Analysis: our last word on the SRU’s debt position

Some leading figures at Murrayfield have recently claimed that the SRU is now debt free. The Offside Line disagrees with their analysis.

SRU Chief Executive Mark Dodson. image: © Craig Watson -

The Spin

Dominic McKay in his letter to the clubs dated 31 July: 

“I am delighted to enclose a copy of our Annual Report for 2018-19 which highlights a historic year for Scottish Rugby, where we achieved record turnover and a debt-free position.

“We have made great progress in the last year.

“We are now free of debt putting the organisation in a strong financial position.”

Colin Grassie in the Annual Report Chairman’s Review:

“Our commercial income continues to grow and I am pleased to report that this year’s turnover of £61.1m shows an increase of £3.9m on last year. With a further improvement in debt position the organisation’s financial good health has allowed us to explore strategic investment and commercial opportunities”

And then at the AGM:

“Operationally we are debt free.”

Mark Dodson in the Chief Executive’s Report:

“I’m pleased to report this year has again seen our financial results achieve an increased turnover of £61.1m and further improvement in our debt position.”

The Facts

The Narrative

SRU Finance Director Andrew Healey at the AGM: 

“Since before I got here, the media, and indeed ourselves, have looked at the debt position in the Union with regard to the bank balance. It is absolutely acknowledged that on the balance sheet there are other forms of debt – debentures, working capital debt, and liabilities. What we have reached this year is, I guess, a milestone that we have looked to be reaching for some time, which is that the net cash position in the year end is in a positive place.

“Obviously, the working capital varies from day-to-day, and month-to-month, so elements of that are merely due to the timings of income receipt and so on.

“Having said that, the reason we have a net average debt position as well is to have a better view of the position. So, the average position itself is in a positive place for the first time in over 25 years. That gives us a position where we can look to invest properly, to look at debt and so on in a way which traditionally businesses would look at it.”

“One of the points in the annual report relates to advance receipts we have in respect to the Rugby World Cup, and that has obviously helped our position at the moment, as indeed it helped our position in 2015 as well.”

  • An acknowledgement that Scottish Rugby is not debt free – and an acceptance that they have used future monies (advance receipts presumably from the World Cup and next year’s Six Nations) to give the impression that they have enough cash to pay off the bank loan and to justify the debt free claim.
  • The £3.4m increase in Advance Receipts from £5.4m in 2018 to £8.8m in 2019 needs explanation. It is not clear whether it is monies for the August friendlies or next spring’s Six Nations or a subsidy from RWC for the absence of autumn internationals or a combination. If it also includes monies for RWC tickets in Japan that have been sold but the receipts not yet remitted then that is a debt to an agency outside the SRU and should have been shown separately.
  • Even allowing for the idiosyncratic (if historical) definition of ‘net cash’ it is difficult to see how the ‘net average debt is in a positive place for the first time in over 25 years’ when the year end net debt figure has gone up from £9.27m in May 2018 to £9.97m in May 2019.

Mark Dodson at his post AGM press conference:

“Every year, and for the last 20 years, we’ve looked at our net cash position and that’s what we’ve always classed as where we are going to be from debt free. It was £23 million at its highest peak, when I came it was 14.4m, and now it is zero.

“We always have debts in other parts of our business, around the debentures and whatever, but the key metric we’ve used, the government use, the BBC uses, and everybody talking about our debt for the last 25 years has used, has been around the net cash position.

“The issue is quite straight forward. We have a rigorous audit through PWC, their view is that our accounts are absolutely solid, and they’ve been passed by PWC. Andrew Healey has come out this morning at the meeting and told you exactly where we stand, there’s a transparency in exactly what we are saying going back to the debt that we talked about there, we’ve always used that as the basis of our net cash position.

“We’ve also got working capital which goes up and down depending on when we’re paid, when the World Cup subsidy comes in, because as you know in World Cup years we don’t have any Autumn internationals so we get our money up front from World Rugby to subsidise that, but it is not as much as we would earn on our own, so we make a loss there this year. There are lots of complicating factors, but the clear factor is that the metric that we’ve been measured against for the last 20 years is at zero.

“It depends in what measure you use. If you look at Marks and Spencers’ figures, any of the top 100 now, you’ll get a different opinion of them, that’s what analysts do. All we’re saying is that we’ve been consistent in our measurement and our metric.”

  • The total debt peaked in 2007 at £20.29m of which £17.37m was bank debt. It had dropped to £18.97m (with £12.73m bank debt) by the time of Dodson’s arrival in 2011 and now stands at £9.97m with £3.00m still outstanding on the bank loan.
  • Historical levels of debt are irrelevant. It is the here and now that is the problem. The BT deal certainly stemmed the tide in 2014 but its impact has now been seriously dissipated.
  • It is not known that ‘the government, the BBC and everybody talking about our [Scottish Rugby’s] debt’ have used the Healey/Dodson definition of ‘net cash’ – nevertheless, this too is irrelevant – merely a comment made to distract from the real issue – known in the communication trade as throwing a ‘Dead Cat’ on the table. Debt remains.
  • The PWC audit is not being challenged – what is being questioned is the interpretation being placed upon the audited figures by Scottish Rugby’s executive – an interpretation which, so far as we are aware, has not been audited by PWC. Not dissimilar to their review of NDAs last year – where we believe they expressed an opinion on the mechanics but not on the merit of the process.

