Rugby Australia’s debts ballooned by $17 million to almost $89 million during 2023, with the code’s governing body drawing down $50 million of its $80 million facility with Pacific Equity Partners just a month after the financial lifeline was put in place last November.
RA’s 2023 annual report also sheds further light on the terms of the $80 million PEP facility, including that it carries an interest rate of “6.25% above Australian Bank Bill Swap Reference Rate”.
That swap reference rate is currently 4.37%, suggesting RA is paying PEP an interest rate of 10.62%.
That equates to an annual interest bill of more than $5 million for RA on the $50 million drawn down thus far.
Other terms of the debt facility detailed in the annual report include that the PEP deal “requires Rugby Australia Ltd to maintain the sum of the cash and cash equivalents above $2.5 million” and that the $80 million facility is “repayable on 24 November 2028”. It also states:
“As of 31 December 2023, a Security deed was entered into and all present and after acquired property, interests and rights and proceeds in respect of which Rugby Australia Ltd has at any time sufficient rights to grant a security interest has been used as collateral against the (PEP) Loan Note.”
In addition to the $50 million draw-down on the PEP facility, RA had other current and non-current liabilities of $38.9 million on its balance sheet for a total of $88.9 million, up from $72 million a year earlier.
While RA is expected to continue drawing down on the PEP Facility throughout 2024 and into 2025, RA chief executive Phil Waugh is hopeful that cash windfalls expected from the 2025 British & Irish Lions tour to Australia and the 2027 men’s Rugby World Cup will be more than enough to pay it back.
According to a leaked document obtained by The Roar, PEP expects those two events will generate a combined $225 million in cash flow for RA.
PEP’s take on that RA deal is that it “underwrote two major events which generate $200m+ of high confidence/controlled cashflows.”
(Photo by Matt King/Getty Images)
The document refers to the revenue generated from the British & Irish Lions tour as coming from “shared broadcast and sponsorship revenue” and “ticketing/match day profit retained by RA”.
From the RWC, it will come from “direct contractual payment from World Rugby” with “minimal costs incurred by RA”.
PEP also highlights that the $225 million revenue forecast is more than four times the coverage of the $50 million RA has already drawn down on the $80 million facility.
Meanwhile, the RA annual report also notes under the heading “Contingent liabilities” the claim made by the Melbourne Rebels board which, while not quantified, was listed as being for more than $8 million in the report released last week by the Rebels’ administrator Stephen Longley.
“As at the date of signing this Report, MRRU (Melbourne Rebels Rugby Union) remains under voluntary administration and the Group is aware of potential claims by the former directors of MRRU against Rugby AU and its Board of Directors in relation to: (a) an alleged shortfall in funding provided by Rugby AU to MRRU for the period 1 January 2020 to November 2023; and (b) PAYG liabilities incurred by MRRU whilst Melbourne Rebels players were representing the Wallabies which the former MRRU directors allege should have been paid by Rugby AU. Based on limited evidence made available to Rugby AU in relation to these potential claims as at the date of signing this Report, Rugby AU is unable to ascertain the merits of such claims.”
It also confirms that the participation agreement for the Rebels to play in Super Rugby expired on 31 December 2023 after not being extended prior to the Rebels lapsing into administration in January 2024.
“As a result, the licence to field a team representing Victoria in the Super Rugby Pacific competition remains with Rugby AU. From 1 February 2024, Rugby AU became the employer of all Melbourne Rebels players by providing notice under their standard player contract. MRRU ceased operating the Melbourne Rebels business effective 14 February 2024 with Rugby AU assuming management of the business operations going forward.”
The Rebels board has argued they should have the club’s licence reinstated because it was lost under “unconscionable circumstances.”
numpty
Roar Rookie
American exceptionalism at its finest. Lets deify a bloke who inherited his wealth and stuffs over everyday people because he throws a few pennies into goodwill causes to wash his image. Twiggy giving $5 million to WA rugby is equivalent to an average person giving about $20 such is his wealth. There are plenty more people giving more blood, sweat and tears to that community then he is without this fan fare.
Go Joe - Jo
Roar Rookie
It's not unsecured. RA has pledged the kitchen sink: "all property, interests, rights and proceeds"
Muglair
Roar Rookie
You are a legend Andy. I just bought the premium unit which allows you to choose to listen to officials, Stan or both. Of course if they are not a magical panacea I will find you. Luckily you are here so I won't need special skills.
