Nine months out from the Rugby World Cup (RWC), the Welsh Rugby Union (WRU) has decided to part-company with its National Coach, Wayne Pivac. That may be the right decision based on recent results and every rugby fan in Wales will have an opinion on it.
The Chief Executive of the WRU, Steve Phillips, said that they had “acted quickly and efficiently”. But a year ago he also fully supported Pivac and said they had an agreed plan to take the national team through to the RWC. So was extending Pivac’s contract after two years an error of judgement by the CEO and is he culpable for the situation in which the WRU finds itself, costing it is said around £1m?
It would be too tempting to come up with the simple answer of ‘yes’ because there is a much bigger issue that needs addressing, namely the governance of the WRU.
In October we saw another WRU annual general meeting missing another opportunity to reform. Another failure of governance.
This time the change proposed was minor, albeit an important step in the right direction. A proposal to give the Board the option of appointing an independent chair, if it thought appropriate, rather than a member of the Council, needed to get three-quarters of clubs voting in favour but it received less than two-thirds.
Unsurprisingly, there was a social media storm about the continuing failure of the WRU to reform. The cries of “the community game shouldn’t have a say in running the professional game”; “we need business people running the £90m sport not clubmen”; “the pro game should split from the community game, enough is enough” etc.
There’s a lot of emotion around the subject of reform but why is governance important and what should reform look like? Before we answer this question, there’s a more obvious one that needs to be addressed. What is governance? Many people use the term but few understand it.
The word ‘governance’ not surprisingly is derived from the word ‘government’. What’s the purpose of government? Well in simple terms, 3 things:
Firstly to protect us, ensure we are safe whether from physical attack, cyber technology, pandemic etc.
Secondly to create the type of society that people want to see. In other words, articulating the values it has and having a vision for the future.
Thirdly, to achieve that vision by using various tools such as passing laws, spending and borrowing money, changing taxation etc.
The same is broadly true in relation to ‘corporate governance’ and companies such as the WRU. Its role is to protect the game; set out its values and a vision for the future development of rugby and use its funding and the resources available within the sport to help achieve that aim.
Governance is not the management of day-to-day operations. It is the framework of strategy, risk management, controls and processes. In this regard it also relates to the organisation’s leadership in terms of culture, values and integrity. These are all functions of the Board as well as the executive. The Board should not abdicate responsibility to the executive. All governing bodies of sport in Wales, including the WRU, are expected to adhere to the principles set out in ‘Governance and Leadership Framework for Wales’. Gareth Davies when he was chair of the WRU was certainly committed to the broad thrust of the document.
Fundamentally, it covers:
Leadership – having a clear vision and direction
Culture – living its values and beliefs
Staff - recruiting the right people, supporting them and ensuring they are valued
Partnerships – ensuring its supply chain functions properly
Strategy – having key objectives to ensure the above are achieved
Performance – ensuring that the organisation’s performance is measured and reviewed
Communication – being accountable to those it serves by establishing clear relationships and messages
Finance – reviewing income, expenditure, risk and opportunity costs
So it’s clear that the Board of the WRU needs people who understand and can help ensure that the above important principles are in place. They need to have the necessary background and organisational experience to do so. Collectively, they need a diverse range of people with a mix of skills – financial, organisational, communication, marketing, legal, IT etc. as well as people who understand the community and professional game. The challenge is to get the balance of skills right.
Fundamentally, the role of 8-10 Board members is to both challenge and support the executive. Using their experience and knowledge they should be able to question the culture which exists, the strategic direction of the organisation, the risks it faces and relationships with stakeholders. It should also ensure collective responsibility for decision making and ensure the continued professional development of the executive.
It is self-evident that the WRU Board does not satisfy the above requirements and needs to change. Eight out of the 12 board members are elected as either national or district representatives. Individually, they are decent people who have given a great deal to the game but their backgrounds and lack of experience make most of them unsuitable to be board directors of £90m organisation.
Having been appointed because of their commitment to rugby it is a disappointment that over the years they haven’t recognised their weakness and said ‘if this organisation is to develop then it needs different people with a range of skills to take it forward’.
There are many areas where a stronger board would have served the WRU better. The culture of the organisation has been under scrutiny as a result of a current employment tribunal case of a female employee alleging sexual harassment along with the departure of a prominent female non-executive director. On top of that there are numerous non-disclosure agreements which have been made with departing members of staff. You have to ask, what sort of culture exists within the organisation and do the executive and Board realise how they are viewed externally?
There is also no vision or strategy for the development of the game from grass roots to international level. Welsh rugby appears to be managed via spreadsheet rather than a coherent policy on the way forward involving all stakeholders.
The professional game is teetering on the brink of financial collapse. At best the pro clubs face the need to make significant cuts to player salaries and squads sizes for the 2023/24 season. That is assuming they survive that long to be able to make the necessary contractual changes.
