and since the regional era began back in 2003, have won two European Challenge Cups.
Finances in professional rugby union are increasingly under the microscope following the demise of English Premiership sides Wasps, Worcester Warriors and London Irish. Only last week, DCMS was criticised over the way it handled the repayment of loans made out to Premiership sides during COVID and there still remains uncertainty that the loans will be repaid as well.
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 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.
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% majority.
The investment group, led by businessmen, Phil Kempe and Neal Griffith, acquired an 84.55% 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."
One supporter said it was a big blow to fans who, just a few months ago, were feeling "proud" of the fact it appeared a "huge investment" for the club had been secured.
Lynn Glaister, chairwoman of the CF10 Rugby Trust - an independent voice for supporters - said they were, "shocked" and "gutted."
Speaking to BBC Radio Wales Breakfast, Glaister said "something has gone wrong" with the investment in the club agreed as part of last year's takeover by investment group Helford Capital Limited.
She added, "questions have to be asked about that", reassuring members her organisation would do all it could "to ensure the survival of our great capital city club."
"We now need to look to the future," she said. "Cardiff Rugby has been around since 1876 and we need to ensure we are around for our 150 year anniversary and for many decades beyond."
Dr. Huw Jones, former chief executive of Sport Wales, said the club's administration news was "very sad."
Speaking to BBC Radio Cymru's Dros Frecwast programme, Jones said he was concerned about the club's staff and coaches, adding: "It's a difficult time, we don't know what's going to happen with the administrator."
"Maybe we will see changes in the club... but it is too soon to say that at the moment." He said it was "very important for the union to come in and help the club, because they have said that they want to see four professional rugby teams in Wales in order to see future developments."
The other three professional regional sides in Wales are the Newport-based Dragons, the Swansea-based Ospreys and the Llanelli-based Scarlets.
Jones said, "Cardiff is in the heart of the city" and claimed the club, "get more fans than anything else" but said serious consideration needed to be given to the number of professional teams in Wales and their locations. "There are fans who want to know what the situation is," he added. "Why were Helford appointed in the first place, and what were the recommendations from the board after the due diligence was done? And also what has been happening over the past year regarding their financial contribution?"
A financial services venture that was led by co-owner of Cardiff Rugby Club, Neal Griffith, went into liquidation in 2021; owing creditors £37m.
Neal Griffith is the former chief executive and shareholder of financial services venture, Optima Worldwide Group (OWG). The liquidation process for that company is ongoing.
Any new owners of Cardiff would need to have deep pockets and be financially comfortable with investing potentially several million pounds a year.
However, a more realistic future option could be a consortium of local high networth individuals that support the club, each agreeing to make a financial commitment each of season of several hundred thousand pounds - similar to the benefactor funding model of the Scarlets.
The WRU could take its time to find new investors for Cardiff Rugby, although hopefully not as long as it took for the Dragons to release the union from its majority ownership stake. However, not having a professional rugby side in the Welsh capital, with its population and business base, would be incomprehensible.
I'm quite surprised by the French side of things. I thought hosting a prestigious tournament would only benefit the hosting country. I never thought it could potentially be a financial burden. I believe it'll take some doing to get out of this mess. I also believe it'll take a few years to get rid of the mess that exists.
Cardiff is stuck in a difficult situation. In my view, the only viable option is to secure a new onership asap. I do agree that a consortium is the best way to go. It seems to have worked for the Scarlets; so I'm sure it'll work for Cardiff. Hopefully, this isn't the end for the club. It's always a travesty when a club has to close down. This is for both the fans and those who enjoy watching the game.