CHAPTER 1

THE CLUB BEFORE THE SALE

Before everything changed

To understand the collapse of Worcester Warriors in 2022, we first have to go back to a time when the club's story looked very different.

This was not a club that suddenly appeared on the brink of disaster. Worcester had spent years building itself into a professional rugby organisation, and much of that transformation was associated with one man: Cecil Duckworth.

Duckworth became involved with Worcester rugby in the 1990s and provided substantial financial backing as the club developed from its traditional roots into a professional organisation. Sixways became the physical expression of that ambition, and Worcester eventually reached the Premiership in 2004. [1]

But Premiership rugby came with a price.

The club needed to compete for players and coaches while developing the stadium and commercial operation required to sustain professional rugby. Like many clubs, Worcester relied upon financial backing from its owners to bridge the gap between what the rugby business generated and what it cost to compete at the highest level.

By 2013, the ownership structure changed.

Sixways Holdings Limited took over ownership of Worcester Warriors as Duckworth stepped back from his previous level of involvement. Duckworth nevertheless remained closely associated with the club and continued as its president. [2]

By 2017, the Warriors were publicly looking for new investment.

And that is where our investigation begins in earnest.

THE CORPORATE STRUCTURE

Before we follow the money, we need to understand the companies.

This is not as simple as saying:

Sixways Holdings owned Worcester Warriors.

The Warriors' affairs involved a number of companies and organisations, and one of the recurring dangers in investigating the club is to assume that two organisations were part of the same corporate group merely because they shared directors or had dealings with one another.

We will not do that.

A directorship does not, by itself, establish ownership.

A financial transaction does not, by itself, establish a subsidiary relationship.

And a connected organisation is not necessarily part of the corporate group.

WRFC Trading Limited, company number 03160145, was incorporated on 15 February 1996. Companies House records its business as the operation of sports facilities. [3]

WRFC Players Limited, incorporated in 1996, was another separate company within the wider Warriors network. WRFC Bars Limited was incorporated in 2016. We will not describe either as a subsidiary of WRFC Trading unless the evidence establishes that relationship.

The Worcester Warriors Community Foundation was a separate charitable organisation. Its published accounts nevertheless demonstrate financial dealings with the rugby operation.

The Duckworth Worcestershire Trust was also a separate organisation, but its accounts establish a financial relationship with WRFC Trading.

These distinctions may seem technical.

They are not.

As the story develops, the difference between ownership, control, investment, lending and connection becomes absolutely critical.

THE BUSINESS BEHIND THE TEAM

The romantic version of professional rugby is simple.

Players train.

Teams play.

Supporters buy tickets.

Sponsors provide money.

The reality is considerably more complicated.

Running a Premiership rugby club required substantial expenditure, and Worcester was struggling to generate enough revenue from its operations to cover those costs.

The financial evidence is stark.

For the year ended June 2017, Worcester reported a pre-tax loss
of approximately £8.1 million. [4]

Contemporary analysis of Premiership finances reported that Worcester's wage bill exceeded its turnover and that the club remained reliant upon shareholder financial support. [4]

This was not yet an insolvency story.

Worcester remained a Premiership club.

Sixways was still operating.

The team was still competing at the highest level.

And its owners were still prepared to support it.

But the underlying financial model was under considerable pressure.

THE £20 MILLION WRITE-OFF

There is one episode in Worcester's accounts that is particularly important because it can easily be misunderstood. During the 2015–16 financial year, the club reported a very large profit. On the face of it, that might suggest that Worcester had turned a corner financially.

It had not.

The reported result was heavily affected by the owners writing off more than £20 million of shareholder loans. [5]

This requires a simple explanation.

Imagine that shareholders have advanced £20 million to a company.

The company's accounts say:

We owe our shareholders £20 million.

If those shareholders subsequently waive the debt, the company no longer has to repay the money.

The £20 million has not arrived in the bank.

The company has not earned £20 million from rugby.

Instead, a £20 million liability has disappeared.

That can create a very substantial accounting gain.

And that is why the headline profit needs to be treated carefully.

The underlying rugby business was still loss-making.

Contemporary analysis explicitly distinguished the underlying operating loss from the accounting effect of the shareholder-loan write-off. [5]

For this investigation, that distinction is fundamental.