Moreover, Stuart Broad, Secretary of Aberavon Quins, recently said “the community game in Wales is on life support at the moment. It’s really, really struggling. It’s dying a slow death. A lot of clubs are, for want of a better term, on their arse. Smaller village and valley clubs are on the brink of extinction” (WalesOnline, 2 November 2022).
The relationship between the WRU and its ‘supply chain’, the four professional clubs is dire. Even its own subsidiary, Dragons RFC through both its Chair and Director of Rugby, has been highly critical of the WRU’s financial policies. Much of this stems from the Professional Rugby Agreement (PRA) which exists between the WRU and each pro club. This is a document which places all the financial risk with the people least able to bear that risk, the clubs. Of course, you have to ask why the clubs signed this contract? But an equally important question is why did the WRU draw up a document which disadvantaged its supply chair so badly? Did it not realise that such a move would be self-defeating in the long term as these are the people who employ professional rugby players and run academies to develop the next generation of Team Wales players? Only this week, the Welsh Rugby Players Association (WRPA) has been highly critical of the fact that the WRU is unable to agree how much it pays the pro clubs under the PRA. Players are being put under terrible strain not knowing if they have a job after June next year. However, it doesn’t auger well for them when Steve Phillips told the Joint Supporters Group in April 2021 that “players are not my employees” and policies were for the pro clubs.
On a more positive note, the four professional clubs issued a statement saying that they “have verbally agreed a new 6 year framework for professional rugby”. It’s a start, but a signed agreement allowing players to be signed could be some way off. It was noteworthy that the WRU were not mentioned in the statement.
As a previous Governor of the Bank of England once said “the WRU and the Regions shouldn’t be viewed as separate economic entities but as one. Or, as he put it “Welsh professional rugby was a zero-sum game”.
Instead of investing in the future of the game developing the academies and building on the excellent work being undertaken by the pro clubs, the WRU chose to invest in a hotel in partnership with Rightacres, the property developers. Whether this turns out to be a success or a failure only time will tell. But it’s clearly a non-rugby risk which the sector could have done without given the opportunity cost and the fact that although the WRU’s borrowing may not be totally maxed out its not far off, therefore giving it limited scope for manoeuvre to invest in the professional and community game.
The organisation’s external communication is dreadful. It has failed to meet the Joint Supporters Group in the last year despite repeated requests to do so. It’s response to bad publicity is to say nothing.
Everybody is accountable to somebody. The WRU is accountable to its member clubs, members of the Professional Rugby Board (PRB), rugby supporters and organisations with which it works. It’s important to be open and honest and communicate with them on a regular basis to tell them what’s going on and what’s being achieved. Communications isn’t just about putting out good news stories and telling people how good you are, although that is important. It’s also a major contributor to accountability.
Culture, vision/strategy, financial management, relationship management and communication are all responsibilities of the Board. But they appear to have limited input into these crucial governance issues. If the executive isn’t asking them to discuss these matters then board members should be demanding it. This of course assumes that board members know the right questions to ask.
All this has led to calls from some to split the Pro game from the Community game. But this has already occurred in the WRU’s structure. It is difficult to go much further given that the WRU is the governing body of rugby and has representation on World Rugby. Yes, the four pro clubs need to work closer and if Dragons RFC becomes independent then a body similar to PRL in England is desirable. Rather than try to engineer further structural change with limited benefit the key is reform of the Board. Everything stems from having the right people making the right decisions.
If an organisation gets a bad name, for whatever reason, it’s potentially the beginning of the end. People are walking away from the game. Ticket sales for internationals are challenging. The pro clubs are struggling in the loathed URC. The community game is in decline. Yet the people charged with solving all these problems remain. Collectively they don’t have the necessary skills to get Welsh rugby out its current hole. The WRU’s corporate governance is failing on a massive scale.
With Rob Butcher standing down, the Board has just appointed Ieuan Evans as its new chair. Bill McLaren compared him to ‘Merlin the Magician’ and there is little doubt he was a great player but he doesn’t have the necessary experience to chair and lead a £90m organisation and drive the governance failings identified in this article.
His first move should be to call an Extraordinary General Meeting of member clubs and propose the establishment of a skills-based board to take Welsh rugby forward. He and the current board need to articulate to the clubs both the urgency and need for reform.
High on the agenda of the reformed Board should be:
The development of a new organisational culture.
The establishment of a working group to develop a strategy for rugby.
A commitment to review the PRA and re-prioritise funding.
The establishment of an engagement plan with stakeholders.
A review of the executive.
There’s a danger now that the Board will think that the replacement of a National Coach will solve their problems. The appointment of Warren Gatland will certainly provoke media attention and discussion. But it won’t solve the governance failings identified above. The current board are not capable of addressing these problems and this means a continuing erosion of confidence in the WRU and ongoing decline in the game at both professional and community levels.
Fundamentally, the WRU board members need to recognise that if they're not part of the solution then they're part of the problem.