A parliamentary report from the Digital, Culture, Media and Sport (DCMS) select committee report said, Premiership Rugby club finances are "clearly unsustainable".
The committee heard the recent demise of Wasps and Worcester Warriors put a "stain on the reputation" of the sport's authorities after the two clubs went into administration in the autumn.
Damian Green MP, who is acting chair of the committee, added: "Inert leadership from the Rugby Football Union [RFU] and Premiership Rugby [PRL] has allowed mismanagement to collapse two of English rugby's top teams. Thousands of loyal fans have been deprived of their clubs and hundreds of jobs have been lost."
The committee was told that annual losses average £4m per Premiership club.
The committee added that Worcester Warriors' "unscrupulous owners mismanaged club finances while attempting to strip the club of its assets", and that they had gone more than a year without filing accounts, with players paid late for several months. The committee said "one of the most striking facets of the problems at Worcester Warriors was the lack of due diligence undertaken regarding its owners, particularly Colin Goldring". Last May, the club's co-owner Goldring was banned from working in the legal profession without the permission of the Solicitors Regulation Authority. "This was seemingly not enough for the Rugby Football Union (RFU) to intervene and end Mr Goldring's ownership of Worcester Warriors," the committee added.
The committee said Wasps had experienced mounting problems for several years, linked to debt from what it called a "disastrous and ill-thought-through relocation to Coventry".
A "lack of attention" to the welfare of Worcester Warriors and Wasps players was another area criticised by the committee. The report said the "introduction of a form of benevolent fund is a pressing need" and recommended that the RFU should adopt measures "to give players a stronger say in all matters relating to their welfare".
Premiership rugby club finances not sustainable, says parliamentary report - BBC Sport
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