WHEN Sir Bill Gammell and Norman Murray present the findings of the corporate governance and business review they recently conducted into the Scottish Rugby Union to a meeting of member clubs at Murrayfield tomorrow [Wednesday] night, the biggest challenge they will face is explaining to the room exactly what it is they are trying to achieve.
Ideally, a review such as this would start with an assessment of the organisation’s current position [detailing the good, the bad and the ugly], followed by an explanation of where it wants to get to [and why it wants to get there], before outlining the best route to reach that destination. Instead, what we have been given is a document written around the central theme of a corporate structure which allows the paid executives to leverage the assets [Murrayfield, and the Union’s interests in the Six Nations, the PRO14, European Rugby and Rugby World Cup] to raise cash without any sort of meaningful accountability to member clubs, with a whole lot of positive sounding but meaningless phrases such as ‘future-proofing’ and ‘direct accountability’ tagged onto the document in a half-hearted effort to disguise the fact that this is essentially a takeover bid of the clubs’ rights.
In fairness to Gammell and Murray, they do reveal the game plan very early on, in point 1.2 of the executive summary, when they state: “The growing professionalism of the modern game now provides vastly increased potential for external investment to further develop the sport in Scotland.”
But what has not been explained is: Why is external investment such an important driver? Why can it not be done under the present structure (especially as it was amended in 2016 to prepare for external investment)? How will it be achieved under the new structure? None of these questions are answered anywhere in the review – it is simply implied that what is being recommended is better and more appropriate.
Furthermore, the report fails to explain how this proposal will marry new outside investment with the protection and development of the game at grassroots level. We are told that a separate ‘Rugby Development Board’ will be set up to oversee the domestic game, but then discover that clubs will only be able to nominate – not appoint – their representatives on that body, with the same executive team as was complicit in the Keith Russell affair, Mark Dodson’s contract extension, the appalling treatment of member clubs at last March’s SGM and several other significant governance failings having the final say.
Worse still, as it stands, funding for the grassroots will depend entirely on the largesse (or otherwise) of the main Board, rather than being indexed to turnover so that all levels of the game benefit proportionally from any major cash injections. The SRU stand to receive £135m of private equity money in the near future – £100m from the Six Nations and £35m from PRO14 – but Gammell and Murray will not guarantee one penny to the clubs.
They are asking for the clubs to put an awful lot of trust in an executive which has a pretty patchy track record. Gammell’s insistence that he doesn’t want to address those previous misdemeanours because he is a ‘forward-looking’ kind of guy is risible. He is in charge of a ‘review’ – the clue is in the name. As Theodore Roosavelt said: “The more you know about the past, the better prepared you are for the future”.
“The review misses completely the key driver, the issue which was presented as the catalyst for starting this whole process, which was to demonstrate improved risk governance,” says Ross Findlay, a retired investment banker and former president of Trinity Academicals. “There is no-one identified at Board level to report on risk, which is a serious omission. Someone with risk management responsibilities should be a full member of this board, be independent and be heard.
“The recommendation to incorporate will abolish all meaningful checks and balances built into the current structure, including on the assets of Murrayfield,” he continues. “SRU Limited will be able to reduce amateur clubs from any significant influence, railroad shareholders and introduce new ones at will. The amateur clubs, as shareholders, will be diluted as time goes by through the introduction of new capital and new shareholders. The significance of this must not be underestimated. They take the candy and when it’s gone, it’s gone …”
“The disbandment of the Trust, with the assets being transferred to New SRU Limited, will mean they can be used as selling leverage when seeking new inward investment. The new entity will be able to swap new shares for cash, giving the new investor a percentage of the company, thus diluting the existing shareholders (ie the clubs). A look or review if how this type of incorporation has benefited, or not, other sporting entities might seem prudent.”
Compounding the ‘back of a fag packet’ impression is the lack of detail about where the ideas within the document come from. “Who are the 70 people interviewed?” asks Findlay. “Transparency means accountability, so if they don’t want to have their name associated with the report, then they shouldn’t have a say.
