Eddie Jones may have put England’s Chariot back on track for next year’s World Cup in Japan after an impressive November series, but his Rugby Football Union bosses have suffered a £30.9m loss and deny they are “moving money around” to try and hide the deficit.
The biggest and most financially powerful Union in the World has made 54 redundancies and had to deal with an overspend of around £40m to finish Twickenham’s East Stand. However, despite taking a massive financial hit, the RFU today made it clear Jones’s World Cup budget is ring fenced and insisted they were not hiding the loss by claiming a one off cash injection of £31.6m meant they effectively broke even .
The £31.6m comes from a restructuring of money from selling the Twickenham Experience Limited hospitality business to Compass and that money has gone into the RFU reserve fund. Steve Brown, the outgoing RFU chief executive, confirmed that under the deal it would have to be bought back in 2028.
He said: “We are absolutely not just moving money around. The asset (Twickenham Experience Ltd ) has become worth significantly more and that new value generates an income. That large liability will have to be paid back, but the business in 2028 will be worth substantially more.
“Let’s get this straight; the £30.9 loss is mirrored by the £31.6m input which is in a different part of the accounts and we are effectively at break even and it would be wrong to be report the loss in isolation”
Brown is quitting at the end of the year forcing the RFU to hastily find someone new he insists he is not jumping ship due to the Union’s accounts which reveal revenue for the last financial year of £172.4m with investment in the sport at all levels of £107m. The profit after tax was £83.3m and the RFU has increased its borrowing facility to £100m.
Brown said: “I am leaving for my own reasons and I don’t think the ship could be in better shape after the last seven or eight years. The World will always change and we are in the best position to move with change. It is a great time for someone to take over and move this to the next level. We are in a sound and solid position and the £25m we have in our reserves is sufficient for World Cup year to ride the loss without any November tests and there will be another financial report before then and we will make a profit next year and add to the reserves.
“We need to plan more prudently, given the recent rise in our fixed cost base, driven largely by the Professional Game Agreement (PGA) and Elite Playing Squad (EPS) fees, which were negotiated when our revenue outlook was more optimistic, and by stadium depreciation.”
Sue Day the Chief Financial officer of the RFU revealed: “Rugby investment for the year totalled £107.7m and was split between professional rugby at £70.7m and rugby development at £37.0m. The RFU has enjoyed unprecedented revenue growth over the last eight years or so, which has enabled record levels of investment in rugby. However, looking to the future we know now that the financial outlook will be tougher. There will be less money to spend both on running the business and on investing in rugby.”
“As a result, rugby investment is likely to come down from the over £100m averaged over the past three years to around £95m per year, still a very substantial sum, but one we need to adjust to in 2019/20 and beyond.
“During the period under review we reduced overheads by £1.1m, with a further focus on efficiency in June 2018 leading to a consultation process with our staff as part of the 2018/19 business planning process. As a result, 62 roles were made redundant across the organisation although, with the creation of some new roles as part of the process, 54 people actually left the RFU. While this was not an easy decision to make, it was however necessary to ensure the financial stability of the Union going forward in more challenging times.”
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