Rugby Finances
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@Bovidae Most of the former All Blacks they had last season in Jeff To'omaga Allen (Ulster), Malakai Fekitoa (Munster) and Vaea Fifita (Scarlets) were cut at the end of last season to trim the Wasps wage bill as they would presumably be fairly high on the pay scale. Jimmy Gopperth (Leicester) similarly departed hurriedly at the end of last season. Simply solution chaps - live within your income!
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The other day, I saw a post on reddit - which was one of those instagram images of the Glasgow Warriors squad for their 2 matches ('tour') of South Africa for their 2 rounds of URC matches.
It was a 35 man squad.
Back in 1996 when Super 12 was set up.
A match day squad was 21, not 23 like today. And a touring squad was 26 players, not 35.
Also back then, a Kings Park or Loftus etc would get 40,000 minimum spectators per match, Not 10 or 15k.
And salaries ....So, I don't hold much hope for URC as a long term thing, never have tbh. Not involving South Africa anyway.
But, the other thing. Modern scrum rules, and front-rower replacement rules ... limits professional rugby as a viable product. (It also decimates amateur club rugby's abilities to put out teams)
If you look at a professional club's page on wikipedia, and then go to the 'current squad' section. Those clubs have approx 25 to 30% of their roster made up of front rowers. (tbf they make up 20% of a starting XV but an unescesary 38% of the bench)
I remember when we used to laugh at front rowers as being dumb oafs, but they've cornered the rugby players market.
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History will keep repeating unless changes are made in English club rugby | Robert Kitson
The fate of Worcester and Wasps mirrors that of Richmond and London Scottish in 1999 and shows that the current structure of the professional game in England is unsustainable
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Baron calls for radical review to save game
News, features and match reports from The Rugby Paper, the UK-based newspaper which specialises in rugby union at all levels ready for your viewing every Sunday of the year.
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It says in above, that need to subscrive to TRP to see the full report.
But rugbypass seem to have dione that for us ...
In a surprise move, rugby pass actually has good info.
Former RFU boss blasts union and calls for radical reform of English game
Francis Baron, the former Rugby Football Union (RFU) chief executive, is calling for a radical reform of the governing body
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He said: “It is no longer possible to justify, in my view, the continued large and unaffordable RFU grant funding to PRL. PRL is no longer an organisation solely of RFU Member Clubs. It is now an organisation which is 27 per cent owned by CVC Capital Partners, a global financial giant with assets under management of US$118 billion. It is therefore now wholly inappropriate for the RFU providing grant funding to benefit, in part, that 27 per cent shareholder who is not an RFU Member.
“The alternative, if PRL do not accept the changes, is for the (EPS) players to have RFU central contracts (as in the ECB) with the clubs paying the RFU a pro rata share of the annual salaries of the EPS players under these central contracts based on the number of days the EPS players spend on Club duty, i.e. reversing the current arrangements.
“The RFU should, of course, continue to pay the agreed international match fees and bonuses to EPS players but these should in future be paid direct to the players and not via their clubs who could end up in administration and not pay on those fees on to their players.”
Suppose ... Bit of a giveaway that this is an element of former CEO shouting at the wind, is the part about: It is inappropriate for the RFU providing grant funding to benefit of CVC.
The 6 nations. E.g.of which RFU is part owner, has also sold part of their product to CVC.
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Baron’s figures show that :
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Over the period 2012 to 2019 the RFU made a cumulative net loss of £73.4m (excluding the one-off ‘ring fenced’ £26m RWC2015 profit). This compares on a like-for-like basis with cumulative net profits being made over the same period by the WRU of £9.6m, SRU of £7.7m and the IRFU of €53.4m.
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The total net debt (debentures plus bank loans less cash balances) of the RFU over the same period increased from £131m to £250m, a rise of £119m. In comparison the WRU’s total net debt fell by £19.8m, that of the SRU fell by £14.3m and that of the IRFU fell by €83.1m.
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The investment in professional rugby by the RFU between 2012 and 2019 has totalled £417m. The comparative figure for the WRU is £190m, the SRU is £195m and the IRFU £250m.
