THE third and (hopefully) final instalment of Scottish Rugby’s 2020 AGM will take place by video conference at 6pm on Tuesday 22nd December.
The meeting will review the 2019-20 financial statements, which have now been audited and distributed to the clubs as part of the Annual Report [click here to view], plus deal with any other competent business.
Clubs have been asked to submit any questions they have on the financial statements in advance, by 12 noon on Monday 21st December 2020, although there appears to be scope for questions to be asked on the night.
The business achieved a £2.9m surplus for the financial year to 31st May 2020, comprising an operating deficit of £5.3m, offset by “net investment income of £8.4m in relation to the CVC investment in the Pro14”, and net interest cost of £0.2m.
“Prior to the onset of Covid-19, a forecasted Rugby World Cup year loss of around £1.0m was expected, mainly as a result of reduced Autumn Test revenues, and additional Men’s National Team costs, compared with a non-Rugby World Cup year,” the Strategic Review in the Annual Report explained.
“However, this position deteriorated significantly as a result of the effects of the virus, primarily around the deferred completion of the Guinness 6 Nations tournament, during the financial year.
“Turnover and other income for the year was £55.5m, compared with the prior year level of £61.1m. This was the result of a number of factors in both normal operations and Covid-19 related matters. In operations, the Guinness 6 Nations cycle resulted in two home matches, compared with the previous year’s three, and two home international matches prior to the Rugby World Cup in 2019 compared with three November Test matches during the prior year. As a result, Ticket Income fell by £5.3m.
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“Broadcasting revenues fell by £4.5m, primarily due to the effects of Covid-19 on the 2020 Guinness 6 Nations tournament. With only 11 of the scheduled 15 games played in the year, broadcasting income from the tournament was similarly proportioned. Without the effects of Covid-19, broadcast income from the Guinness 6 Nations tournament would have increased compared with the prior year.
“Further, in relation to Broadcasting income, the value attributable to the two pre-Rugby World Cup matches in 2019 was lower than that for the three November Tests in 2018.
“Commercial income has risen £0.2m, in what remains a continuing challenging global sponsorship environment. Covid-19 has had a similar effect on this category of income in relation to the deferral of Guinness 6 Nations sponsorship as a result of the number of games played.
“Professional rugby income fell from £13.3m to £10.1m, generally as a result of the Covid-19 related curtailment of the season, both directly at the two teams, Glasgow and Edinburgh, and also from income streams from EPCR and Pro14.
“Within Development income and grants, the increase of £9.2m was mainly in relation to additional funding from World Rugby in the Rugby World Cup year, and Coronavirus job retention scheme income of £1.3m.
“Finally, the reduction of £2.0m in Hospitality and other income was in relation to the number of events this financial year, compared with the prior year.”
As previously outlined by Chief Executive Mark Dodson at AGM2.1, Scottish Rugby Union Limited received dividends to the tune of £8.4m for its share in the sale of a 28 percent stake in PRO14 to CVC. The deal was announced 22nd May, nine days before the end of the financial year.
It has now been revealed that “subsequent to the year end, in October 2020, a further tranche of income was received in relation to the partnership, the value of which was £9.4m”.
“A further sum may be payable up to Financial Year 2024-25, depending on the financial performance of the Pro14 group,” the Annual Report adds.
Dodson stated when the CVC deal was announced that it would be worth “north of £20m”, while his Irish counterpart, Philip Browne, valued it as worth £30m to his organisation.
The Welsh Rugby Union only show an income of £4.9m from CVC in respect of PRO14 in their audited accounts for the year to 30th June 2020, while the Irish Rugby Football Union only show £5m (€5.6m) to 31st July 2020.
The Financial Statements discuss both a “base case cash flow forecast” and a “severe but plausible downside forecast” for the next 12 months and beyond, explaining that subsequent to year end a “working capital facility” of £11.8m and a “revolving credit facility” of £8.5m have been procured, while an advance of grant has also been secured from World Rugby as well as CVC’s investment in the PRO14.
The “base case cash flow forecast” makes the following key assumptions:
- 50% attendance at the 2021 Guinness 6 Nations Championship and crowds allowed to resume at Guinness Pro 14 matches played in Scotland
- Potential 100% attendance possible for the 2021 Autumn Internationals
- Salary costs return to contracted levels
The “severe but plausible downside forecast” is based on the following assumptions:
- No attendance at the 2021 Guinness 6 Nations Championship and no crowds allowed to resume at Guinness PRO14 matches played in Scotland
- Potential 25% attendance possible for the 2021 Autumn Internationals
- Consideration of further mitigating actions available, for example a delay or reduction in budgeted discretionary spend and use of the recently extended Covid-19 job retention scheme.
In both cases, Scottish Rugby’s Directors have concluded, and the auditors have agreed, that there is a “clear and reasonable expectation that the Union has adequate resources to continue in operational existence for the foreseeable future and do not foresee a scenario where additional funds will be required”.
The Annual Report also provided an update on player numbers, stating that the total number of registered players (male, female, adult and youth)from 36,207 during the 2018-19 season to 36,966 during the 2019-20 season (net increase of 759).
The number of male adult players was given as 13,413, compared to 11,028 the year before, male youth players dropped from 21,176 to 19,303 during the same period, female adult rose from 1,658 to 2,126, and female youth dropped 2,345 to 2,124.
Scottish Rugby’s coach registration process went live in 2019-20 with 3,507 coaches being registered (3,237 male and 270 female).