Rugby Australia has recorded a net deficit of $27.1 million for 2020 due to the COVID-19 pandemic, with the governing body losing so much money it even considered reverting to amateur status.
The $45.7m reduction in revenue was the key factor behind the huge loss, which was somewhat offset by $31.2m in drastic cost-cutting measures.
Staff costs were reduced by $9.9m (down 46 per cent), a $7.7m reduction in player costs (down 45 per cent), an $8.1m reduction in Member Union funding (down 28 per cent), and other costs were reduced by $5.5m.
Rugby Australia chairman Hamish McLennan said the organisation was “shaken to its core” by the impact of the global pandemic.
And the size of the financial loss led to serious conversations about becoming amateur.
“We were very nervous,” McLennan said on Thursday afternoon after the AGM.
“When I came on board in June/July, had we not been able to get cost out of the business and get some certainty into some of our revenue numbers, we openly talked about the game potentially becoming amateur.
“It was a real possibility. It wasn’t just idle talk. But we got through it and there’s light at the end of the tunnel.
“We knew it was going to be brutal, so it’s not really a surprise. I’m proud of the fact that the team here has kept the game alive and professional.”
New Zealand Rugby approved a historic private equity deal at their AGM on Thursday, with a 12.5 per cent stake to be sold to US equity firm Silver Lake for $NZ387.5 million ($A361 million).
McLennan indicated Rugby Australia would follow suit.
“We have absolute alignment,” he said.
“I can’t see us giving more than 15 per cent away. It will be between 10 to 15 per cent. Probably 12.5 per cent.
“In a perfect world you wouldn’t have to do it. There’s an extra stakeholder we’ll have to deal with.
“But I don’t fear it. The more diverse range of skill sets we get around the table is a good thing.
“Rugby deserves to make a lot of money which we can reinvest back into the community game.”
McLennan feels Australian rugby has weathered the worst part of the financial storm, with a string of international series set to pump much-needed money into the game.
RA is confident the proposed three-Test series against France during the middle of the year will go ahead.
GregM
Roar Rookie
maybe RA needs to have the players contracts linked to bums on seats and TV deals - no crowds and poor TV ratings - less coin for the players, play an attractive style of rugby - win some games, get fans back at the games, good TV ratings - players earn more. Maybe if the merchandise was made out of cotton or something that's wearable in summer instead of 100% polyester that's unwearable in summer then they might sell some clothing too. Oh - an in case the clothing marketing wizz's haven't noticed - slim line shirts and jerseys don't look too good on the average rugby supporter on the sidelines
Train Without A Station
Roar Guru
Yes they do but the compensation is less than the loss between test revenue, sponsorship and tv rights
soapit
Roar Guru
but dont they get compensation for losses from the wc from wr?
AndyS
Guest
Got to call BS on that. The salary caps had not increased at all by 2017, which is when RA said all the extra money was already gone and they needed to save even more. I don't know where it went, but it most certainly didn't go there; even now the salary caps are still essentially the same as they have ever been. If you are talking other staff however, and think $35M/yr went on support staff, then that is the very definition of unnecessary bloat that could and should be wound back. As for the 2015 loss, I am interested to see you pulling it out in isolation. As you have said many times on the past, losses in a RWC year are expected and part of a 4 year cycle. But even if you now want to treat it as the annual norm, it would still be far short of the $35M that vanished year on year. So there is still an awful lot of money somewhere, doing something not actually critical to delivering all of rugby as it was last time the Wallabies contested a RWC final.
Train Without A Station
Roar Guru
Slumped from their peak earlier in the year. They are still up from 2020
Train Without A Station
Roar Guru
You don’t have FTA TV?
Train Without A Station
Roar Guru
Lions. RWC’s cause losses. You really have to look at the finances in a 4 and 12 year cycle. 4 because you make a loss every RWC. 12 because you get a money spinner every 12 years.
Train Without A Station
Roar Guru
You can’t really consider 2019. It’s a RWC. Lost July test, EOYT and TV money. You basically have to divide it by 4 because you really incur it 2016-2019.
Train Without A Station
Roar Guru
In 2015 they were running at a loss. Partially because they knew more money was coming in 2016. A factor that can’t be ignored is the SR teams. All of them. All 5 were poorly managed meaning they needed collectively more money to run operations, in addition to expected increases in salary to compete with a global market
soapit
Roar Guru
doesn it rely heavily on lions and wc's topping up the losses on other years?
soapit
Roar Guru
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LeftRight
Guest
Web, Super Rugby's TV ratings have slumped by 57% in two months (The Australian 1 May). You're quoting RA's press release from this week, but "the numbers don't withstand scrutiny,"(again The Australian 1 May). For the reason I have given above, rugby union has lost viewers & will probably lose stadium attendences as well. So, again I ask, how will RA use PE funding to address this decline? Their track record doesn't inspire confidence (with me) & no plan has been revealed to date.
AndyS
Guest
Sorry, "into inefficiency"
AndyS
Guest
Maybe. RA is no different from many other big organisations, in that it is very difficult to be all things to all people without lapsing into efficiency, and very easy to lose sight of the point of the whole exercise. The old RA was far too lazy for far too long and the price is being paid now, but only time and opportunity will tell whether anything is learned from the experience and whether the new RA is any different. At the moment I doubt it - if TWAS does have a point I'd agree with, it is that they seem to have gone for easy fixes so far rather than really dig into what is a 'must have' and what is a 'nice to have'. Let along examine any mechanisms for preventing the same malaise again in future.
GregM
Roar Rookie
how much was the Qantas sponsorship worth? who has taken over now?
CPM
Roar Rookie
No. At the start of 2017 there were 18 teams in Super Rugby, 6 SA teams. In 2017, 3 teams were cut to make it a Super 15 competition. It’s in the records! So instead of cutting they could have created 3 conferences.
web
Roar Rookie
LeftRight " Frankly I haven’t watched a game since they broke up with Foxtel (not that I think Foxtel is great), but I’m not going to the trouble of taking out yet another pay TV subscription to watch a substandard product. No wonder crowd and viewer numbers have dropped off." Thankfully you still find time to come on to the Roar and state your opinion. Viewing numbers are up by a reported 140% ( not including Stan) compared to last year and at least 30,000 tickets have been purchased for next weeks final.
Ex force fan
Guest
Andy even the current management complaint about wasteful expenditure of the previous RA managements. The cost-benefit analysis was just not done or not done properly. I think they far overestimated the benefits of axing the Force and underestimated how devastating it would be to WA rugby. TWAS thinks axing the Force was the only cost saving option and that all other options were exhausted when that was clearly not the case. Even with a much smaller budget RA is a far more capable organisation than they ever was under Pulver-Clyne
LeftRight
Guest
Will additional funding, from whatever source, actually improve RA's products (Super Rugby, Wallabies et al) to such an extent that stadium crowds and TV viewers increase & continue to increase? What is RA going to do with the potential PE funding to actually bring the game back to prominence? On their past record they'll just drive the game further into the doldrums, while paying themselves lucrative salaries. Frankly I haven't watched a game since they broke up with Foxtel (not that I think Foxtel is great), but I'm not going to the trouble of taking out yet another pay TV subscription to watch a substandard product. No wonder crowd and viewer numbers have dropped off.
Tooly
Roar Rookie
A few points. . Private equity is not a charity. . We are not as valuable as NZ Rugby. . Andrew Forrest is talking to McLennan and Marinos. . This our our last chance. . Get rid of the parasites and fix it. . That will mean a new coach. . When that’s done let’s support Rugby anyway we can. .