The Problem

The continuing debt is not a major problem per se – but denying it is symptomatic of the disdain Mark Dodson habitually shows for the stakeholders in Scottish Rugby – and it is being used to camouflage an open wound.

Debt can only be repaid out of operating surplus or by fresh investment.

Dodson is using the ostensible reduction in debt to project an image of financial well-being.


  • Broadcasting Revenues, Commercial Income and Other Operating Income showing zero growth. According to Brendan Fanning, the respected rugby correspondent for the Irish Independent, RBS offered £13.75m a year in 2016 to extend their Six Nations sponsorship for four years but the Scots and Welsh representatives on the Six Nations Council reckoned there was more money out there, and voted to knock it back – and they ended up in a deal with Guinness for circa £8.5m a year – £5m less than was originally on offer from RBS. Ticket Income appears to have reached saturation point – with any possible growth dependent upon more games or increased ticket prices.
  • Operating costs did not merit a mention from either Grassie, Dodson or McKay in the Annual Report – yet grew 3.2% faster than turnover. Domestic & Performance Rugby was up 12.9%, Commercial & Operating Costs were up 16.7%, the non-playing head count is up 44% since 2011, and the statutory accounts have not been lodged at Companies House so we still do not know how good a deal Dodson was handed by the ‘Remuneration Committee’ notwithstanding the Keith Russell fiasco.
  • The Operating Surplus for 2019 was down to just 0.9% of turnover which is simply unsustainable. There are no Capital Cash Reserves whatsoever.

In this light, Scottish Rugby’s finances are not as strong as the Annual Report and AGM pronouncements would have us believe. At a time when we are expecting game-changing private equity investment into the sport, we need more clarity on the true position, and reassurance that the people running the game are not going to sell the jerseys.

Analysis: SRU ‘debt-free’ claim is disingenuous at best


  1. Most succesful and promising period for the national side in decades. Most promising and succesful period for both pro teams since professionalism. Debt dwindling, assets soaring.

    Keep moaning lads, pleased to see the obligatory mention of Keith Russell in there.

    • Scrummo, you forgot to mention an as yet unknown multi-million pound (some mention of £100m) cash injection into the game.

      But just like the Board, that would only be highlighting the positive side of the balanace sheet – no mention of a Club game in turmoil and shrinking, U20s relegated, Womens rugby struggling to keep up with other 6 Nations countries, 7s stuck somewhere in mid-tier.

    • Thanks Scrummo. I was getting really concerned having read through the annual report and saw the debt figures for myself. And attending the AGM to be confronted by complete pr waffle for the Chair, CEO and President.

      I’m obviously mistaken and will go back to my box and cheer more enthusiastically for all the great work Dodson et al are doing. Nothing to see here just move on.

    • Scrummo,

      The key point of this article is that debt is NOT dwindling, in fact it has gone up.

      We welcome on-field success, but Scottish Rugby also has to be financially viable and able to support the grassroots game.

      The Keith Russell affair will continue to haunt the current SRU executive until they produce evidence that it was properly dealt with.

    • The big question for me is why? AGM focussed on being debt free which by primary school maths is clearly not true.

      But why spend so much time to persuade us otherwise knowing the accounts would be scrutinised? What are they trying to do?

      We need to keep asking the questions about the debt, the Keith Russel fiasco or the Doddie Weir ticket debacle and Super 6-Agenda 3 saga otherwise there is a real possibility that a successful national side will only be something we can tell our disbelieving grandchildren.

  2. Very good piece with in depth cutting analysis.

    I was thinking about Andrew Healy’s response to my question about debt. Most presentation or media trainers advise answers to be short. This was certainly not short. Andrew was trying hard to not say yes we have debts! But used many words to obscure that.

    It is telling when senior leaders in an organisation direct attention to specific items and away from others. As in “feel the width not the quality”. Best revenue figure is meaningless if you don’t also look at expenditure. The SRU are sprinting to try and keep up. The question is do they have the wherewithal to keep it up?

  3. The SRU Board seem to be playing with words to suits there specific needs at the time. Whether they use ‘net debt’, ‘net bank debt’, ‘bank debt’, net cash position’ or whatever other derivation they might have conjured up, they are trying to gloss over the facts:

    1/ The SRU is not debt free: it has a loan due to their bank of £3m; it has debentures due to their debenture holders – this is debt too.

    2/ Net cash is almost meaningless when they also announce an increase in advance receipts from RWC of £3.4m. There should of course be a corresponding creditor (debt) to push this income into the financial period it relates to.

    3/ To use a current asset (cash of £4.5m) to offset a long term liability (bank loan of £3m) and claim to be ‘operationally debt free’ is blatantly trying to mislead the stakeholders of the SRU.

    In my view there was and is no need to spin this as much as they have, unless they are preparing for/covering up something not yet in the public domain.
    To claim the SRU had ‘a positive cash position at the year end, but with long term liabilities of £xm, we are in a financially stable position’ would have been truthful and cut it for me!!!

    So why the disingenuous spin?????

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