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@Machpants said in Rugby Finances:
@Rapido house of cards
The brain injury link to impact should be in here too... That's going to hit finances very very soon with lawsuits and feeding the base of the pyramid. Scary stuff
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TV rights for the Champions Cup have fallen from 30 million Euros to 14 million in France for 2022-2026.
Some google translate:
The lack of competition on the French market explains this discount in particular, beIN Sports being the only paying player truly interested, unlike the call for tenders of the previous cycle, organized in 2017
During the previous cycle (2018-2022), the EPCR had negotiated the rights to its main European Cup at €30 million per season (24 million paid by beIN and 6 million by France Télévisions)
Looks like the UK and Ireland TV rights were also renewed earlier this month, but no mention of $$ in the press. So assume good news, or rather approximate status quo news - in that market. Nothing to report ... either way.
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Federation Olympic television shares for Rio and Tokyo revealed
Once held in tight secrecy, the amount of money distributed to the summer Olympic sports federations for the 2016 Rio Games and the 2020 Tokyo Games (held in 2021) was published on Wednesday by the Association of Summer Olympic International Federations (ASOIF).
ASOIF has undertaken a heavy effort to encourage good governance and transparency and the publication of the Olympic television shares is a show of good faith.
The International Olympic Committee does not decide how much money each federation receives from each Games. The IOC does determine the total amount of money from the television rights sales from each Games that is to be allocated to the International Federations, and then that amount is divided among the ASOIF members according to an internal agreement.
The distribution percentages were the same for Rio 2016 and Tokyo 2020, and the ASOIF decided on the current distribution process in 2013, based on a recommendation from the IOC on five tiers of classification for the sports based on their popularity during the Games. For Rio and Tokyo:
● Group A: $39.48 million to World Athletics and $31.36 million each to FIG (gymnastics) and FINA (aquatics).
● Group B: $24.45 million each to 5 federations: FIBA (basketball), FIFA (football), FIVB (volleyball), the International Tennis Federation, and the Union Cycliste Internationale.
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$17.31 million each to 8 federations: BWF (badminton), World Rowing, the International Judo Federation, ISSF (shooting), ITTF (table tennis), IWF (weightlifting), World Archery, and boxing (AIBA-IBA). The IOC has withheld the payment of the Tokyo allocation to the IBA, as it was on suspension for the Tokyo Games.● Group D : $15.14 million to 9 federations: FEI (equestrian), FIE (fencing), FIH (hockey), the International Canoe Federation, IHF (handball), World Triathlon, United World Wrestling, World Sailing and World Taekwondo.
● Group E: $12.98 million to 3 federations: UIPM (modern pentathlon) and to the two new federations for 2016, the International Golf Federation and World Rugby.
The distribution was based on a total of $540.29 million provided by the IOC; the same amount is also set aside to support the National Olympic Committees through its Olympic Solidarity program.
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re: above.
That olympic payment computes for 2016. But it contradicts expected 2020 amounts according to this article from 6 months ago quoting WR CEO:
but the deferral of revenues from the postponed Tokyo 2020 Olympics was also felt keenly. In a recent interview with the Financial Times, World Rugby chief executive Alan Gilpin said that sevens’ Olympic appearance would bring in between $30 million and US$40 million to the game.
Rugby starts to emerge from the pandemic's financial abyss
Rugby's financial landscape is starting to evolve as the world emerges slowly from a global pandemic and it is set to change irrevocably
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The FT source, that the RP article is referring to:
In 2019, the governing body took the Rugby World Cup, which generates about 80 per cent of its revenues, to Japan, the first time the flagship tournament had been hosted in Asia. Japanese TV and sponsorship deals meant the competition made an estimated £360m in revenues, compared with £330m four years earlier.
From a financial perspective, the Olympics are less significant to rugby. Gilpin said Games-related revenues from direct and indirect sources were only about $30m-$40m.