An accounting profit is not necessarily cash profit.

And a loan write-off is not the same thing as an operating turnaround.

THE SEARCH FOR NEW INVESTMENT

By September 2017, the club was openly seeking new investment.

The BBC reported that Sixways Holdings had owned Worcester since 2013 and that the club was looking for investment. The existing owners said there was no fixed timetable and that finding the right partner was more important than completing a deal quickly. They also said the existing shareholders were committed to funding the club while the right partner was sought. [2]

This is important because hindsight can distort history.

Knowing what happened in 2022, it would be easy to portray the 2017 investment search as evidence that the club was already doomed.

The evidence does not support that conclusion.

At the time, Worcester was still a Premiership club with a substantial physical asset at Sixways and owners who continued to support the business.

The search was for investment.

The club was not announcing that it was insolvent.

That distinction should remain throughout this investigation.

SIXWAYS — THE PROPERTY

Sixways itself was one of the most important assets in the story.

In November 2017, the BBC reported that the overall market valuation being discussed was approximately £26.7 million.

The reported figure comprised approximately:

£17 million for the 50-acre Sixways site

and

£9.7 million for the rugby club. [6]

Those figures need to be treated as a reported valuation rather than as the price ultimately paid for the club. Nor should the £26.7 million valuation be confused with the value of WRFC Trading's assets in its accounts.

There are three different concepts here:

accounting value

market valuation

transaction price

They are not interchangeable.

That distinction will become increasingly important as the investigation moves into the 2018 takeover and the financial restructuring that followed.

THE OTHER ASSET
THE P SHARE

There was, however, another asset attached to the rugby business that is easily missed.

It was potentially one of the most valuable.

The P Share.

The P Share was not a share in Worcester Warriors itself.

It was a perpetual share in Premiership Rugby Limited, carrying important economic and governance rights within Premiership Rugby. P Shares were associated with a share of central Premiership income and voting rights on matters concerning the league. [7]

For Worcester, this meant that its rugby business had an interest in the central financial structure of Premiership Rugby.

That distinction is essential.

WRFC Trading shares

determined ownership and control of the company operating the Warriors.

The P Share

represented Worcester's interest in Premiership Rugby.

They were two completely different things.

And that means that when the Warriors changed ownership in 2018, the purchaser was not simply acquiring a rugby team and a stadium operation.

The rugby business also had its interest in Premiership Rugby.

WHY THE P SHARE MATTERS

At the time of the 2018 sale, the P Share was simply part of the rugby club's Premiership position.

Its importance became much more obvious later.

During the COVID period, Worcester's P Share became involved in the security arrangements surrounding government-backed financial support.

By the time WRFC Trading entered administration in September 2022, the administrators' statement of affairs recorded P Shares and fixed-interest stocks at a combined book value of £13.865 million.

That figure must be understood correctly.

It was not £13.865 million attributed solely to Worcester's P Share. The administrators grouped the P Shares and fixed-interest stocks together in the asset schedule. [8]

The administrators also recorded that the P Shares were subject to pre-emption rights under the Premiership Rugby shareholders' arrangements and that the company had a fixed-charge creditor in relation to those assets. [8]

The P Share subsequently became one of the most important realisable assets in the administration.

Premiership Rugby exercised its contractual rights following the insolvency, and Worcester's P Share was ultimately sold back to Premiership Rugby.

The sale generated approximately:

£9.8 MILLION

The BBC reported that the bulk of the proceeds was used to repay part of the large government loan associated with COVID support. [9]

The National Audit Office subsequently recorded a £9.8 million insolvency payment to the Department for Culture, Media and Sport in relation to Worcester Warriors. [10]

So the P Share is not a minor footnote.

It ultimately generated almost £10 million in the administration.

But its importance to this chapter is simply this:

the rugby company possessed an interest in Premiership Rugby which was separate from the Sixways property and separate from the shares that determined ownership of WRFC Trading.

We will follow its journey through the later chapters.

THE BALANCE SHEET — JUNE 2018

If the search for investment was the warning sign, the accounts for the year ended 30 June 2018 provide the clearest financial snapshot immediately before the change of ownership.

