THE Scottish Rugby Union’s AGM will kick off this Saturday with member clubs congregating at Murrayfield or tuning in via conference call to elect a new vice-president and fill a number of council vacancies, and to vote on a motion and amendment to change the male adult season structure (as well as an amendment which has been put forward by Orkney and Murrayfield Wanderers).
However, the full audited accounts of the business will not be presented, meaning the meeting will have to be adjourned until a second instalment in mid-September.
Below are 10 of the key talking points which are likely to come up this Saturday.
1. How will Scottish Rugby respond to the deeply disturbing and damaging charges made against the organisation in the recent Sunday Times article which dealt with the Siobhan Cattigan tragedy?
It is astonishing that a proper and thorough review was not initiated immediately after this catastrophic event, especially as the family’s negative view of Scottish Rugby’s role in what happened was evident from an early stage.
With any adverse event, there is an opportunity to learn from the experience and improve the level of support provided, without necessarily apportioning blame.
It is simply not good enough to state that “there are details and assertions about how our people are said to have acted that we do not recognise or accept” and then batten down the hatches in the hope that the storm blows out.
Medical confidentiality is not a reasonable excuse to kick this can down the road. There are very specific accusations related to the management of the situation which don’t fall into that category and these must be addressed.
This cannot be a face-saving exercise. Public confidence in the sport is on the line so the review must be immediate, external and fully independent.
2. Where the heck are the full audited accounts?
Clause 16.1 of the Union’s bye-laws clearly states that ‘the financial statements of the Scottish Rugby Union (for year to 31 May) shall be laid before an AGM no later than 31 August of that calendar year’. Hilary Spence was appointed Chief Financial Officer and has been in place as a member of the Board since summer 2021 (ie: a full year). She must have been well aware of this deadline, and she must also have been aware of the discontent amongst the clubs when the 2021 financial statements were not available for last year’s AGM. It is curious that she did not hire the necessary professional support to ensure that there was no repeat this year.
3. Should the membership be concerned about the rushed change of auditors?
The letter from Murrayfield which informed member clubs of the delay to the final accounts began by explaining that there has been a change of auditors this year as one of the leading reasons for the lateness.
Generally, a change in auditors is not a big deal per se. Price Waterhouse Coopers inherited the audit from Coopers Lybrand when Coopers Lybrand and Price Waterhouse amalgamated in March 1999 and have been in post ever since, which is probably too long in terms of responsible governance.
The problem here is the lack of transparency and due process. The re-appointment or replacement of auditors is a normal standard item at any companies AGM, but changing auditors mid-stream is extremely rare and raises a huge red flag for member clubs and, one would think, the Union’s bankers.
It transpires that following a recommendation from the Audit Risk Committee [Lesley Thompson (Chair), Mark Dodson, Julia Bracewell, Bob Richmond and William Gardner] the decision was made at the Board Meeting held on 20th January 2022, to replace Price Waterhouse Cooper as auditors with Johnston Carmichael.
The recommendation was “based on a number of factors, including value for money, general ethos and approach, size, knowledge of Scottish rugby and the game”. It is, however, disingenuous to suggest that the money was reason for change, The audit fee in 2012 was £26k or 0.07% of the £38m turnover, in 2020 it was £41k which was still 0.07% of the £55m turnover, and it only jumped to £69k or 0.13% of turnover of £52m in 2021, which it is reasonable to assume was a function of the complicated extra work involved in establishing ‘going concern’.
The minutes of the Board meeting on 31st March 2022 stipulate that: “The decision to appoint Johnston Carmichael as new auditors had been progressed, with engagement letters (two were needed – one for SRU and one for SRUL and subsidiaries) close to being finalised. One of the appointments (the statutory appointment for SRUL as a limited company) was governed by the Companies Act 2006 procedures and was more complicated as a result. It required a formal ratification by the Company’s shareholders , ie the SRU Trust / Trustees, which in turn meant either a written resolution, or more likely, a motion to be dealt with by those shareholders at a special general meeting of the Company. The Company Secretary was preparing the necessary documentation with assistance from external legal advisors”.
But there is no evidence of the Trustees having met to ratify the change and there has been no SGM to endorse it, though the Companies Act is quite clear: “Where a resolution removing an auditor is passed at a general meeting of a company, the company shall within 14 days give notice of that fact in the prescribed form to the registrar. If a company fails to give the notice required by this subsection, the company and every officer of it who is in default is guilty of an offence and liable to a fine and, for continued contravention, to a daily default fine”. At time of publication, no notice has been lodged with Companies House.