Rugby uses Olympic showcase to tempt private equity
Governing body seeks to capitalise on popularity of Games event to boost funding of sport around world
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https://www.bbc.com/sport/rugby-union/63520511
"Accordingly, the Rugby Club Board decided to sell one of our non-rugby assets for which members approval is needed and which is being sought at an Extraordinary General Meeting at Sandy Park on Wednesday, 30 November.
"This should be more than sufficient to see the club pay the loans and be financially secure for the future."
The Chiefs have not stated which "non-rugby asset" it is planning to sell.
But the club holds a 75% share in the company that operates the Sandy Park Hotel - a £40m development which was officially opened at the end of April.
If it is the hotel. I'd guess, there is a big difference between selling (percentage of) a company that operates the hotel rather than owns the hotel/land, so that is a bit vague.
Well run enough to be in the position to sell something.
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@Higgins said in Rugby Finances:
The RFU in the gun again
https://www.msn.com/en-nz/sports/other/asleep-on-the-job-english-rugby-chiefs-torn-to-shreds-by-mps/ar-AA14vEyC?ocid=msedgntp&cvid=7aa2f82b624a48258828b006c0f01b00“How did you allow a liar and asset stripper to destroy a community club?”
Comedy fucking Gold
How the Government has the neck to criticise anyone else is quite frankly mindboggling
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https://www.bbc.com/sport/rugby-union/63874443
Who is owed the most money?
The administrators' reports have highlighted the full extent of the CBS Arena's and Wasps' debts.
Taxpayers took the biggest hit as a result of the £14.1m unsecured Covid Sport Survival Package (SSP) loan from the Department for Digital, Culture, Media and Sport (DCMS), administered by Sport England.
A further £7m owed to His Majesty's Revenue & Customs (HMRC) has not been repaid - and there were also losses for local taxpayers.
Coventry City Council was owed more than £270,000, with the council telling the BBC the bulk of it (£228,152) was as a result of unpaid business rates.
Warwickshire County Council was owed £600 and Stratford District Council £2,868, while West Midlands Police lost £20,570 and West Midlands Ambulance Service took a loss of £1,755.
The reports also show former Wasps owner Derek Richardson had loans of about £16.5m in the various Wasps companies when they went bust.
It is a bigger blow to the public purse than when Worcester Warriors collapsed in October, owing the government £16.1m from their SSP loan (the biggest of the combined £124m package of loans given to all 13 Premiership clubs), as well as £2.1m in unpaid taxes to HMRC.
The other big losers were Wasps bondholders, who were owed £35.2m.
They did receive around £7.4m back, but it still results in total losses of £27.8m.
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From Telegraph.
Exclusive: Premiership clubs ‘heading for disaster’ having amassed £300m in net debt
A joint investigation between Telegraph Sport and a rugby finance expert can reveal a number of clubs are financially under threat.Gallagher Premiership clubs are at risk of “heading for disaster”, having collectively amassed £300 million in net debt over the past six years, Telegraph Sport can disclose.
The figure, which excludes investment in the competition from CVC Capital Partners in 2018, highlights the fact that after Worcester Warriors and Wasps were placed into administration, other clubs are under threat.
An investigation shared by Mike Ryan, a private equities director who has produced reports on the finances of Rugby Australia and New Zealand Rugby, shows that:
CVC, which bought a minority shareholding of 27 per cent of the Premiership for £200 million four years ago, took out a £27.5 million dividend across the previous two financial years from the league’s holding company, Premier Rugby Limited, with PRL’s net debt now £29 million, having been nil before the takeover.
London Irish are considered “high risk” due to low turnover of, at best, £10 million, while Harlequins are “concerning” due to their high borrowing of £48 million in the 2021 financial year. Wasps borrowed £62 million before the end of the 2021 financial year, months before the club were placed into administration
Worcester Warriors wrote off £30 million of borrowings prior to going into administration
Sharing detailed analysis of both the clubs’ and PRL’s financial figures dating back to the start of the financial year in 2016, Ryan believes that the structure of finances and player payments must be addressed as a priority for the league’s long-term financial health.
