ACCORDING to Mark Dodson in his opening remarks at Scottish Rugby’s AGM on 18th November:
“The rising cost of the professional and international game together with the residual costs of Covid has resulted in the collapse of famous and well-established clubs in England and straitened times for Welsh region – and none of us are immune from the issues which affect our sport, but we in Scotland are safer than most and better insulated from the uncertainties of the market.”
Scottish Rugby’s Chief Executive is right that English and Welsh rugby currently face a largely self-inflicted crisis. So, benchmarking is an extremely worthwhile and valid exercise. But it should be set against the Union most similar in terms of size, shape, structure and culture.
- Scottish Rugby’s turnover has grown 72.8% from £39.3m to £67.9m in the ten years since 2013 – but costs have risen by a mammoth 104.1% from £38.4m to £78.4m.
- IRFU’s turnover has grown 63.5% from £55.0m to £90.0m in the same period – but costs have only risen a just-about-manageable 75.7% from £52.2m to £91.7m.
- Irish Rugby had budgeted for a loss of €7.4m for the year to 31st July 2023, but managed to hold their deficit to €1.0m on the back of their on-field success and a new sponsorship deal with the Bank of Ireland for their Autumn Tests.
- They have, however, welcomed this outcome with a healthy dollop of realism.
- IRFU chief executive Kevin Potts estimates that the 2023 World Cup will hit his 2024 bottom line for €10m in terms of additional player and logistic costs and the loss of the Autumn Tests even after World Rugby’s €5m grant.
- He is, however, nothing if not utilitarian in his approach: “I often speak about the IRFU living within its means, only spending funds we have or can predict with relative certainty, and I am determined that we will continue to adhere to this in the medium to long term.”
- IRFU (13.6%) and SRU (12.6%) are both light of the 15% of turnover earmarked for the community game in Scottish Rugby’s new governance structure – but Scottish Rugby’s 1% differential with the IRFU, would, if applied to the 2023 turnover, have put an additional £678k into the club game.
- Scottish Rugby spent 20.1% of turnover on their Commercial and Administrative activities – a function, without doubt, of Scottish Rugby’s bloated and overpaid payroll and its outrageous executive remuneration packages, but a full explanation is needed for the line on page 58 of the Annual Report indicating that Commercial Costs included “our contribution to Six Nations running costs and the revenue share to private equity”.
- Meanwhile, Chief Financial Officer Hilary Spence, in her pre-AGM video conference briefing to clubs, explained that the cost of dealing with private equity investors had increased by £1.3m.
- Scottish Rugby spent 15% of turnover on Facilities against only 2.8% by IRFU, Page 59 of the Annual Report tells us that: ‘These costs are mainly the costs of running Murrayfield and the events that happen there , including insurance costs, maintenance, utilities and rates. More games means more investment here, with 7 v 6 international home games and improved Women and Girls events in the period.” But these costs are not investments – and the spiralling maintenance charges are a backwash from years of physical neglect.
- The note goes on: “Other investments relate to international team payments for activity outside Regulation 9 (the regulation that governs the release of players for international duties) and post-Covid relief” with absolutely no explanation of what these costs might be or why they should be charged to ‘Facilities’.
It was difficult to follow the logic of Dodson’s claim at the AGM that “the four-year cycle which has historically ended with rising revenues will demonstrate that your Union is on a sound financial footing, providing money to develop the game at every single level”, given that three home Six Nations games and four Autumn Tests in 2022-23 must have been at the top of the cycle yet produced a £10.5m loss.
And Dodson’s premise is further jeopardised by Irish Rugby’s anticipated €10m World Cup hangover, because he, too, lost his Autumn Tests, while the national team’s three and a bit month training camp followed by more than a month in single rooms based at the luxurious Golden Tulip Hotel in Valbonne could not have come cheap.
Patrick Kennedy, the IRFU’s Honorary Treasurer says in the notes to his accounts: ‘The underlying €7m deficit will continue into the future unless increased revenues are sourced or costs are reduced”. With a £10.5m loss for 2022-23, a big hit coming from the 2023 World Cup, and no concrete prospect of growth, it does not look good going forward for Scottish Rugby.
Potts said in issuing the IRFU Annual Report: “We’ve a greater responsibility to the wider game in the longer term and if we started to spend too much money on the professional game, money we cannot afford, ultimately that’s going to have an impact on the long-term health of Irish Rugby. That’s not going to happen here, certainly not on my watch”.
Dodson was not quite so circumspect at Scottish Rugby’s AGM: “I’ve heard criticism that consistently referencing the importance of securing our financial position somehow implies a lack of respect for our club game. Future proofing our financial well-being is the single most important task of your executive and we are at pains to emphasise the virtuous circle that connects us all. But, simply put, without sufficient money, we can’t fund the great work that goes on across our organisation, at every level, and in your clubs”.
Unfortunately, the numbers do not validate this proposition. The International/Professional game ran at a net loss of £662k in 2022 and £1.2m in 2023, and so could make zero contribution to the community game, which was, of necessity, entirely funded out of what should have been reserves.
Dodson went on to say: “We undoubtedly have challenges across the game, bit nothing like the ones we faced a decade or so ago. Then we had £32m of turnover, £17m of debt, no reserves, we were 13th in them men’s game and nowhere on the women’s game.
He was presumably referring to 2011 when he took over from Gordon McKie; but, in fact, that turnover of £35m produced a surplus of £1.2m as opposed to a £10.5m loss, and Net Current Liabilities were £8.6m against £10.4m in 2020 before the Scottish Government’s Covid rescue and the CVC windfall – which are now being gratuitously frittered away. At that point, Scotland Men were ranked seventh (we are not aware of them ever being 13th) in the world (and they are currently sixth), while Scotland Women were 15th (currently eighth).
There is a cold wind blowing through British rugby with a tough economy, ridiculously inflated player wages and the CVC clawback – even before we start worrying about concussion.
The IRFU has felt the draught and hunted out the thermals.
Has Mark Dodson?