Scarlets have seen their financial position worsen after a loss of almost £3m for the year ending June 2023.
The figure was more than £1m worse than the previous 12 months when they lost £1.8m for the year ending June 2022.
At the same time, the region saw turnover fall from £13.3m to £12.9m as income via the Welsh Rugby Union (WRU) was cut from £7.3m to £6.7m
Scarlets chairman Simon Muderack said the WRU must address the game’s financial issues “urgently”.
Muderack blamed the pandemic, rising interest rates and inflation that “decimated” their savings and called for “drastic” action across the game in Wales.
Under the current deal between the WRU and Scarlets, Dragons, Cardiff and Ospreys, each team will receive £4.5m central funding for 2024-25, down from £5.2m this season.
The four clubs are also repaying a £20m loan negotiated by the WRU.
“Covid and its impact continues to dominate our day-to-day operations,” Muderack stated in a directors’ report.
“And while pre-Covid we had achieved a level of sustainable financial performance at the club that generated a surplus we could invest back into the club, Covid decimated that achievement and led to the club, like others across the UK, take on considerable debts, compounded by significant increases in interest rates, inflationary pressure on the cost of sale, energy and staffing costs.
“The impact of these factors will be felt for many years to come without more drastic action across the game in Wales.”
Muderack said the six-year participation agreement struck with the WRU in March 2023 “allows for an austere future and there are many areas of the new framework that need to be worked on to improve”.
Since that deal was agreed, an independent review following damaging revelations found aspects of the WRU culture were sexist, misogynistic, racist and homophobic.
The WRU also has new faces at the helm in chairman Richard Collier-Keywood and chief executive Abi Tierney, who have taken up their roles amid governance reform.
Collier-Keywood has promised changes in 2024 after a 2023 was a year “to forget”.
But Muderack believes that cultural reform has been prioritised above financial stability.
He said: “While these efforts will undoubtedly be positive for the future of all Welsh rugby in the short term, it has meant that the actions to improve all our financial positions have not been focused on the they way they should have [been].
“These actions, as well as a general return to focus on growth within the game across all of Wales need to be urgently addressed by the end of season 2023-24.”
The WRU posted a £4.3m loss for the same period. This included £1.9m paid out to departing employees, such as former chief executive Steve Phillips and ex-head coach Wayne Pivac.
