Wasps face relegation as financial crisis in English club rugby union deepens

English club rugby has been plunged further into turmoil with Wasps facing the prospect of relegation after moving towards administration and Worcester Warriors told by the Rugby Football Union they will be suspended if they cannot produce a “credible plan to take the club forward” by next Monday.

On a desperate day for the domestic game, the financial hardship of Premiership clubs has been exposed with Wasps filing notice to appoint an administrator. The Coventry-based club failed to repay a debt of £35m that was due to bondholders in May, though the club recently stated that they were in “advanced discussions” to refinance the bond, which helped fund the move from London to the Midlands in 2014. The decision to file notice was ultimately taken with HM Revenue & Customs preparing a winding-up petition over unpaid tax.

A Wasps statement said: “Due to the impending threat of action from HMRC, Wasps Holdings Limited … have taken the difficult decision to file a notice of intention to appoint administrators in order to protect its interests.

“This measure does not mean the business is in administration but provides a crucial period of grace to continue negotiations with a number of interested parties to secure the long-term future of the group. These negotiations have been going on for some time, are in advanced stages and we are hopeful of securing a deal.”

RFU regulations state that a club that enters administration during the season will be relegated for the following campaign as it is classed as an insolvency event. RFU regulations also state that “notice of intention to appoint an administrator” is considered an insolvency event, which paints a bleak picture for Wasps.

In a statement, the governing body said: “The RFU is in dialogue with Wasps, we will work with them to understand the current action, their sustainability plans and what the next steps will be.”

Wasps, twice European champions, have started the Premiership season with consecutive defeats on the back of a recruitment freeze over the summer that saw the club miss out on signings including their former wing, Christian Wade. Administration would likely lead to a player exodus and relegation to the Championship next season.

There is, however, a clause in the RFU regulations relating to finance which says the union may waive or amend sanctions over an insolvency event that is not deemed to be the club’s fault. Tellingly it gives mention to a “pandemic” and one well-placed source told the Guardian that clause is likely to be significant if Wasps do enter administration.

Worcester, meanwhile, have been given a deadline by the RFU of 5pm on Monday to show they have the necessary funds and long-term plan to lift the club from crisis. The Warriors have also been ordered by the union to provide guarantees by midday on Thursday that Saturday’s home Premiership fixture against Newcastle can safely go ahead.

The outlook is bleak with the RFU demanding that, by close of business on Monday, Worcester have the necessary insurance cover in place – it is currently due to expire at midnight on Monday – as well as enough funds to cover the monthly payroll and the means to sustain the club’s future. Despite promises from the owners over the weekend that the sale of the club was close, Worcester remain mired in upwards of £25m of debt and face a winding-up petition from HMRC in early October.

The RFU’s ultimatum to Worcester comes after weeks of what the club’s staff, some of whom received 65% of wages last month, and some nothing at all, have called “broken promises” from the owners Jason Whittingham and Colin Goldring. Failure to meet Monday’s deadline would see both the men’s and women’s teams kicked out of all competitions., potentially for good

Firstly, the club must provide safety guarantees and evidence they have the necessary medical provisions in place to host Newcastle. That is, in effect, the same ultimatum issued last week before Sunday’s match against Exeter that went ahead thanks to the club’s staff and volunteers who gave up their time for nothing to ensure the fixture could go ahead.

In other developments on Wednesday, the Warriors were forced to call on the 41-year-old academy coach Jonny Goodridge as well as the 37-year-old former England deaf international player Mat Gilbert, who retired in April, for their 22-man squad for the Premiership Cup match at Gloucester.

Worcester had been working with the RFU to register additional players in time for the match on Wednesday night but still had to turn to the pair, including Gilbert, who now runs a pizza business.