ONLY recently invited on to the SRU Board as a non-executive member, Ian Barr is joining at a time when Scottish Rugby faces the most grievous financial challenge in its history. Covid-19 and the government policies arising have the potential to threaten the SRU’s short-term future, never mind its longer-term strategic aims.
Scottish Rugby’s Chief Executive, Mark Dodson, has rightly raised the risk of a loss of significant income – in the region of £12 million he estimates – should the Autumn Tests not be fulfilled. A risk that must be considered high in the current political climate.
The monetary hit of the Autumn Test loss to the SRU equates to 20 percent of annual turnover, apart from the immediate cash-flow implications. Even if the Autumn Tests go ahead, there will surely be some significant social distancing restrictions. Are fans going to turn up? Would you?
The doomsday scenario is if next year’s Six Nations is cancelled or heavily curtailed by social distancing, which is a very real possibility given some predictions that mass gatherings will be last on anyone’s list for easing restrictions, with some suggesting that they should be prohibited until a vaccine is developed.
With Murrayfield in lockdown, little income from spring and summer commercial activities – either inside the main bowl or in the hospitality suites – must be a given. Cash is absent, with the furlough of staff and reduction in professional wages the obvious proof.
No significant capital reserves (cash) were built up by the SRU in the times of plenty. A failure now coming home to roost.
The big-time investment the SRU was anticipating from private equity houses is no longer imminent, and likely lower when it arrives, and negotiating individual sponsorship deals must be a thankless task at the moment.
The SRU financial model was, and is, predicated on the assumption that future ticket income, broadcast revenue and sponsorship/advertising sales will meet present operating demands. This premise is now clearly under severe strain as the economic impact of the pandemic unfolds.
So, how does the SRU fill the loss in income? Sizeable borrowing if the banks allow (which will require compelling evidence of a repayment strategy), or expense contraction by reducing costs across the broad spectrum of Scottish rugby (from the executive, to the pro teams, to the Murrayfield civil service, to grassroots and player development), or a mixture of both.
What is without doubt is that the SRU Board has a huge fight on its hands.
We must wish them well in the challenge ahead. Our sport needs them to succeed.