Newport Gwent Dragons auditor's concern for region's future

Rodney Parade Chief executive Chris Brown said the debt was created by the cost of building a new stand but plans were in place to pay that off

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The auditor of Newport Gwent Dragons says he is concerned about the future of the rugby region.

Recent accounts show its professional playing arm has debts of £2.5m, putting pressure on the rest of the region.

The Newport Gwent Dragons is the latest region to show that off the pitch it is facing mounting debts.

Chief executive Chris Brown said it was a "wake up call", but the region was getting closer to a "break even position".

The latest accounts show that the rugby playing arm of the company - as opposed to the commercial arm - made losses of just over £270,000 for the year to May 2011.

The independent auditor who examined the Dragons' accounts says they reveal "a material uncertainty which may cast significant doubt about the company's ability to continue as a going concern".

RUGBY REGION LOSSES

  • Cardiff Blues £2.3m
  • Newport Gwent Dragons £272,000
  • Ospreys £1.46m
  • Scarlets £1.8m
  • Losses for financial year ending May 2011

The other three rugby regions in Wales are also facing financial challenges with all agreeing a £3.5m salary cap to keep costs down.

Mr Brown said the Dragons' debt was created by the cost of building a new stand but plans were in place to pay that off.

He told BBC Wales: "They [the accounts] are disappointing and they are losses again.

"We're not terribly happy with that but we have been working on that since then."

He said efforts were being made to address the losses, with three new directors on the board including former owner Tony Brown.

"We believe we can generate sufficient funds, together with the money we receive towards the players, to have a break even situation," he said.

Analysis - BBC Wales business correspondent Nick Servini

Despite all these figures, the rugby regions are saying they have got a good chance of breaking even over the next few years but the jury's still out.

The introduction of a £3.5m salary cap for the elite playing squad will be a huge help.

The Ospreys, for example, has reduced its wage bill by £2m pounds over the past two years, that's an enormous chunk of money for a business with a turnover of around £7m.

The rest will be down to things like corporate hospitality, sponsorship and old fashioned bums on seats, all of which is tough in a recession.

Some are coming up with new ideas, the Scarlets for example are opening a cafe bar in the centre of Llanelli and the return by the Blues to the Arms Park will save it money.

But the truth is that none have been able to survive for any length of time without wealthy individuals.

It will be a real achievement if they can do it.

"The key to what I'm trying to do is looking for a more sustainable future without such reliance on benefactors.

"It's of concern so far into a deep recession that rugby clubs and other sports clubs rely on benefactors to keep them going.

"It's a lot of money. I talked before about the new stand and it has been key in terms of getting hospitality and catering money coming into the business, and certainly we've been successful with that since the stand was completed."

Dragons director Tony Brown wrote to season ticket holders recently to warn them that the region was facing "considerable" debt.

"If we can get through the next six months then I am confident that we can build for the future and create great rugby at Rodney Parade once again," he said.

The other regions are also losing money, with Cardiff Blues making a loss of almost £2.3m for the year up to May last year.

In May, Ospreys faced a winding-up petition from Her Majesty's Revenue and Customs over an outstanding tax debt, although the region said at the time both parties were confident an amicable solution could be reached.

And last November, Scarlets reassured fans they were not in financial danger despite a £5.5m debt.

The Welsh Rugby Union said it was in the middle of discussions with the regions on a range of issues so it would be inappropriate to comment.

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