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Exeter chairman and chief executive Tony Rowe has agreed to buy a stake in a hotel owned by the club to help pay off government-backed Covid-19 loans.
Exeter have not disclosed how much Rowe has paid, or what stake he has taken.
The group that runs Exeter had borrowings of £28.1m according to accounts to 30 June 2021.
Those included a Barclays Covid-19 loan of £5m, a Sport England loan of £6.8m and a NatWest loan of £6.6m – accounts show that Rowe has personally guaranteed £750,000 to NatWest in the event the club were to default on that loan.
Club members, who still run Exeter, agreed to the sale at an extraordinary general meeting on Wednesday.
Rowe made his fortune in the telecoms industry and has been involved with the club for more than 20 years, playing an instrumental role in their 2010 promotion to the Premiership.
His firm South West Communications sponsored Exeter’s shirts until the end of the 2020-21 season, when he sold the company, while last season another of his companies, West Exe Business Park, sponsored Exeter’s shirts.
“The sale of the shares mean Mr Rowe now has a majority stake of Sandy Park Hotel Limited moving forward, but that the rugby club itself still maintains a sizeable percentage of the shares themselves,” a club statement read.
“The fee paid for the shares by Mr Rowe not only provides an injection of capital to keep cashflow going, but will also help service substantial debts accrued by Exeter Rugby Club due to the impact of the Covid pandemic in 2020.
Directors will use “their best endeavours” to retain “at least” 26% shareholding in the hotel company.
“We can move forward with a level of guaranteed cashflow that was just what we needed really for the next 18 months to two years,” Exeter director of rugby Rob Baxter told BBC Radio Devon.
“It’s effectively sorted out a lot of our issues, but what we do have to do is we have to start building crowds and getting the business genuinely back on track to where we want it to be and back to the profit-making business that it was.”
The decision to sell such a major asset comes less than two months after Wasps and Worcester both went into administration and were removed from the Premiership as they were crippled with debt.
Worcester were given a £15m loan from Sport England, as part of the government’s sports survival package during the pandemic, and had an overall debt believed to about £25m, including £6m owed to HMRC in unpaid tax.
Wasps have struggled to repay a £35m bond taken out to buy the CBS Arena and their most recent set of accounts for Wasps Holdings showed an £18.5m loss over a two-year period, with current liabilities of £54.7m.
