FoNR second letter to shareholders
Since our last letter the club has released more information about the proposed sale of the ground, and there has been another Q&A meeting, attended by Martyn Phillips, the CEO of the Welsh Rugby Union. We undertook to write to shareholders again after out first letter and some members have asked us to do this to summarise the available information.
It is certainly not our intention to tell you how to vote but to provide our understanding of the information available some of which might not be available to people unable to attend the meeting or follow discussion on social media.
The ground will be sold to the WRU for £3.75 million. There has been much speculation over the true value of the land, particularly as the club has not commissioned a professional valuation. However, the Trust has been speaking to a number of people and an estimation is that the maximum value is £5.4 million but likley to be a lot less. Land has been sold in the area for less than that value per acre. The price paid by the Union reflects the need to spend a large amount of money on the pitch, on the Hazell stand and other parts of the site infrastructure which are in poor condition.
The Union will take over the Dragons and would call them simply Dragons.
The Union will not give any commitment to how long Newport RFC can play at Rodney Parade, but have indicated that it will be at least as long as the Dragons play there. They will have to pay staging fees for the costs of each game and other operation costs that have not yet been set out. However, in recent documents it has come out that Newport will only have use of the training pitch and clubhouse for one season. The Board are in negotiations about the availability of facilities in the Bisley stand for a club bar (with net profit for us) meeting rooms and the museum.
Newport would be left with £600,000. However, the outline financial projections show that they need to raise an additional £90,000 or more each year, so £600,000 will not last long if that cannot be done. The concern is that without a clubhouse there will be no way of raising additional funds through functions and bar sales if the negotiations referred to are not concluded.
There is a further concern that the future of the Dragons may be short. The current agreement for the Pro12 runs out in 2020 and we do not know if the Union will run four professional sides. That could lead to a situation where Newport have nowhere to play, and not enough money to adapt another ground to Premiership standards, if they can find one.
Vote No - the view of the Board
The position of the Board is quite clear on this. The Dragons would cease to trade the day after the meeting, owing the rest of the group £2 million. Messrs Brown and Hazell will call in their loans and the rest of the group will follow into receivership. With a Yes vote Brown and Hazell would accept only a partial repayment of their loans. With a No vote, they would require full repayment on the basis that rugby will no longer be played at Rodney Parade. It must not be overlooked that there are jobs at risk in each strategy, whether now or in a few years.
Vote No - the other view
There are supporters who take the view that the Yes vote simply does not offer enough to Newport RFC and cannot be accepted. The view is that if agreement can be reached with the bank not to call in the loan, that will create time to look at the possibility of selling off the clubhouse and training pitch to clear loans and reduce outgoings.
In addition to the value of the ground, its position in the Newport Council plan for the area is important. The land is clearly marked for sporting use, and it will be very difficult to sell it for development unless it is "surplus to requirements." That test is applied to the community, not the landowner, so that might mean any disposal is less attractive to any director wanting to call in a loan.
There is no doubt that even with a No vote the position of Newport RFC is still precarious and that it might not survive. Some shareholders still think a better option than being cut adrift with inadequate funding. It is clear (by their own admission) that the Board have put the interests of the Dragons ahead of everything else, and that does not sit comfortably with many members.
The decision is personal for each shareholder and we hope that the information that we have provided is helpful to you.
Whatever the outcome, Friends of Newport Rugby will do all that we can to support the team. It is clear that money is going to be important and we will be redoubling our efforts in the hope that all shareholders will respond.
Friends of Newport Rugby Supporters Trust