4. What can we glean from the financial information which has been provided at this point?
Two hard facts emerge from the unaudited accounts incorporated in Scottish Rugby’s 2021-22 Annual Report –
- Scottish Rugby made a £5.528m operating loss for the year to 31st May 2022 despite “both Six Nations home games and three of the four Autumn Tests being sold out” and “extremely prudent management of costs”.
- £881k sunk into the Old Glory project has had to be written off.
The Scottish Government’s letter to Dominic McKay (dated 20th January 2021) confirming their £15m grant stipulates that this funding was “intended to ensure rugby clubs at all levels of the game across Scotland are better able to cope with the financial challenges that Covid-19 has brought”. To date according to the Annual Report only (at most) £3m of this money has been distributed to the clubs – with £2.15m spent on Covid compliance, £7.45m used to keep the Murrayfield head-count intact, and £2.25 set aside to compensate for years of neglect to the fabric of the Murrayfield stadium.
The contemporaneous Scottish Government £5m interest-free loan was designated as being ‘to allow the Prospective Borrower (Scottish Rugby) to assist grass-root rugby clubs in Scotland with damage caused to them as a result of their compliance with Covid-19 public health rules’. The damage caused to the amateur clubs was by loss of subscriptions, gate money, bar takings and sevens tournaments — and this facility was surely intended to be used to compensate them in hard cash rather than to be commandeered by Scottish Rugby to cover their financial obligation to the clubs over the next five years through their Growth and Participation Fund.
According to the Unaudited Financial Statement, Scottish Rugby spent £7.6m supporting the grass roots in the year to 31 May 22 (£4.1m on ‘Domestic Rugby’ and £3.5m on ‘Club Support’) which is pretty close to the 15% of Turnover figure proposed by the Standing Committee on Governance [SCOG] – but the member clubs will expect to see a Source & Application Statement for these funds in the audited accounts to allay suspicion that they are simply being drip fed cash which is already rightfully theirs anyhow.
The clubs will also be looking for assurance that the move to separate ‘Core Business’ and ‘Strategic Investments’ is not a ruse to exclude the proceeds from CVC’s investment in the Six Nations from the calculation of the Domestic Game budget as outlined in SCOG’s new governance proposal, and will be reminding Messrs Dodson and Jeffrey that they, the clubs, not only own the Murrayfield campus but also the rights to both the Six Nations and the British Lions, and that Article 92.2 of Scottish Rugby Union’s Articles of Association asserts that: “The company shall not dispose of the whole or a substantial part of its business undertaking or assets, except with the prior sanction of a motion passed by two-thirds majority of those present and entitled to vote at a properly convened General Meeting of the Union”.
5. Are Scottish interests being effectively represented at executive level in World Rugby?
It is not clear how the recent decision was reached to amalgamate Scotland, England and Wales as a single Great Britain team in the HSBC World Sevens Series. According to World Rugby’s website, it was a “decision taken jointly by the RFU, Scottish Rugby and the WRU.” According to Scottish Rugby’s own press release, the decision was “mandated” by World Rugby.
Taken at face value, the Murrayfield press release is clear that this move is not what Scottish Rugby wanted. Scotland is represented on World Rugby’s Council by John Jeffrey (since 2010, which makes him the second-longest serving member behind chairman Bill Beaumont), Mark Dodson (since 2012, which makes him the fourth-longest serving member behind Beaumont, Jeffrey and Jurie Roux of South Africa) and Lesley Thomson (since 2018). Jeffrey is also a member of World Rugby’s Executive Committee and Chair of its Sevens Strategy Group. Was it a lack of desire, a lack of influence, or a sense of conflicted loyalties which led to Scotland’s interests being overlooked? Are Jeffrey and Dodson at the wheel of two vehicles on opposite sides of the road?
6. How have performances by the senior men’s international team been reviewed and assessed during the last 12 months? Is the Board confident that the team are on track to succeed at the 2023 World Cup?
There was no organised review after Scotland’s World Cup slump in 2019, although we were assured that there was plenty of serious internal conversations. Since then, Gregor Townsend’s side have continued to blow hot and cold, catching England on the hop at the start of the last two Six Nations championships, and also derailing France’s title bid in 2021, but struggling to build on those excellent one-off performances.
As the Board like to tell us, the profile and financial pulling power of the men’s national team is the driving force for everything else in Scottish rugby, and this was supposed to be a golden generation with a handful players who can genuinely be described as world class at Townsend’s disposal. However, Scotland have not finished in the top half of the Six Nations table since 2018, and the most recent campaign concluded amid farce and acrimony after an illicit mid-tournament drinking session involving six leading players – including the talismanic duo Stuart Hogg and Finn Russell – was leaked to the BBC.