“The club structure has historically been on an unsustainable footing. It has never made a profit. The combined losses for the clubs over the last six years, excluding the payment from CVC, has been £300 million,” Ryan explained.
“At the moment, this is heading for disaster. I would like to see the fiscal-year 2022 numbers to be more comfortable with the call, but I would be surprised if they were any better than FY19 [financial year 2019]. The overall competition is still losing money.
“It is professional on the field and semi-professional at best off the field. That is the biggest problem that rugby is facing globally, in my view.”
Addressing how to fix the Premiership’s loss-making model, with clubs in the red for earnings before interest, taxes, depreciation and amortisation, Ryan believes the Premiership must hire an independent commissioner and follow the kind of centralised model used in other sports, including American football’s NFL. That would lead to centralised contracts in the league that would ensure stricter player payments as well as “consistent accounting so at any point in time you can look at the health of the entire PRL”.
The impact of CVC’s investment has also been raised as a concern, given that PRL now holds net debt where previously there was none and has incurred £72 million of net losses since CVC’s investment, having previously broken even.
Why Premiership rugby clubs are in a financial mess
While it has been obvious to anyone this season with the demise of Wasps and Worcester Warriors that rugby's finances are under immense strain, the scale of the challenge which all Gallagher Premiership clubs are facing has not always been clear.The nine-figure amount of net debt across the Premiership without CVC's investment, £300 million, can be accounted for partly down to government loans, with £100 million of the debt owed to the Government as part of the Winter Survival package which helped Premiership clubs emerge the other side of the pandemic.
A substantial majority of the remaining debt is made up of investor debt at individual clubs, money owed to a majority shareholder which has amassed over a number of years. Debt which, in reality, it is hard to see ever being repaid. The question with those clubs therefore becomes what happens if a major investor decides they no longer want to pump millions into keeping a club afloat.
Mike Ryan, a private equities director who has previously produces reports on the finances of Rugby Australia and New Zealand Rugby, believes that the time has come to reassess the entire financial model of the league, adding that a structure similar to the NFL where the league negotiates national merchandise, licensing, and TV contracts before dividing shares equally among its teams, would be more successful with teams united and drawing from a central pot.
“The club structure has historically been on an unsustainable footing. It has never made a profit,” Ryan notes. “If you look at the successful codes, whether it’s the NFL or otherwise, they almost take a dictatorial approach. Not everyone is comfortable with it, but it makes the clubs and code successful to have a centralised approach to it, because it cannot work otherwise.
“I would be very strict on player payments, but also on the rigour and integrity of how the clubs are run. I’d have centralised contracts for all players. I’d move to centralised funding for broadcasting and sponsorship, and consistent accounting so at any point in time you can look at the health of the entire PRL.”
Certain clubs, it should be stressed, continue to perform well financially in trying circumstances. Exeter are one, even with the recent construction of a new stand. Gloucester have posted a small profit over the past two years and hope to do so again. Northampton in the last financial year recorded their highest-ever revenue.
But while CVC's investment was essential four years ago, the rub is that teams now still have to pay 100 per cent of their cost base while collectively missing out on 27 per cent of revenue which goes to CVC, at a time when every pound is desperately needed. Withdrawing a £27 million dividend is CVC's right given their substantial £200 million input, and they have been described as a very supportive and engaged partner. But how the clubs would love to now hold on to that revenue. “All of them fell into a false sense of security when they received the CVC payment,” believes Ryan.
Wasps and Worcester can be regarded as unique cases given their respective previous ownerships, but their collapses are still harrowing. Wasps borrowed a staggering £62 million in the last financial year.
Ryan adds: “It’s an unsustainable model. You cannot run a business which is turning over £20 million, £30 million and running up debts of twice that amount. A bank shouldn’t allow them to borrow against that.
“It was a hotel, events coordinator, entertainment business and stadium which tacked on a rugby club. Multiple businesses being operated by people who were essentially rugby players, when you look at the boards, highly inexperienced and with a single individual with Derek Richardson providing funding. Not the sort of board you need to be running multiple businesses, you need the right skill-sets.