“There is no empirical evidence for the review or the outcomes,” he adds. “There is no proof, no source or no references!”
Gammell and Murray have claimed that all this secrecy is a good thing because it allowed people to speak candidly. However, we are talking here about changes to Scottish Rugby not the Gulag. If people are reluctant to speak up for fear of reprisal, then there is something far more fundamentally wrong with Scottish Rugby than just the governance structure.
Perhaps the most significant assumption in the review – which helps explain the general mindset – comes in point 1.4 of the executive summary, which states that: “At present it appears that the interests of domestic rugby and the professional game in Scotland are diverging.”
David Watt – a former amateur rugby player, who was executive director of the Institute of Directors Scotland for 16 years up to the summer of 2019 and a Board Member for British Gymnastics during a period of unprecedented growth – thinks this is a dangerous attitude.
“What we need to remember is that sport is a pyramid,” he says. “If it wasn’t for Cambuslang, Jonny Gray wouldn’t be playing for Glasgow and Scotland. If it wasn’t for Cumnock, Mark Bennett wouldn’t be where he is now. The academies maybe came along and then polished them into the players we see today, but they wouldn’t exist as rugby players if it wasn’t for Cambuslang and Cumnock.
“It is a numbers game, and the more kids we have playing the more chance we have of uncovering a Jonny Gray or a Mark Bennett or a Finn Russell or a Stuart Hogg. It is pretty simple: get as many thousand people as you can playing your sport and get ladders for the best players to get as far up as they can.
“So, separating the two strands makes sense from an organisational point of view, and I support that, but I would be very wary of saying that the pro and domestic games are diverging – and if that is the case, I certainly wouldn’t be encouraging it.
“We are surely all working together to the same aim, from the guy who buys a season-ticket at Edinburgh or Glasgow, to the guy who goes every week to watch Cambuslang. It is not a competition of who is better or more important than who, it is about us all trying to make all of Scottish rugby better – and I don’t think we have that joined up thinking here.”
There are issues on the ‘Professional Performance Board’ side as well. “One of the things which I believe is completely wrong is the professional board is going to be chaired by the CEO,” says Watt. “That’s not the CEO’s job, it is his or her job to run the whole business of Scottish Rugby and to let the professionals run the bits of rugby that they are responsible for, and if they don’t do it properly get rid of them.”
“Why is there no representative from either Edinburgh or Glasgow on that Professional Game Board? That’s crazy!”
Watt is at pains to stress that any observations he makes about the review are not a personal attack on the authors – “I have the utmost professional respect for both the report’s authors” – but fears that they have failed to grasp the fundamental difference between a corporate governance structure for a straight-forward business as opposed to for national sporting body.
“While you’ve got to treat sport in a business-like fashion, you can’t ever forget that it is not a business … it is a sport,” he says. “That is the really difficult balance the SRU face, and I’m aware that for a long time it didn’t treat the sport in a business-like fashion and consequently it was a bit of a shambles, but if you go too business-like with not enough sport then what you get – and what we’ve had in Scottish rugby – is a poor performance because you forget what you are actually trying to do.
“It is pretty simple, what we are trying to do is help players and coaches be the best they can be, whether that is at club 3rd XV level or with the Scotland national team, it doesn’t matter. I think we lost the plot with that for a while, and while there has been a refocus, I’m not sure this governance structure is set up to really achieve this aim.”
The mood music from across clubland is not promising for Gammell and Murray. The Edinburgh regional forum met last Wednesday and unanimously instructed their Council representative to let SRU President Dee Bradbury know that they [collectively] will not support the proposal. The feedback from other forum meetings has been along similar lines.
The two businessmen are passionate about their vision and will give it their best sales pitch. Not everything about it is bad, but the clubs are being asked to relinquish an awful lot, including ultimate control of the assets, so they need to be sure about the substance of the proposal, not just the slickness of the presentation.
The stakes are high. If the clubs hand over the keys to Murrayfield now, they will never get them back.