REMEMBER all the effort and expense which went into launching the Gammell/Murray Independent Corporate Governance and Business Review back in January 2020? The glossy, high-spec brochure? The photo-call? The press briefing? The town hall meeting? The former internationalists with hitherto unknown expertise in business command structures who stepped up to support the plan?
Contrast that with the release yesterday afternoon of the second (and final) consultation document on the proposed structure which has been drawn up during the last 14 months by the Scottish Rugby Council’s Standing Committee on Governance – distributed without fanfare in a standard ‘Club Communication’ email, which contained a letter from SRU President Ian Barr alongside some hyperlinks, including one to the consultation document in question and one to a document providing questions which now need to be answered.
The consultation paper contains a block diagram of a proposed corporate structure which was first unveiled in August, along with 12 and a half pages of scanned text which provides a bit more detail on the plan than was previously available. Everything the clubs need to know at this stage to spark a worthwhile discussion appears to be there, but the presentation was basic.
Could it be that the people directing the communications department at Murrayfield are not fully behind this latest attempt to find a structure which can work for everybody – from the lowliest club to the highest paid executive – in a rapidly moving rugby landscape?
Here’s hoping that what has been produced is a triumph of substance over style, because, after years of internecine fighting and several false starts, it is vital that an effective way forward is identified.
The basic premise of SCOG’s proposal is that the unincorporated association of the SRU will be replaced with a company limited by guarantee (“NewCo”) – just as the rejected Gammell/Murray report proposed, with the key difference being that in this case the NewCo Board is elected by the membership rather than selected internally.
The Trust – which currently owns the shares for Scottish Rugby Union Limited on behalf of the clubs – will be dissolved, and the shares transferred to NewCo, with members of the SRU [the clubs] able to become members of NewCo, taking on a guarantee liability of £1.
The Directors of the NewCo will be called “Custodians”, consisting of the President (as Chair) and four others to be elected by the membership. The immediate past-President will take one of those spots for the first two years of the new structure as a transitional measure.
The role of the Custodians will be to oversee those charged with running the business on a day-to-day basis, and to do that properly they will require ‘back-office’ support for secretarial, audit and legal functions, and so on. It is essential that this support group exists and operates purely on behalf of NewCo and doesn’t end up serving two masters, as often tends to be the case when it comes to the elected representatives and their hired help inside Murrayfield at the moment.
Below NewCo sits Scottish Rugby Union Limited [SRUL], which remains the principal operating entity for all of Scottish Rugby, in charge of running commercial and other delegated affairs of the business, reporting to the NewCo (through the Custodians) four times per year.
Those matters which are not delegated [i.e. remain the reserved responsibility of NewCo] will include the disposal of Murrayfield, sanctioning any decision to drop the budget for the community game below 15 percent of revenue, and sanctioning debt in the annual budget to exceed 15 percent of revenue.
Otherwise, SRUL will have full control of budget and strategy, whereas Council currently – at least theoretically – have the right of veto.
Crucially, the NewCo Board will be responsible for selection of the independent Chair of the Board of SRU Limited and maintain an independent Standing Committee on Governance, which will improve accountability and hopefully serve against any further constitutional gridlocks such as we have seen in recent months.
Populating the Boards
The Chair will be one of the four independent non-executive directors (appointed by the SRUL Board’s Nominations Committee), who will sit on the SRUL Board alongside four non-executive directors elected by the membership (including the President and Vice President), and three executive directors (CEO, CFO and one other).
A curious feature of the consultation document is that SCOG states that its preference is for there to be a complete split which prevents members of the SRUL Board sitting on the Board of NewCo, but reveals that there has been “significantly divergent views from those interested parties that have made representations in this governance review process”.
The alternative view is that a “hybrid” model be adopted which allows there to be cross-over between the two Boards“with, for example, the Chief Executive Officer and Chief Financial Officer of SRUL also sitting on the Board of NewCo”.
Given that much of the recent angst over Scottish Rugby governance relates to the current Board marking its own homework, and to the conflict of interest which exists between Board and Council in relation to areas such as the role of the legal department, this is an issue which needs to be addressed carefully.
If the NewCo is being set-up to provide oversight, should it not stand separately from those it is overseeing?
Then, bizarrely, we are told that: “SCOG would also note that an alternative structure would be for the present member clubs of SRU to become direct shareholders in SRUL. Such a structure would mean that there would be no NewCo holding company.” No opinion is expressed on the merits or otherwise of this proposal, and you wonder why it is there?
It certainly seems like the document has more than one set of fingerprints on it, and we’ve heard claims of Board interference leading to its late delivery, which is problematic because this is meant to be the recommendations of SCOG and if somebody else has a better idea then they really need to own it.
Back to the actual recommendations: SCOG wants the Board of SRUL to delegate responsibility for the club game to a Club Rugby Board [CRB], which will meet at least four times per year and have its own budget, proposed at 15 percent of overall revenue. What that 15 percent encompasses will be crucial because, at the moment, there are a lot of central costs which aren’t assigned to either the ‘Performance’ or the ‘Development’ departments.
There will be a separate Performance Rugby Board [PRB] delegated by SRUL, with SCOG recommending that a liaison committee be set up consisting of figures from both the club and the performance games to work together so that silo mentalities don’t develop.
The suggested membership of the CRB is: the Vice-President (as Chair), forum chairpersons from South, East, Glasgow North, Glasgow South, Midlands and North (ach serving a maximum of 3×2 year terms), Director of Rugby Development and Finance Director.
Membership of the PRB will be at the discretion of the CEO, with SCOG envisaging that the initial membership will include the CEO, CFO, COO, one Non-Executive Independent Director from SRUL, Director of Performance Rugby and Technical Director.
There’s a lot to like about what SCOG has recommended here, but the whiff of interference is concerning, with the current Board appearing to have most to lose – not necessarily in terms of power [in fact it will have more power under these proposals], but in terms of accountability.
We have waited long enough for a governance model which can work for all of Scottish rugby. This most recent proposal must stand or fall on its merits. Barr and the surviving members of SCOG need to be given full opportunity to sell their concept – just as Sir Bill Gammell and Norman Murray were allowed to two years ago – with objections and counter proposals heard and addressed in an open and constructive manner.
This discussion document was initially supposed to be issued on the week commencing 22nd November, with the aim of voting on the final proposal at an SGM before the end of the year. Given the delay, the consultation period will now run until 11th January, giving members five weeks to respond.
The “questions which need to be addressed” document, which was also issued yesterday, is designed to help clubs focus on the key issues which need to be definitively settled.
There is, inevitably, a fair bit of governance fatigue out there amongst club representatives after years of batting back and forth, but this headache won’t go away until a settled and progressive path forward is laid out. The ball is now in the clubs’ court.