THE struggle to create a governance structure for Scottish rugby which can work for everyone and help all levels of the sport to prosper in the professional era faces a critical moment tomorrow [Monday] evening at a Special General Meeting for the governing body to be held at Murrayfield.
Member clubs will be asked to vote on a proposal which has been painstakingly formulated by the SRU Council’s Standing Committee on Governance [SCOG] with the aim of establishing a long-term solution to the governance problems which have been a running sore since at least the summer of 2018, when a series of flashpoints uncovered an apparently dysfunctional relationship between the Scottish Rugby Council (elected by the clubs to oversee the sport) and the Scottish Rugby Board (hired to run the business).
The proposal is for a new company limited by guarantee [CLG] to be set up to wholly replace the unincorporated association known as the Scottish Rugby Union, taking on all the assets held by the SRU Trust [crucially the land at Murrayfield and international competition rights].
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The new CLG Board will have eight ‘Custodians’ – who will as a matter of law be classified as Directors with all the consequent statutory duties and obligations – consisting of an Independent Chair, the President, Vice President and Immediate Past President of the SRU, two members elected by the clubs and two individuals selected with the assistance of recruitment consultants and appointed by Council or its successor body.
It is anticipated that the Independent Chair of the CLG, the two Custodian Directors elected by the membership and its two independent Custodian Directors will be people of standing in Scottish rugby who have “an overall diverse and appropriate skillset in line with a bespoke skills matrix”.
Custodians will not be remunerated, will have a maximum of two terms of three-years in office, and no more than six years in total inside any 12-year period.
The CLG will oversee the work of Scottish Rugby Union Limited [SRUL – ie the current Board] as it continues to run the organisation’s commercial affairs and interests, including the management of assets and the administration of professional rugby.
A Relationship Management Agreement [RMA] between CLG and SRUL will be created which will involve quarterly meetings (more frequent if required) between the two bodies. The Board of CLG will be required to give formal approval to annual budget, annual and/or longer-term strategy and the appointment or re-appointment of Chair of SRUL. Any proposed material and exceptional deviation from the annual budget or strategic plan will require approval of the Custodians. This will include, for example, disposal or other arrangements of importance for Murrayfield or major asset acquisitions.
As standing invitees, the SRUL Chief Executive Officer and its Chief Financial Officer will also be present at CLG Board meetings, but won’t have a vote.
Meanwhile, a Club Rugby Board [CRB] is to be set up to be “directly involved with CLG and the Executive team of SRUL in the formulation and implementation of the strategic vision, mission, and development of the domestic game in Scotland, including the allocation of resources to member clubs and other domestic rugby bodies”.
The CRB will be made up by individuals elected by the clubs as well as the SRUL’s Director of Rugby Development. It will have its own budget, currently proposed at 15% of SRUL’s annual turnover, with the aim of alleviating anxiety at grassroots level about clubs being marginalised and/or short-changed by Murrayfield.
As one club stalwart who supports of the motion said: “I genuinely hope we can all now move beyond such partisan nonsense under the new structure. It’ll give the clubs more direct influence over their part of the game. Which, of course, is something many having been shouting loudly about for ages. Let’s hope some grown-ups with a wider horizon than their own men’s 1st XV step up then to the challenge.”
A simple majority in a vote of member clubs is required to approve these proposals, and it is anticipated that the motion will carry fairly comfortably
This will trigger an implementation and fine-tuning period so that all final proposals, including the proposed Relationship Management Agreements and new constitutional documents, can go before a second SGM for final approval in August, when a two-thirds majority will be needed for a change in the bye-laws.
“The recommendations are aligned and founded upon the Dunlop principles,” says Professor Lorne Crerar CBE, Independent Chair of SCOG, in his introductory notes to the SGM. “The recommendations comply with all legal, financial and other regulatory compliance frameworks as well as models of best practice in governance arrangements including for Sports governing bodies and their operating companies.”
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In reality it’s apples and pears. The budget each year is always pre-set and therefore nothing has really changed except what proportion of that budget is specifically pre-set to the CRB. It’s based on a rolling 3 year average, perhaps not a perfect solution but no reason why the Scottish Rugby Board can’t work within those parameters. They still have enough levers to pull if required.
I find it strange to see people querying a %age of turnover with mention of shifting revenues between accounting periods? No matter what period it is declared it will still attract 15% for the CRB. The other worry seemed to be the uncertainty of the level of turnover to which the answer should be to build up reserves to cover any such fluctuations.