WRFC Trading's accounts show:

The filed-account data gives total assets of £25,781,326, total liabilities of approximately £42.819 million, and net liabilities of £17,037,298. [11]

These numbers require some explanation.

The company had only around £713,000 of current assets against £13.817 million of creditors falling due within a year.

That meant net current liabilities of roughly £13.1 million.

Once the longer-term creditors were included, the balance sheet showed liabilities substantially greater than recorded assets.

But it would be wrong to say:

“Worcester Warriors owed £42.8 million in loans.”

The £42.819 million was the total creditor/liability figure.

It contained different categories of liabilities.

Some were borrowing.

Some were trade creditors.

Some could be connected-party balances.

Others were different forms of creditor.

The precise creditor-by-creditor composition is an important subject for the continuing investigation, but it should not be invented simply to make the story appear tidier.

The fact we can state with certainty is this:

At 30 June 2018, WRFC Trading's recorded liabilities exceeded its recorded assets by approximately £17 million.

That is the financial position against which the sale must be understood.

CONNECTED FINANCIAL RELATIONSHIPS

There were also documented financial relationships between the rugby operation and organisations outside the core company structure.

One was the Duckworth Worcestershire Trust.

Its publicly available accounts record a £500,000 loan involving WRFC Trading, together with accrued interest. [12]

That does not establish anything improper.

It establishes a financial relationship.

The same principle applies to Sixways Holdings.

The later administrators' reconstruction of the 2018 sale stated that the purchaser undertook to pay £6.5 million owed by WRFC Trading to Sixways Holdings.

Because that figure comes from a later insolvency reconstruction rather than the contemporaneous 2018 accounts, it will be treated as a later reconstruction unless the underlying primary documentation independently establishes the exact balance. [13]

That is the standard we will use throughout this investigation.

Evidence first. Interpretation second.

THE PEOPLE WAITING IN THE WINGS

While the existing ownership was looking for new investment, another group was beginning to emerge. One of the key acquisition vehicles was Militibus Quanco Limited, incorporated in February 2018.

Gerard McCrory became its director.

There were also companies associated with Colin Goldring and Jason Whittingham, including Bond Group Investments Limited and Bond Group Sixways Limited.

At this point, however, these companies should be described as part of the incoming acquisition network, not retrospectively inserted into the old Warriors structure.

That is an important distinction.

The old ownership structure was one thing.
The companies and individuals preparing to acquire the club were another.

The two worlds were about to meet.

28 SEPTEMBER 2018

And then came the date that changed the history of Worcester Warriors.

28 SEPTEMBER 2018

The club changed hands.

The incoming acquisition vehicle was Militibus Quanco.

The later administrators' reconstruction records that the transaction involved a payment of £1 on completion, together with undertakings concerning specified liabilities, including the Sixways Holdings and Duckworth Worcestershire Trust amounts referred to earlier. [13]

We will examine the transaction itself, the new ownership structure and the financial arrangements surrounding it in Chapter 2.

For the purposes of this chapter, however, the significance lies in what the new owners were taking over.

They were not acquiring a simple rugby club.

They were taking control of a complicated business which:

• operated professional rugby;

• operated at Sixways;

• had substantial recorded liabilities;

• had relied upon shareholder support;

• had previously benefited from a major shareholder-loan write-off;

• was carrying significant financial obligations;

• and held an important interest in Premiership Rugby through its P Share.

At the same time, the business was attached to a substantial property asset at Sixways.

That combination is fundamental to understanding what followed.

WHERE THE OLD OWNERSHIP ENDED

By September 2018, the financial picture was therefore far more complicated than the words “Worcester Warriors”suggested.

There was the rugby club.

There was WRFC Trading.

There were other associated companies.

There were connected organisations.

There were creditors and lenders.

There was the Sixways property.

And there was the P Share.

All of those pieces would become important.

But on 28 September 2018, the ownership of the Warriors passed into new hands.

The old era was over.

The next era was beginning.

THE FINANCIAL PICTURE

Before the new ownership arrived, the numbers looked like this.

Shareholder-loan write-off

More than £20 million

The write-off materially affected the 2015–16 accounts. [5]

Following year's loss

Approximately £8.1 million pre-tax loss

for 2016–17. [4]

Reported 2017 valuation

Approximately £26.7 million

comprising approximately £17 million for the Sixways site
and £9.7 million for the rugby club. [6]

June 2018 balance sheet

£25.781 million assets

against

£42.819 million creditors

leaving

£17.037 million net liabilities. [11]

And within the rugby business

A P Share in Premiership Rugby.

