AGM: Dodson lines up Six Nations CVC deal as clubs make their point

Scottish Rugby's Chief Executive believes that a private equity investment in European Rugby's crown jewel will happen by end of the year

Scottish Rugby's Chief Executive at last year's AGM. Image: © Craig Watson - www.craigwatson.co.uk
Scottish Rugby's Chief Executive at last year's AGM. Image: © Craig Watson - www.craigwatson.co.uk

SCOTLAND’S rugby clubs delivered a strong message to the SRU Board during last night’s virtual AGM [part 2.1], by voting through two motions aimed at addressing a range of concerns about the governance of the organisation, with landslide majorities of 157 votes in favour and 16 against on both occasions.

The subsequent SGM, which was requisitioned by Biggar RFC, seeking support for the promotion of clubs which had already achieved unassailable positions in their respective leagues by the time the 2019-20 season was declared null and void, was unsuccessful [78-90].

Earlier in the AGM, Chief Executive Mark Dodson gave a pre-recorded presentation on the position of the business, hoping to allay escalating anxiety caused by the accounts for the 2019-20 financial year being three months late, whilst also laying the groundwork for a deal with CVC Partners private equity house to purchase a slice of the Six Nations before the end of 2020.

CVC have already bought a 28 percent share in PRO14, in a deal worth around £20m to Scottish Rugby, back in May. They have, for several months, been on the verge of securing a deal for the Six Nations – the jewel in European rugby’s crown – worth a reported £40m to Scottish Rugby, although the Covid crisis has led to some uncertainty on this.

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“The business is stable and in the process of securing its medium-term future,” insisted Dodson. “We face ongoing challenges which may obstruct our progress and alter our time-frames, but, ultimately, Scottish Rugby was a strong business going into this pandemic and we’ll be a strong business when we come out of this crisis.”

Bold words but Dodson knew he had to address the fact that the accounts for the financial year up to the end of May 2020 have still not been released. They are not required at Companies House until next May, but the Union’s bylaws state they should have been laid in front of the clubs by the end of August. Dodson admitted that auditors PWC have not yet signed off  because they want to “test our assumptions and look beyond this current [financial] year, through to the beginning of 2022”.

“This is happening across the UK in all kinds of businesses,” he stressed. “We are in the sport and hospitality sector, and as such are seen as being more affected than other enterprises. The end of the outlook period, and the need to allow for a serious, plausible downside risk, has resulted in us restructuring our finances with the bank, and I’m delighted to say that we are about to conclude an arrangement with them that delivers flexibility for the Union and satisfies these heightened expectations.”

All about the audit

Dodson then explained that CVC’s cash – which was designated as ring-fenced when the deal was signed back in May  – is being used to provide comfort to Scottish Rugby’s bankers (Bank of Scotland) for the lending facility the business needs to secure auditor sign-off. He added that he fully expects the accounts to be ready for presentation to the clubs by the end of the year.

Intriguingly, he also expects a deal between CVC and the Six Nations to be concluded in the same timescale.

“The initial proceeds of the PRO14 investment have been retained within the business to provide the financial security which allows us to trade through the worst effects of the pandemic,” he said.

“Crystalising the value of the tournament has transformed Celtic Union’ revenues and formed the foundation for a credit solution from the bank, and we hope to be able to announce further reassurance before January through the signing of a Six Nations deal, again with CVC.

“And we hope that this will future-proof the Union for years to come, providing a sustainable, long-term provision for our community game and stakeholders.”

The golden goose

As hopeful as Dodson is about the CVC golden goose laying an egg sooner rather than later, it was necessary for him to deal with the cold reality or Covid survival using what is on the table right now.

The chief executive explained (as he did back in August) that if things progress as anticipated – meaning socially distanced crowds during the Six Nations – then the business is looking at an £18m shortfall in the present financial year.

Dodson then explained that the auditors have asked for “a plausible severe downside” forecast which would involve no crowds during the remainder of the 2020-21 season, and only 25 percent capacity during the 2021 Autumn Test. This would result in a further drop of £12m in income (total £30m in the next 18 months), he said.

“This more extreme scenario would need to be covered by a reframed bank facility,” said Dodson, before making his pitch for state intervention. “We have made public statements about our inability to continue in our current form if losses of this size did not result in some form of direct government support.


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“All the Home Unions and other sports find themselves in very similar territory. We have been in lockstep with the Scottish Government and have been in regular dialogue with the UK Government as this crisis has unfolded. Our belief in government support has been evidenced by the emergency support delivered in recent days through DCMS [Department for Digital, Culture, Media and Sport].

“Rugby in England received a significant support package, acknowledging the impact that Covid-19 has had one the game at all levels, we in Scotland are waiting to hear the details of the Scottish Government support plan. Wales are also unclear about the support they we will receive.

“But we expect that a combination of our revised banking arrangements and a material support package from the government should go some way to repairing our finances and allowing the game in Scotland to return to health.”

It is not clear how a game-changing private equity investment and a government bail-out – both brokered by a guy who has been paid just short of £1.4m in the last two years – will piece together.