Hogg and Russell were rested this summer as Scotland lost their first ever three-match Test series to a fairly ordinary Argentina side, and with the 2023 World Cup now looming over the horizon, there is a concerning lack of momentum when it comes to both performances and results.
England’s form since the last World Cup has also been patchy but at least the RFU give the impression that progress – or lack of – is being monitored by regular post-campaign reviews.
There has been no shortage rehearsed platitudes emanating from the camp about how much they all like spending time with each other, but the same old problems – kick-off receipts, misfiring pressure line-outs, soft penalties – continue to haunt the team.
It’s all very cosy, but there is too much riding on the next 14 months for this to be another fudged PR exercise. Have Dodson and Director of Performance Rugby Jim Mallinder taken appropriate measures to be satisfied that there is a coherent and realistic strategy in place to get Scotland out of a killer World Cup pool?
7. Is the delay in ratification of new governance structure a cause for concern?
It has been a marathon effort and outgoing president Ian Barr has proven himself to be an endurance athlete of the highest order in his perseverance to get this much-needed governance review to its current position. The initial target for voting on SCOG’s recommendations in principle was August 2021, but that didn’t happen until an SGM in June of this year, at which point it was anticipated that the necessary paperwork for the new structure and detailed transition arrangements would be put before the clubs for final approval this weekend. However, that is now not happening until after AGM2 in mid-September. All of which is very frustrating, but Barr and SCOG’s independent chair, Lorne Crerar, are baked into the process and will not be sidelined, meaning that they will get there in the end so long as the clubs keep faith and continue to actively support the process.
Perhaps the bigger question is whether the current Board is ready for the seismic shift which is coming, and prepared to engage positively with club representatives in the new governance structure?
8. Is the Board really as relaxed about grassroot player numbers as the Annual Report suggests?
Scottish Rugby Board Chairman, John Jeffrey, stated in the Annual Report that: “One of the biggest fears associated with the pandemic – namely that we would haemorrhage playing numbers across the board – has proved unfounded.”
Scrums – Scottish Rugby’s online management system – may back this claim, but that doesn’t really tally with the mood at ground level, where more and more clubs are struggling to field a competitive single team, let alone 2nd and 3rd XVs required to push up standards internally. Converting youth players into adult players is an increasingly difficult challenge.
This can’t be about survival of the fittest. Every club in the country is a recruitment tool for players, future coaches, and casual consumers of the game. It is good news that Hawick Harlequins and Trinity Accies are both planning to resurrect in 2022-23 after falling by the wayside in 2021-22, but more often than not there is no way back for a club once it withdraws from the leagues.
This is a long-term and multi-faceted problem which will have consequences for generations to come. There are no easy fixes but glossing over the inconvenient truth cannot be the response.
9. Does Scottish Rugby need to redouble its efforts to get the age-grade pipeline up and running?
Back in June, Jim Mallinder hosted a press briefing during which he was joined by Head of Pathways and Elite Coach Development John Fletcher and Head of Player Transition Kenny Murray to outline their vision for improving the player development pathway in this country. It all sounded very positive, if light on hard detail, but then another deeply disappointing campaign for the men’s under-20s team at the Six Nations Summer Series in Italy provided a stark reminder of just how far off the pace our age-grade programme is. The team is on a run of 14 straight defeats and, if truth be told, seem to be getting further and further away from being able to break this miserable sequence.
The big fear is that the horse has already bolted. What is beyond doubt is that the gap between Scotland and its rivals will not be closed by a reshuffling of personnel and a few new appointments. A major overhaul in the way we do things and some serious investment is required. If Super6 has a role to play then what that looks like needs to be properly defined.
10. Can the women-and-girls strategy deliver to the level required?
Growing the women’s game is a key tenet of Scottish Rugby’s current strategy, but qualifying for the World Cup for the first time in over a decade by beating Colombia (ranked 25th in the world) in a play-off is an underwhelming emblem of progress. Scotland suffered a Six Nations whitewash earlier this calendar year, and have not won a tournament match since 2018. Player numbers are growing but there is a long way to go before we have a genuinely competitive club game.
A four-year strategy for the women’s and girls’ game which includes an increase in expenditure next year to £4.1million, up from £1.6million, and a commitment to have a minimum of 30 contracted players following the World Cup, was recently announced. Sounds positive but is it enough?