The future of Cardiff Blues is at severe risk after the Welsh side was issued with a statutory demand for non-payment of more than £200,000 in rent for their Cardiff Arms Park home.
The Guinness PRO14 side haven’t paid rent to landlords Cardiff Athletic Club for 12 months and, despite regular promises of clearing their debt, missed another deadline this week.
They now have 21 days to pay in full or risk being wound up.
It’s another embarrassing episode for the capital region, who Dai Sport recently revealed were leaving their purpose-built training base at the Vale of Glamorgan resort to train instead at the Arms Park and at Sophia Gardens. The club have denied that move is to cut costs.
The final straw for the Athletic Club, who had agreed at their annual general meeting to give the Blues until the end of May to pay up, came when they were asked to accept certain conditions imposed on the Blues by a financial backer before payment would be made.
The Blues posted an operating loss of £1.3million in their latest set of accounts up to June 30, 2018.
Former chairman Peter Thomas wrote off £3.33m and converted more than £10m into equity. Another director, Martyn Ryan, also wrote off £933,708.
It allowed the Blues’ overall debt to drop from £15.75m to £4.16m.
New Blues chairman Alun Jones admitted in May this year the latest accounts “do not make pleasant reading” and the legal action from the Athletic Club serves to only pile on the financial pressure.
Once the Blues receive the statutory demand for payment they will have 21 days to either pay up or reach an agreement to pay.
Under law, Cardiff Athletic Club would be able to apply to bankrupt their debtor, or ‘wind up’ the Blues, if they do not respond to the statutory demand within 21 days.
A Cardiff Athletic Club spokesman said: “At the AGM of Cardiff Athletic Club in February 2019 it was overwhelmingly approved that, if the substantial rent arrears owed by Cardiff Blues were not cleared by the end of May 2019, legal proceedings should be taken for the recovery of the outstanding debt.
“At the May meeting of Cardiff Athletic Club Management Committee it was unanimously agreed that on the 1st June 2019 a Statutory Demand be issued for all outstanding money.
“Due to some confusion on the administration front it was discovered that the Statutory Notice had not been issued as instructed. At this time, we were assured by Cardiff Blues that a financial package had been arranged which would guarantee settlement of all arrears before the end of June.
“As a result of this reassurance the legal proceedings were put on hold. We were told that certain conditions had been set by the lender which must be fulfilled by Cardiff Athletic Club before the rent would be paid.
“We have been unable to meet these conditions and, in fact, the attachment of any conditions to settlement of rent arrears is a breach of the terms of the lease between Cardiff Athletic Club and Cardiff Blues Ltd.
“Cardiff Athletic Club recognises the tough financial environment for regional rugby in Wales and has made every effort to work with Cardiff Blues Ltd to clear the outstanding arrears. However Cardiff Athletic Club Management Committee has a duty to all five of its sections and the absence of any rental payments for such a substantial period has impacted on the operations for all sections of the Club.
“Having exhausted all areas of negotiation and settle this matter amicably, Cardiff Athletic Club has therefore issued a statutory demand in respect of all outstanding debts to protect the interests of our members.”