Money where his mouth is

Dodson provided an unaudited overview of the accounts to the end of May – incorporating two months of Covid – revealing that turnover had dropped from £61m to £55.47m, while costs rose from £59.2m to £60.74m, meaning that there was an operating loss of £5.27m. However, the £8.38m received from CVC as the first tranche of around £20m in total for their share of the PRO14 league created a £3.11m surplus (before interest and tax).

“Since the year end, we’ve also received a second payment of PRO14 proceeds which will positively impact the result from this current financial year, helping to offset a serious and sustained drop in income,” said Dodson. “Despite this welcome injection of cash, we still expect the 2020-21 financial year will show a significant financial loss.”


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David Barnes
About David Barnes 2133 Articles
David has worked as a freelance rugby journalist since 2004 covering every level of the game in Scotland for publications including The Sunday Times, The Telegraph, The Scotsman/Scotland on Sunday/Evening News, The Herald/Sunday Herald, The Daily Mail/Mail on Sunday and The Sun.

10 Comments

  1. Mr Dodson seems to belong to the sadly increasing group of leaders who seem to think if they something then that makes it true and if they ignore something that means it doesn’t exist.

    If only those of that follow Scottish rugby could ignore Mr Dodson and that would mean he didn’t exist.

  2. If the banks put the pressure on, the biggest asset is Murrayfield itself. Will MD stay when that’s even at risk?

  3. A fascinating case study into the modern CEO

    Lots of unnecessary words and management speak. Show a few figures. Forget that the Pro 24 CVC investment was to be ringfenced but now seems to be propping up the accounts

    And all done by video clip that bivouac took quite a few goes to get right.

  4. This is surely the point in time when the shareholders should be applying pressure on the chief executive & to tell him to cut out the management jargon & answer some straight yes or no questions.

    This is beginning to have a slight flavour of “Ticketus”.

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  5. This is carpetbagger territory…how on earth is this a sound financial footing? Borrowing money we don’t have, to pay for people we don’t need, and at the same time giving away a very valuable asset to a vulture fund.

    The size and cost base of the organisation has increased year-on-year, and revenue has decreased. Those simple factors show that this crowd cannot, and should not run our union.

    Any investment we have seen has been mostly pointed towards deals with no transparency (American Rugby etc). We have two pro teams who are going backwards due to the sale of key players, with no obvious replacements that are coming from our own ranks that will fit the bill. We have a national team who are relying more and more on residency to keep us at the top 10 table.

    When are we going to start to take back our union and the future of our rugby culture to secure the growth of the sport, and its talent from our own ranks?

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  6. Ed Crick
    The abject lack of depth in top level Socttish Rugby is down to governance. Short cuts don’t work and greed off field doesn’t help. Rugby is a (large) minority sport and does offer a great on field career to some but the single biggest problem is that non private school (whose graduates have often more opportunities from which to chose) – i.e. youth Rugby is massively underinvested and the academy structure flawed. The policy to remove mauls & lineout from youth game is also crazy – way to put off all the “big” kids. London Scottish should be a thriving English Championship side (with no promotion ambition) owned by SRU and geared around channelling academy talent alongside providing clear non Rugby opportunities and training or the majority who won’t make it. Super Six is dogs dinner.

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  7. There will be few of us that fail to identify with problems when the Bank is asking the time old question, ‘where’s the money’ [never mind where’s the audited accounts] and some aspects of Dodson’s message suggests that he thinks the present situation can be resolved, simple as ABC.
    A: ‘CVC’s money [has it actually arrived?] is ‘being used to provide comfort to Scottish Rugby’s bankers’ and ‘restructuring our finances with the bank’.
    Translation – we had a letter from the Bank to ‘have a wee chat’.
    B: ‘I’m delighted to say that we are about to conclude an arrangement’.
    Translation – I think I’ve got away with extending the overdraft debt [not that there was any debt of course everything was fine till Wuhan Lurgy].
    C: The auditors have asked for “a plausible severe downside”. He added that he fully expects the accounts to be ready for presentation to the clubs by the end of the year.
    Translation – The accounts are late because the auditors’ aren’t/weren’t happy but I think I’ve managed to use some financial jargon [there’s a cheque in the post] and with luck the auditors will believe in the ‘Tooth Fairy’ and anyway I’ve only said I expect them to be there, if you get my drift, but don’t be too surprised if they don’t appear until required at Companies House.
    Mind you, if like me you are a bit of a cynic and can identify Bovine-waste then ‘“But we expect that a combination of our revised banking arrangements and a material support package from the government should go some way to repairing our finances”
    Note: ‘go some way’! That little aside suggests that some time down the line the failure of ‘that’ promise, the one that fails when the cheque doesn’t arrive, will be all too evident.

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  8. So, we’re hoping for:
    – a new banking facility
    – a CVC deal for 6 Nations
    – a government cash injection (which may be a loan),

    However, none of these are signed and it also turns out that the auditors think we are being too optimistic in our assumptions about the return of crowds.

    Hence, auditors unwilling to put their name to the accounts.

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