“It’s got nothing to do with the players, it is mismanagement of the businesses. Auditors should have highlighted concerns earlier than they did. There was a negative profit pre-tax of £23 million between 2016 and 2018.”
Worcester's issue feels more common outside of clubs with consistent supporter bases – the amount of money borrowed could never be matched by the club's turnover.
“Worcester never made a dime,” notes Ryan. “The club only turned over £12 million. They have property, but look at the borrowings. They wrote off £30 million of borrowings and converted a portion of it to equity. The business was never going to survive with that debt. It doesn’t matter how much debt you forgive, at an operational level you’re not able to break even before paying your interest.”
Is rugby in England prepared for a radical rethink about its finances at the top of the game? Or will Worcester and Wasps be followed by others? London Irish's low turnover is a concern but the overall net debt figure for the entire Premiership deserves to be recognised and mulled over by supporters as well as those at board level.
All of the figures listed in this article have been compiled from the financial results made publicly available on Companies House. Premiership Rugby and all of the 11 Gallagher Premiership clubs have been contacted for comment. Premiership Rugby, Bath, Bristol, Harlequins, Leicester, London Irish, Newcastle, Sale and Saracens declined to comment.
The net losses of £72 million in Premier Rugby Limited are related to accounting for CVC's purchase over the years, Telegraph Sport understands, with the league's revenue for the financial year ending in June 2021 being £62 million. The net debt of £29 million in PRL is also understood to be a loan facility used by Premiership Rugby to support club distributions in a normal course of business.
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Inside that telegraph link, were these extras:
AT A GLANCE
Club-by-club | What financial shape is your side in?
By Ben ColesBath
Not a lot of serious red flags, albeit the level of debt has increased to an unsustainable level, which is mostly shareholder loans. The problem with Bath is that its operating structure will require continual propping up by Bruce Craig.Bristol
Bristol are OK as along as Steve Lansdown keeps on funding the club. He has a big cheque book but is happy to fund a business that has lost £30m over the past five years at the EBITDA (earnings before interest, taxes, depreciation, and amortisation) line. That is a passion.Exeter
Exeter have been much better at running its business than more or less all of the clubs. They have taken on more borrowings in Financial Year 21, but they have managed their business with a lot more vigilance.Gloucester
Gloucester would be on the fringe, but are not over-invested in hard assets, around £8.6m. They have a little bit of debt, bearing in mind some of that is the Covid loans from the Government, and were sensible to take that on.Harlequins
One club that is concerning is Harlequins. They borrowed £48m in FY21, maybe through £50m on the back of FY22. If you look at operating profit per employee, they are paying £60,000 per employee and going backwards. It's the structure of the business – big property investments, borrowings.Leicester Tigers
Their turnover averages £19-20m and they still incur losses, although they were more or less breaking even prior to Covid. Their latest net debt to revenue for FY21, with the debt being 0.8x their revenue, was their worst in the past six years but one of the league's best returns.London Irish
London Irish are challenged. They have never made a profit, have £30m worth of borrowings. It’s one club that’s potentially at high risk because of very low turnovers, at best in a good season of £10m.Newcastle Falcons
Another case of an unsustainable operating model, although in recent years have improved significantly. Club is also being propped up by a major shareholder increasing the loan over time. Too much debt for too little revenue.Northampton Saints
Probably managing better than most. Relatively low debt levels. Also seemed to manage the impact of Covid better than other clubs, reducing costs and managing to minimise the operational loss.Sale Sharks
Sale just run a club, they do not have any property. Their only problem is their operating costs are pretty chunky, which is why they could potentially be under pressure. They had the reprieve with the CVC payout, but ultimately it’s an unsustainable model.Saracens
Continued to incur significant losses of £30m over the last six years (up to FY21). Debt waived of £42m in FY18, resulting in nil debt for that year. However by the end of FY21 the net debt had leaped back to around £25m. While costs have declined, revenue was halved in FY21.and a graphic:
