England's top clubs facing 50 per cent cut in RFU central funding

English rugby’s top clubs are bracing themselves for a potential cut of 50 per cent in Rugby Football Union (RFU) central funding due to the impact of the COVID-19 pandemic.

Under the current eight year Professional Game Agreement, signed in 2016 between Premiership Rugby Limited (PRL) and the RFU, clubs are guaranteed funding from the union each season. For the first four, they received a fixed amount and £25.5m but now that figure will reflect RFU funding and the biggest union in the sport is preparing for a loss of £107m

As a result, RugbyPass understands that Premiership clubs are expecting the central funding pot to halve, creating further financial pressures at a time of real crisis for the sport. It is one of the reasons the RFU has agreed that relegation from the Premiership will not happen at the end of the season and a complete review of the way the professional game is structured will be undertaken.

The RFU finances will be boosted when private equity firm CVC finally signs the deal to take a 14.5 per cent stake in the Six Nations with the unions pocketing a pro-rata windfall worth tens of millions over the next five years. France and England will get the biggest slice of the £300m cake which is likely to be worth around £60m to each union.

The Premiership clubs have seen revenue slashed by the pandemic with loss of gate receipts, hospitality and sponsorship revenues while having to pay between £20,000 and £40,000 a month for COVID-19 tests for their players and staff.

The second tier of English rugby, the Championship, which is starting its delayed season next month has already been told about its funding cut from the RFU. The £534,000 per club will be reduced to £288,000 by the start of the 2022-23 season. London Scottish have mothballed their operation and will not take part in this season’s competition due to financial problems.

Premiership Rugby, the RFU and television partners BT – who have paid £110m for the rights – will be involved in thrashing out what comes next for the professional game in England with suggestions the “no relegation” option could stay in place for four years to help give the club’s bid for financial stability. Given that all of the Premiership clubs were reporting operating losses before the pandemic hit, finding a viable solution will be difficult, even with BT support.

The Premiership will increase to 13 teams next season but the club promoted will still have to satisfy entry criteria that includes having a 10,000 capacity stadium, while also meeting targets for club administration and other key roles, community development programmes, ground tenure and ground moves, facilities, medical and safety, marketing, plans to increase attendances, adherence to the Salary cap and playing and contractual commitments. Saracens, having been relegated last season, would be confident of satisfying the criteria – including salary cap issues that saw them relegated - if promoted but Championship rivals Ealing Trailfinders do not meet the criteria for a 10,000 capacity stadium.

BT has expressed concerns about the lack of relegation affecting interest in the competition but are ready to join the discussion about how to move forward. A BT statement said: “We've seen the decision, and will now get to work with Premiership Rugby on how a thirteen club League will be scheduled next season. While we recognise the immediate need to introduce relegation protection for this COVID affected season, we also note the importance of working together more closely on a longer term plan to ensure a compelling and exciting competition for fans of all clubs, and the BT Sport viewers - ensuring a sustainable future for rugby on TV in the UK."