ICSM Sports Business News: shock as Jersey Reds Rugby Union Club cease trading leaving staff, players and suppliers high and dry

By Harry Mottram: Rugby Football Union circles are in shock after Championship title-holders Jersey Reds ceased trading this week and are set to be liquidated according to reports by the BBC and Sky Sports News.

Jersey Red’s chairman Mark Morgan said: “We had been able to start the season and maintain sufficient funds to cover the summer, but regret that our conversations with potential new investors as well as existing ones have been unsuccessful. At one stage at the end of last season it appeared there was a viable way forward for the second tier once the new Professional Game Agreement was implemented from summer 2024, but Championship clubs have been left in the dark since that point and this led to a growing fatigue among those who may have invested, but could not be given any concrete assurance about when the new structure would come in, or how it would be funded.”

He continued: “There are a large number of players, coaches and other members of staff who have made huge contributions to the club in recent seasons, and we regret that the massive effect this will have on all of them – it’s a very sad day.”

The Rugby Union have responded with this statement: ““The RFU has been informed that Jersey Reds has taken the decision to cease trading following unsuccessful discussions with both existing and potential new investors. We, like their players, staff and supporters are deeply concerned by this news.  The RFU is working with the Rugby Players Association to support the players.

“It is extremely disappointing that investors would take decisions at this early point in the season to place the club in such a position. Championship clubs had clear confirmation from the RFU on funding for the 2023/24 season and we have been working with the Championship and Premiership Rugby on the new Professional Game Partnership and shape of Premiership 2 with funding levels to be confirmed at the end of this calendar year. The Championship has been fully involved in these discussions since February which are aimed at stabilising and strengthening the professional game.

“This news will clearly impact the season for the Championship league and Premiership Rugby Cup competition, which was introduced this season as a way to offer a new format to supporters, bringing with it the experience of playing Premiership sides and the opportunity to welcome new fans into Championship clubs and assist them to grow new audiences. Further information on the impact of this to the Premiership Rugby Cup and Championship League season will follow.”

The shock will be felt across the rugby world as the news comes in the middle of the Rugby World Cup in France with England still in contention in a sport at international level awash with cash – but at club level things have gone awry. Worcester Warriors, Wasps and London Irish have all hit the buffers reducing the size of the topflight, the Gallagher Premiership, while Leicester, Newcastle, Bristol and Saracens all have debts in the tens of millions. The Premiership Rugby Cup was introduced to bring the second tier – the Championship – and the top flight closer together but the money spinning competition is now damaged as Jersey Reds having beaten Bath were set to play Cornish Pirates next – with that match likely to be scratched.

Reaction has been swift - and damning of the English Rugby Union (RFU) in particular - for the ‘lack of support’ for lower league teams. Exeter Chief’s fan Toby Mottram said the RFU is to blame, with ‘no loyalty to the roots’ while London Welsh Minis (junior section) said it was ‘terrible news’ as their youth teams had toured to the Channel Isle club for years. Jersey Reds fan Howie Davies summed it up for many when he tweeted: “I’m absolutely devastated for the club, and everyone involved. So sorry this has happened to you. Jersey Reds have punched above their weight over the years and have been incredible ambassadors for the sport.” Bath Rugby fan Martin Johnson tweeted: “Considering the performance they put on at the Rec to beat Bath Rugby, it’s absolutely heart breaking for all involved. The RFU need to sort this out - gutted.”

West Country rugby fan and CEO of ICSM Group Ian Carrotte – the business group that warns firms of potential insolvencies - said it was a sad day for the professional sport but looking at the finances of so many top clubs there was always the potential of financial failure. He said: “There are a couple of reasons for clubs to collapse – which are unique to them as businesses. Firstly, there are the highs and lows of a season or seasons with a bad run of results usually ending in fewer punters passing through the turnstiles and buying fewer shirts, beers and pies. Hospitality is a big part of their cash flow so to get relegated or to be knocked out of a cup competition can spell problems.

“The second factor that can lead to trouble is the blind loyalty of many suppliers and backers to their favourite club. It’s assumed a club will be around for ever, but we have seen large numbers of teams – both in rugby but also football - go to the wall. Because of that loyalty lenders and suppliers will often allow late payment as they believe they are helping the club through a bad patch – but this is a mistake as professional clubs should be treated like any business and credit and repayment terms stuck to. And there is the ego factor - too many clubs spend too much on players and facilities - out of all proportion to the expected income that will be generated.”

ITV have reported that the Jersey Reds received £370,000 in Jersey Island Government grants in the last three months to avoid insolvency while the players who were triumphant at Bath’s Rec this month will not get paid according to ITV. That will mean suppliers, lenders and season ticket holders will also be out of pocket. The island's administration said they could not continue with loans since there were other demands on the public purse.

Jersey Reds split from Jersey RFU in 2018 in a bid to reach the top flight of the rugby pyramid and turn professional. Jersey Rugby Football Rugby Club remain as an amateur club playing at county level with junior and women’s teams.

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