Scarlets’ Money Worries Mount
With the accumulated deficit rising to almost £14.5 million in 2013-14, Scarlets Regional Ltd is in a dark financial tunnel — and its half-empty stadium doesn’t help
If only Parc y Scarlets did not exist in its present super-sized form!
The stadium constructed for the Scarlets rugby region, based in Llanelli and extending over West and North Wales, does not host sufficient top-class games, and when there is a match, it is on average half empty.
The stadium, built at a cost of £23 million on land owned by Carmarthenshire County Council and opened in November 2008, seats 14,870 people but the average home gate in the Guinness Pro 12 league, 2014-15, was just 7,069.
The structure of the Pro 12, the outer circle of European rugby union, is a problem because fans have long distances to travel to away games. The four clubs from Wales, four from Ireland, two in Scotland and two in Italy, are far-flung geographically, and the journeys add to the expense of being a fan.
So no surprise that Scarlets Regional Ltd remained financially embarrassed in 2013-14. Their annual accounts for the year to June 30th 2014, filed in May 2015, show a pre-tax loss of £1,745,954 – so no tax payable – and an excess of liabilities over assets of £4,164,241.
The stadium has become a proverbial millstone, and its funding costs restrict the amounts which the region can spend on players and coaching.
It’s tough on the shareholders, tough on directors. Room for manoeuvre is limited. The Scarlets need to invest in players, if they are to improve on their mid-table status, but how to raise the money, other than to call again on the shareholders, who are already carrying an accumulated deficit of £14,418,588 – almost £14.5 million — a big drag on any loss-making club.
James & Uzell of Swansea, the auditors, make several caveats. “The company is dependent on the continuing financial support provided by the Welsh Rugby Union and the funding directors,” they say in the financial statements. “The company has now signed a new Rugby Services Agreement with the WRU [Welsh Rugby Union]. Projections prepared on this basis suggest that there is adequate funding to enable the company to continue to trade for at least 12 months from the date of signing of the balance sheet, and so it is appropriate to prepare the financial statements on the going concern basis.
“However, there is a very small margin in terms of the company meeting its ongoing liabilities, and so there can be no real certainty with ongoing cashflows. The financial statements do not include any adjustments that would result from a withdrawal of this financial support.”
The stadium is valued at £9,847,038 in the accounts, but the auditors warn about “material uncertainty which may cast significant doubt about the carrying value of the stadium”. How much would the structure fetch if Scarlets Regional no longer qualified as a ‘going concern’? There isn’t a great second-hand market in stadia, and a queue of eager buyers is a remote possibility.
Scarlets owe Carmarthenshire County Council more than £2.6 million, repayable in 2023 and secured on the stadium. By then the stadium will be 15 years old and quite possibly worth a great deal less than £9.8 million.
I hope the Scarlets can pull through. The club is careful not to overcharge fans, and has set season ticket prices for the new season between £135 for over-60s renewing and £590 for a full-priced top package. The most expensive season ticket for under-17s is £35, and for 17-21s, £80. A family of four can buy a season ticket for £260 (early) or £280 (full price), with each additional child just £4.
If only there were another 7,000 local rugby fans able and willing to buy tickets, prospects for the club, and its stadium, would be so much brighter.
Since June 30th 2014, another year has passed, and the directors will have a good idea of the financial outcome. Let’s hope that the losses have stopped accumulating – or at least, are growing at a slower rate.