As I expected. Overwhelming vote in favour of motion.
Meeting done and dusted in 15 mins
I guess time will tell whether this will improve things or turn out to be another re-arrangement of the chairs on the Titanic.
The real problem with Scottish rugby is there for all to see – the Chief Executive. As long as he remains the problems will.
He has been Glasgow’s nemesis…….in thought & deed. All too obvious before & after S6 setup which way the wind was blowing for the whole of Scottish rugby !! He has poisoned a whole generation of volunteers, or certainly not been backing up Grass Roots rugby which has to be the bedrock of any future flow of players….from Minis all the way to U20s…..!! Good luck to the new system, but I fear more of the same until Dodson is removed !!
its a strange world when Mr Sutherland and myself have come to a similar conclusion about using a fixed % of turnover
“Professor” if you must…..
While governance changes are clearly necessary, and have been for some considerable time – not least to provide Member Clubs with a voice, influence and a hand on the SRU tiller – the rather arbitrary 15% minimum of annual audited T/O for CRB funding is a highly imperfect stipulation.
Based upon T/O, this provision does little to guarantee year on year stability or consistency of funding & investment, and is certain to become a problem going forward.
Of course a formal commitment to funding the grassroots is welcome, but in the cold light of day such funds can only derive from net revenues (i.e. after deduction of operating costs and other possibly unforeseen charges against profits….) which is a very different equation to an arbitrary % of turnover.
Work it out, folks!
I commend the paper from SCOG. It’s well written and in easily understood language. They lay out what the new structures will be.
The devil will be in the detailed articles and the RMA but the ground work has been meticulously done. A big thank you to Prof Crerar and the SCOG team. Excellent work.
the suggestion that the CRB will have a budget set at 15% of SRU turnover is understandable in terms of giving stability (altho it doesn’t really as turnover can in theory rise or fall), but it can also mean reducing “profit” for investment or, yes, funding pro rugby and thus the Scotland team. Thus the danger is reducing income for all.
I get it but worry about unintended consequences
15% of turnover is actually the minimum proposed CRB annual budget under SCOG proposals, Sepsis, dear boy!
Setting such a specific percentage of an unknown amount of future turnover (always open to manipulation, as in the SRU’s past, with the blatant shuffling of revenues between accounting periods) creates a potentially significant hostage to fortune.
Equally, your premise about profit (by which you presumably mean surplus funds under the afore-mentioned formula) for funding “pro rugby and thus the Scotland team” is fundamentally flawed – no matter how regularly people are seen to have swallowed and regurgitate it. The two are aligned, but not inextricably linked.
15% of turnover is around the current club spend by Scottish Rugby. And it’s over a 3 year average. What would your proposal be?
Professional rugby already consumes most of the SR revenue.
Incentive then for the Exec to grow the pot if they wish to spend more.
While governance changes are clearly necessary, and have been for some considerable time – not least to provide Member Clubs with a voice, influence and a hand on the SRU tiller – the rather arbitrary 15% minimum of annual audited T/O for CRB funding is a highly imperfect stipulation.
Based upon T/O, this provision does little to guarantee year on year stability or consistency of funding & investment, and is certain to become a problem going forward.
Of course a formal commitment to funding the grassroots is welcome, but in the cold light of day such funds can only derive from net revenues (i.e. after deduction of operating costs and other possibly unforeseen charges against profits….) which is a very different equation to an arbitrary % of turnover.
Work it out, folks!
Are you a legally-qualified expert, Dum?
Dom
Simples, Dom! More relevant to set a reserved percentage for CRB budget funding averaged off the bottom-line, after charges, dear boy.
Non-accountants might struggle to appreciate the downside of taking an arbitrary amount or percentage off the top-line revenues (essentially, turnover) during a period or periods when net residual revenues and as a consequence available funding, e.g. for CRB, were reduced or non-existent, for whatever unforeseen reason(s)…. The separate legal persona of the Governing Body might conceiveably one day be so impacted, and that is a possibility, however faint, that needs to be addressed within a new corporate & governance structure.
One of the key requirements in drafting corporate & governance structures is to make provision for the unexpected, the unforeseen. Wearing my legal & accountancy hats, if not that of a former professorial sports management academic, this particular point is far from being the most obscure or unlikely future eventuality! Go figure – you know where to contact me for further elucidation, though it may come at a chargeable rate.
Excellent, Prof. Very succinct.