Wales’ rugby regions pay eye-watering interest rate on loan to the Welsh Government

Wales’ rugby regions pay eye-watering interest rate on loan to the Welsh Government

The four Welsh rugby regions are paying four times the rate of interest on Covid recovery loan funding from the Welsh Government than English Premiership clubs are paying the UK Government. And this is despite the fact that the Cardiff Bay administration is financing the loan from a lending facility it has with the UK Government’s Treasury for which there is no interest.

The Welsh Rugby Union refinanced the initial Coronavirus Large Business Interruption Loans Scheme (CLBILS) package from NatWest, amounting to £18m and agreed in 2src2src, with the Welsh Government last year.

However, the regions are now being charged an eye-watering annual interest rate of more than 8% by the Welsh Government.

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The current high interest rate is because when the deal was struck between the Cardiff Bay administration and the union – which has passed the lending through to the regions – a margin of 3% over the Bank of England’s (BoE) base rate was agreed.

At the time the base rate was just src.75%, so with the 3% margin on top it meant the debt was initially only a little more expensive to finance than the original CLBILS loan with NatWest.

The BoE, in its fight to curb inflation, has since increased the base rate to the current level of 5.25%. That means the regions are paying interest of around 8.25% per annum.

In comparison English Premiership clubs secured Covid support loans from the UK Government with a fixed interest rate of just 2%. The English clubs’ debt, through the Department for Culture Media and Sport (DCMS), has the 2% fixed until the end of the repayment term in March, 2src31.

Collectively the four regions, based on the current BoE interest rate plus the 3% margin, are paying interest to Welsh the Government of circa £1.5m a year – or an average of around £375,srcsrcsrc each. To put into context if the interest was just at 2% it could have kept a player like George North at the Ospreys and not moving to France from next season.

In contrast, while not all Premiership clubs in England drew down the same level of funding from the DCMS, Bath Rugby – according to its financial year to June, 2src22, is in receipt of a DCMS loan of £5.3m, which incurred an interest payment of just over £1src5,srcsrcsrc in that year.

With other WRU lend

…. to be continued
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