Its ultimate significance would only become apparent several years later, when it was sold for approximately £9.8 million during the administration. [9]

WHAT WE KNOW — AND WHAT WE DO NOT

An investigation is only as credible as its willingness to distinguish fact from assumption.

So, at the end of Chapter 1, these are the facts we can establish.

WE KNOW

Sixways Holdings Limited owned Worcester Warriors from 2013. [2]

Worcester was seeking new investment by September 2017. [2]

The reported 2017 valuation was approximately £26.7 million. [6]

More than £20 million of shareholder loans were written off before the 2016 accounts. [5]

Worcester subsequently recorded an £8.1 million pre-tax loss for 2016–17. [4]

At 30 June 2018, WRFC Trading had approximately £42.819 million of creditors and £17.037 million of net liabilities. [11]

There was a documented £500,000 loan relationship involving the Duckworth Worcestershire Trust. [12]

The rugby operation had an interest in Premiership Rugby through its P Share.

The incoming acquisition network was already taking shape before the September 2018 transaction.

The ownership changed on 28 September 2018.

WE DO NOT YET CLAIM

We do not claim that the entire £42.819 million was borrowing.

We do not yet publish a definitive creditor-by-creditor breakdown of that figure.

We do not attribute every part of the £20 million-plus loan write-off to particular individuals without the necessary primary documentation.

We do not infer ownership merely because individuals held directorships in more than one company.

We do not suggest that any documented loan, payment or company relationship was improper simply because it existed.

And we do not assume that the later £9.8 million realisation value of the P Share was its value in 2018.

Those questions belong to the continuing investigation.

THE END OF THE BEGINNING

The Worcester Warriors that entered the 2018 transaction was therefore a club with two very different faces.

On one side was the rugby club supporters knew.

The shirt.

The players.

Sixways.

The Premiership.

The roar of a crowd on a Saturday afternoon.

On the other was a complicated corporate and financial structure carrying substantial liabilities and requiring continuing financial support.

The owners had already written off more than £20 million of shareholder loans.

The club had subsequently lost millions.

The balance sheet showed liabilities substantially greater than recorded assets.

Yet Sixways had a substantial reported market value.

And hidden within the rugby operation was another asset that would eventually become worth millions: the club's P Share in Premiership Rugby.

The supporters entering Sixways in September 2018 could not have known how important all of these pieces would eventually become.

They knew their rugby club.

They did not necessarily know the companies behind it.

They could see the stadium.

They could not see the financial architecture supporting it.

They knew Worcester had new owners.

They could not yet know what the new ownership would do with the complicated collection of companies, assets, liabilities and rights that came with the club.

That is the story we now have to follow.

Because 28 September 2018 was not the end of Worcester Warriors' financial story.

It was the beginning of the next chapter.

And from here, the investigation changes.

We move from the people who had owned and financed Worcester into the world of Militibus Quanco, Goldring, Whittingham, the Sixways property structure, new borrowing, Premiership Rugby money and the decisions that ultimately shaped the fate of the club.

Chapter 2 begins on that fateful day
28 September 2018.

OUR EDITORIAL STANDARD

This investigation follows five principles:

1. Primary evidence first.
Companies House, statutory accounts, government documents, parliamentary evidence, court and insolvency documents take precedence wherever available.

2. Contemporary reporting is identified as contemporary reporting.
A newspaper or broadcaster's account is not silently converted into an established fact.

3. Later reconstructions are identified as later reconstructions.
An administrator's account of an earlier event is not presented as though it were the original contemporaneous document.

4. Connection is not guilt.
A company relationship, loan, directorship or financial transaction is reported as a fact. We do not imply wrongdoing without evidence establishing it.

5. Where the evidence does not establish something, we say so.

The purpose of this investigation is not to manufacture a scandal.

It is to establish, as accurately as the surviving public evidence allows, what happened to Worcester Warriors, who controlled the relevant companies, where the money went, what decisions were made, and how a club that had survived so much ultimately fell.

The evidence will tell the story.