The publication of the IRFU Annual Report for the 2019/20 season has further outlined the widespread impact the ongoing Covid-19 pandemic has had on the Union’s finances.
This year’s numbers cover a fifteen-month period so as to align the financial year with the rugby season stretching to end of July as opposed to the end of April as was previously the case.
After recording its best-ever financial year in 2019 with a surplus of over €28 million, the IRFU’s financial position has changed dramatically in 2020 and the true effect of the pandemic is laid bare in the Union’s financial statements.
The principal line of income is that assigned to representative matches which in 2020 made up to €73,719,131. This dwarfs the line item of other income which stands at €5,518,009.
The loss of the income from the concluding matches of the Guinness Six Nations, the Guinness PRO14 and Heineken Cup and the tour to Australia means that the figure has fallen by €10.56 million, though that figure would be tiny by comparison if fans are not permitted back into stadia between now and the next year-end in July 2021.
The drop in income is exacerbated by the rise in cost, attributable largely to the changed timing of the accounts, in every single line item of expenditure.
The costs of the professional game rose from €45.6 million to €48.3 million. In elite player development, the rise was from €11.1 million to €13.9 million. In domestic and community rugby the costs rose from €11.2 million to €13.9 million. Similar increases, though in lesser absolute numbers were seen across grounds, marketing, administration and depreciation.
The overall impact has turned last year’s surplus of €28 million into a deficit of €35 million. More worryingly, that figure of last year included exceptional income of €24.9 million from the sale of land at Newlands Cross.
Worrying longer-term trends
These are the immediate short term hits but closer analysis looking for trends that will show how long recovery might take generate equal cause for concern.
The average surplus over the four years between the end of the financial year 2016 and 2019 was €1.697 million.
The same average over the previous four-year cycle from 2012 to 2015 was four times higher at €6.588 million.
Furthermore taking the same two four year cycles. while the average income from representative matches rose from €65.217 million to €77,784 million, the average costs of the professional game rose from €32.512 million to €41.674 million.
The 2019 figure of €45.604 million was also nearly 10 per cent above that four-year average while in 2015, the number was €32.393 million or a shade under the average.
In comparative terms, the largest line item of income had risen 19.2 per cent while the same on the expenditure side had climbed 28.2 per cent and was accelerating faster.
The good times then that returned post-recession had a greater impact on the debit than the credit column which will make a recalibration after the pandemic trickier again.
Government support for the professional game, together what has to be hoped as being a stable level of sponsorship income through increased recognition from higher TV viewing figures in a behind closed doors environment will help to cushion the blow in the short term, but Philip Browne’s commentary about the existential threat to the sport caused by the pandemic and the financial repercussions should not be taken lightly.
The 2020 Figures in detail
The IRFU suffered a deficit of €35.7 million for the accounting period, after income fell from €87.5 million to €79.2 million and expenditure increased from €84.2 million to just under €115 million. In respect of expenditure, Honorary Treasurer Tom Grace highlights the effect of the three additional months of payroll costs, which impacts many of the Union’s cost centres, as we have recognised above.
Gate receipts fell by €5.8 million for the IRFU in the 2019/20 season due to the replacement of the normal Guinness Series of three Test matches at Aviva Stadium with two Rugby World Cup warm-up matches in August 2019, while the postponement of the Ireland v Italy fixture in the Guinness Six Nations last March due to Covid-19 had a further significant impact.
This postponement also has an impact on the Union’s broadcasting income, as does the nature of the warm-up matches, against Italy and Wales, compared with the normal Guinness Series matches against southern hemisphere opponents.
The net surplus arising from Rugby World Cup participation did, however, exceed expectations by c. €0.8 million and the Union’s Commercial income improved due to a new additional sponsorship, contractual increases and the aforementioned extension of the accounting period to 15 months.
“We have been very fortunate that almost all of our commercial partners have maintained their financial relationship with us throughout this crisis and we are profoundly grateful to them for their support,” said Grace.
In respect of expenditure, player and management costs increased by €4.8 million due to the additional three months of payroll less savings in relations to bonuses, in light of fewer Guinness Series matches and the postponement of Ireland v Italy.
One of the first things to note in expenditure, Grace says, is the movement in bad debt provision of just over €16 million, which arose due to the impact of Covid-19 on the four Provinces where restrictions around match attendances has left Leinster, Munster, Connacht and Ulster unable to pay their share of the player salary costs paid by the Union.
“It would be very important to note that this represents a movement on a provision and should not be interpreted as a forgiveness of any part or all of this debt,” Grace outlines. “The Union is working on an appropriate financial package to assist the four Branches in getting through these difficult times.”
In 2019/20, Men’s Sevens, Women’s representative teams, academy and high-performance costs all increased, largely due to the three additional months of payroll costs. In addition, high-performance costs increased due to over €1 million in new costs in relation to the running of the IRFU High-Performance Centre on the Sport Ireland Campus, as well as staff increases agreed in the 2019/20 budget.
Sport for Business Partners