St Helens showed Business Editor Bill Gleeson why they are no longer sport’s poor relations.
Rugby League is probably the second most popular sport in the north of England. But for years it has been the poor relation to association football – partly because the main fan base has been largely in relatively small towns such as Wigan, Widnes and Warrington.
But Merseyside’s only professional rugby league club is trying to break down those geographic barriers to tap a larger market. St Helens is relocating its ground from its traditional home of Knowsley Road to the derelict site of a former bottling factory closer to the town centre.
It’s a move that is driven by commercial ambitions. The club, currently top of the Super League and in the semi-finals of the Challenge Cup, wants to match its on-the-pitch success with off-the-pitch growth.
Despite the sport’s poor relation status, St Helens efforts to finance its plans seem to be going more smoothly than similar projects at Everton and Liverpool football clubs have experienced. In moving to a new venue close to the M62, Saints are hoping to lure new spectators from the soccer-crazed city of Liverpool.
The ground move is part of a plan hatched by St Helens chief executive Sean McGuire. He was set the task of turning St Helens around financially when he was appointed three years ago. Back then the club’s finances were not in the best condition. Mr McGuire says that St Helens was losing £1m a year on turnover of maybe £3.5m. The ‘maybe’ is pertinent because, according to Mr McGuire, nobody knew for sure what the exact figure was. He said: “It was badly run.”
He aims to tap into the sport’s very different ethos to football. The provocations and retaliations that marred the recent World Cup are not often seen on the rugby field. There is no foul-mouthed language to the referee or in the stands. Families turn out in large numbers, with 40% of rugby’s spectators being women. Some even suggest that rugby league players are fitter than their soccer counterparts.
Mr McGuire is now seeking to make St Helens financially leaner. One of the first things he did was to open a new shop in St Helens town centre. “It’s not an amateurish operation. It’s kitted out to good high street standards in a prime site too. “It’s become a focus for the fans. It doesn’t just sell them replica kits. Fans can buy tickets there as well as enter the lottery and do any other business they need to do with the club. “The shop has resulted in higher ticket sales. We used to have about 8,000 a game – it’s now about 12,500. “The fact it’s there makes it easier for them to buy tickets. It keeps the club in the forefront of the fans minds.”
As a result, Mr McGuire says the next set of accounts should show turnover is up to £5.5m and the club has hit break-even at the operating level, though it may still remain in the red due to the initial costs of setting up the shop.
But the biggest transformation in the club’s financial performance will come about if it manages to build its stadium. That requires £23m to be raised from a variety of sources. The club plans to sell its current home at Knowsley Road to Taylor Woodrow, who will build houses on it. Knowsley Road is worth about £14m. Further sums will come from Tesco, who want to be able to build a superstore on part of the 50-acre site that will form the location of the new ground. That leaves a small gap that needs public money to bridge it. The club is in talks with the Northwest Development Agency about an application for government funding.
In that respect the rugby club finds itself in a similar position to Liverpool FC which has applied to the NWDA for £20m but only got £11m. However St Helens doesn’t expect similar troubles as they intend to stick rigidly to the guidelines for applying for cash. Nor does Mr McGuire anticipate problems associated with spiralling steel and labour costs dogging many construction projects, not least the new Wembley.
“We have engaged a firm who have done the Emirates stadium for Arsenal within time and budget. They have not signalled any concerns about rising steel costs to us yet,” said McGuire. He also said that should there be any shortfall he believes the club is well placed to raise additional resources.
Once the stadium is built, the club should benefit from a sharp rise in attendances. The new ground’s capacity will be 18,000. Mr McGuire is confident of higher gate receipts following the experience of Warrington Wolves, who opened a new ground two years ago and saw gates double. “We will be at £5m this year and would anticipate that rising to £10m with the new stadium,” he said.
There should also be the chance to earn extra revenues by staging concerts. Corporate entertainment will be another source of income growth – although less formal than the football club equivalent – and will adhere to the family-friendly ethos of the club. Nor will it be beer and pork pies. “There will be Sauvignon Blanc on offer,” said Mr McGuire.
The game has climbed back from the edge of bankruptcy in the last 10 years, but there is still a shortage of wealthy benefactors
James Dow is a business adviser who has specialised in the sports industry. Ten years ago he wrote a report for Rugby League’s governing bodies about the state of the sport’s finances.
Mr Dow said: “A decade ago the clubs were all close to bankruptcy. They were all playing in decrepit stadia. “The game was not in good health then. Around the same time, many of the clubs were renamed. Warrington became the Warrington wolves, Bradford the Bradford Bulls, Leeds became the Leeds Rhinos. “It was a bid to broaden the appeal and make it more like American football.
“It was about using as much best practice as they could identify to improve things.”The finances of rugby league have remained poor. “They’ve never really had the media revenue nor attracted the wealthy benefactors with the exception of Dave Whelan at Wigan.”Those people tend to be attracted to rugby union. “The gates are poor. The games are not well attended and as a result the clubs don’t get much spin-off money.
“The facilities at the ground have been quite poor until quite recently, which means they haven’t been able to charge premium admission prices. Warrington Wolves have seen a significant take up in gates and have attracted a benefactor, though not the wealthiest. “Warrington’s stadium was a Tesco deal. “The club gives them a superstore and they build a stadium.”
Mr Dow points out that while the clubs have employed professional players, they have not generally had professional management. He adds: “The Holy Grail for rugby is the unification of the codes.
“There have been a lot more players crossing over to league but the real opportunities for merchandising, media and sponsorship is the bigger audiences from a merged game and wider national appeal. It would mean bigger games. “But it has not happened in our life time. To the rugby enthusiast, the two codes are two different games.”
Mr Dow acknowledges that things have moved on in the ten years since he wrote his report. “There is no doubt that its finances are now improved. “The Sky money has helped to put in infrastructure.”
But Rugby League does have one big advantage over soccer. A salary cap means any extra profit generated won’t be lost to what former Tottenham owner Sir Alan Sugar called the “prune juice effect” afflicting football.
This results in any fresh money coming into football, such as a new television rights deal, being soaked up almost entirely in additional wages for the players. Growing rugby league clubs should be able to keep more of their cash.
Source: www.icliverpool.icnetwork.co.uk