Everyone Feeling The Pinch

“We all have to cut our cloth accordingly. I can’t see any way that we won’t incur losses next year. We’ve been clobbered by the downturn in the TV market. The Six Nations deal hammered us all.”

Not another IRFU broadside about their financial state ? No, it’s a quote from RFU Chief Executive Francis Baron, in a piece by Mick Cleary in the Daily Telegraph about the financial difficulties facing international unions.
The following is an edited extract from that piece.

As the England players were honing their physiques in the Twickenham gym yesterday morning, their bosses in the committee rooms upstairs were issuing grave warnings that the entire sport needs to get into shape.

The Rugby Football Union admitted that they are set to make a loss of some #3-4 million next year as the shortfall in the Six Nations television contract and the loss of revenue incurred by the World Cup begin to bite. Every level of the game has suffered. The performance department, who oversee England’s World Cup preparations as well as all elite programmes, have seen their budget request trimmed from #13 million to #10 million.

“The commercial environment is pretty tough at the moment,” Francis Baron, the RFU’s chief executive, said. “We all have to cut our cloth accordingly. I can’t see any way that we won’t incur losses next year. We’ve been clobbered by the downturn in the TV market. The Six Nations deal hammered us all.”

The Six Nations committee had been hoping to attract in excess of #100 million. Instead, they had to take the #70 million three-year deal on offer last summer from the BBC.

The loss of revenue from the autumn internationals is a major burden for the RFU. Their gross profit from the autumn series of games against New Zealand, Australia and South Africa was #21 million. This autumn, Twickenham will be empty with the World Cup in Australia in full swing.

The impact of the industry recession on the clubs is likely to see squads reduced in size and a freeze on the #1.925 million wage cap, if not a reduction. Already, Saracens have imposed a 10 per cent pay cut on their squad.

“It would seem that clubs are paying more than they can afford in the current climate,” said Peter Wheeler, chief executive of Leicester, who are one of only two clubs, Northampton being the other, to turn a profit in the Premiership.

Wheeler, though, sounded a warning note to those who might look to slash the wage cap as an easy means of curbing expenditure. “Do that and you’d pretty soon have our best players heading off to France or into Super 12 to play,” he said.

The RFU and the clubs feel that even though the problems are acute in the short-term, the medium-term forecast is reasonably buoyant. The combined club losses have reduced by #4.5 million in the last year, from #13.5 million to #9 million.

The Celtic countries are really feeling the economic squeeze and Ireland are facing losses of #4 million this year.

The proposed cut from nine club sides to four provinces in Wales will have severe knock-on effects in the Heineken Cup and Parker Pen Challenge Cup. The English clubs will fight the corner of clubs such as Llanelli, who might be subsumed into provinces.

“We would back the Welsh clubs,” Wheeler said. “Any change in who represents Wales in the Heineken Cup has to meet with board approval. The reduction in numbers in the Parker Pen is a serious concern.”

The draw for the semifinals of the Heineken Cup sets up the prospect of an all-English tie should Leicester defeat Munster and Northampton achieve the not inconsiderable task of winning in Toulouse. Whoever does win that game will have home advantage in the choice of neutral venue for the semi-final.