AndyS
Roar Rookie
Yeah, at the game. So long ago I honestly don't remember where I bought them, but a search online suggest they are still around.
Muglair
Roar Rookie
Have you taken them to a game to see if the referees are still being broadcast? 100% agree it would be an enhancement, I did try quite hard to find some, and made a lot of enquiries at the time.
Muglair
Roar Rookie
You probably asked it.
Go Joe - Jo
Roar Rookie
From the article above: "Phil Waugh is hopeful that cash windfalls expected from the 2025 British & Irish Lions tour to Australia and the 2027 men’s Rugby World Cup will be more than enough to pay it [PEP facility] back." Piccolino's article:"Based on previous earnings, the 2025 Lions tour and 2027 World Cup can get RA on a level footing to pay off its current $80m loan. However, they are unlikely to provide another war chest that underwrites the future of the game." Fair criticism, or just making it up?
MarlinsTragic
The 225 million is the total of all three monetary events - Lions, we get ticketing/Corp hospitality revenue & share broadcast, sponsorship & apparel with Lions. RWC 2027 & 2029 is 20% of profit, which will be huge. 225 mill is a pretty mild estimate. Lions pays down debt & leaves us enough to get through 2025 & 2026. RWC’S sets us up for the future as they are planning on investing this in a “capital untouchable” account like Sydney 2000 Olympic team had, they still have the original 100mill in the account and have run the AU program for 24 years in the interest.
Rugbynutter
Roar Rookie
So we are looking at one off windfalls of RWC and lions tour to clear the debts but already the supposed war chest these events were meant to create looks diminished. But moreso with current expenditures in excess of revenue and hence the need to draw down on debt, how can we be confident the windfalls from these events won’t be frittered away.
Nicked Off
Roar Rookie
If Phil Kearns is the answer it's a really stupid question.
AndyS
Roar Rookie
The way they talk, they obviously seem to think they have some secret sauce. I assume it's not a guaranteed buyer for every ticket at $1500 a pop, so whatever it is I guess we can only hope that when they publish the final accounts, WR doesn't say "Oi, that's not ticket sales, read the hosting agreement, that's ours."
Jacko
Roar Rookie
What is wrong with the quality of rugby we see every week? If that fails to satisfy you watch another sport. You are an NRL tragic anyway. Go watch that sport we wont be concerned you aint here.
Jacko
Roar Rookie
Why would they need to?
CPM
Roar Rookie
For 2023 SA and Ireland both guaranteed WR €120 million, the French were brave and offered north of €170 million and were still in financial trouble after the tournament ended. If RA is chasing a pot of gold at the end of the rainbow they are in for a shock.
Jacko
Roar Rookie
No need to change anything. NZ players are 100% allowed to play in Aus or Japan teams. Just arnt elegible for ABs. No different to now.
Jacko
Roar Rookie
Nope KPM..... Wrong
Jacko
Roar Rookie
France had bribe money to pay to stop SA hosting too Harry. That left SA with plenty to "donate" to Barnes retirement fund in the Bahama's lol.
Ballymore Brumby
Roar Pro
The Japanese rugby administrators have shown zero interest in anything that touches super rugby interfering with their comp, teams or contracted players however.
Jacko
Roar Rookie
Savant its not a Billion a year tho. Its actually 650 mil over 5 years. https://www.afr.com/companies/media-and-marketing/nine-signs-650-million-deal-to-secure-nrl-for-five-years-20211220-p59j30
AndyS
Roar Rookie
WR has taken a guaranteed return from the last several cups. Read the article above your post... "Stephen Brown, managing director of organisers England 2015, said it had exceeded the revenue target of £250 million which covers the surplus it must pay to World Rugby of £80 million - leaving an extra £15million for the RFU.". The hosts get the ticket revenue, and nothing else. With that they have to put the tournament on, and pay WR the guaranteed return, then they keep whatever is left. My recollection is that it was £180M for 2027, but for sure it won't be less than the £150M for France. Would love to know where they see the money coming from. That is the best part of $300 per ticket to WR, then the cost of running the comp, and then they find out what profit they get...