The sustainability of rugby in tiers below the top leagues is a challenge faced all around the world. As reported in The Daily Telegraph, Oakwell was delighted to give the RFU an independent overview of its place in rugby union’s economic ecosystem.
Full article below:
In November 2017, the Rugby Football Union (RFU) offered Samoa a goodwill payment of £75,000 prior to their fixture against Twickenham. England’s players would be earning almost a third of that figure that week. More pertinently, the RFU would pocket over £5m from the afternoon.
It was easy to scoff at how World Rugby allows host unions to keep all gate receipts during designated international windows. Two days before the game, which England won 48-14, Eddie Jones addressed widespread criticism of his sport’s global governing body.
“I think what World Rugby have done for Samoa is absolutely outstanding and they never get any credit,” he said.
“World Rugby is a bit like the RFU. Everything they do is not right. They never give enough money. They do. They do some great work.”
Now, Jones clearly had vested interests. Besides his lucrative England role, which now seems to have accrued a second contract extension, he had worked for the International Rugby Board as a consultant for Fiji, Samoa and Tonga after being sacked by Australia in 2005.
But those comments two and a half years ago came to mind as the RFU became the subject of contempt last month. In an interview with The Times, Coventry chairman Jon Sharp – a model of commitment to his club – explained that the RFU had already shown “extreme disdain” towards Championship sides with their plans to reduce annual funding to second-tier teams drastically from £534,000 to £288,000.
He then suggested fellow clubs would be on their own to combat coronavirus chaos. Since then, it has been reported by The Observer that Coventry are set to lose out on £750,000.
The RFU forecast losses of up to £50m themselves, which could increase if Australia are unable to tour this autumn. Twickenham is a precious cash cow for them. How fortunate that they were at least able to milk it for two Six Nations games against Ireland and Wales. So far, their response to Covid-19 includes pay-cuts for Jones and chief executive Bill Sweeney as well as a relief package worth £7m, £5m of which represent repayable loans worth up to £10,000 per club.
Only clubs in National One and below are eligible, which would appear to corroborate Sharp’s fears. Then again, there is important context to add. Six months ago, Oakwell Sports Advisory were asked to give the RFU an independent overview of its place in rugby union’s economic ecosystem. A presentation highlighted how the RFU’s £37m spend on the community game dwarfed that of other unions worldwide.
All figures from 2017-18 financial year, where published, for comparison across northern and southern hemispheres
That should not be a surprise or a particularly huge accolade given England’s playing numbers and the fact that a total revenue of £172m accounted for almost a quarter of the combined revenue generated by Sanzaar and Six Nations unions, excluding that of the Argentinian union, whose accounts were unavailable. Still, the RFU’s commitment to the grassroots sector had grown by nine per cent year on year since 2012.
And yet, their spend of £71m on professional rugby was shown to be 48 per cent higher than the £48m that the fully-centralised Irish Rugby Football Union (IRFU), the next biggest spenders to their elite end.
Andrew Umbers, Oakwell’s co-founder, stresses the importance of seeking out facts during emotive debates over funding. He outlines that English rugby is not alone in “wrestling with the sustainability of tiers below its top league”. For instance, in the summer of 2018, South Africa Rugby Union (SARU) publicly committed to slashing its pool of professional players from around 990 to roughly 460.
“We’ve created a false market in this country,” lamented SARU president Mark Alexander, before adding: “We should have done this much earlier.”
Sweeney has made little secret of his desire to phase out payments to players from grassroots clubs, which happen to various degrees as low as level seven of England’s league pyramid, on the grounds that they often violently derail sustainability. He hopes tightening Championship funding will aid that process. Strengthening the Premiership’s A League would also help, but that is another story.
Oakwell’s analysts drew a comparison between how the IRFU siphoned two thirds of its £73m total revenue over the 2018 financial year towards the professional game. The RFU’s equivalent share was down at 41 per cent thanks to the load taken on by England’s privately-owned clubs.
The Elite Player Squad agreement and the relationship between the RFU and Premiership Rugby is vital in all of this, even if wage inflation and investment from CVC Capital Partners seem to have exacerbated the financial perils of the coronavirus situation while salary-cap constraints create odd situations such as that of England star Jonny May, facing a big pay-cut at Leicester Tigers.
In Unholy Union: When Rugby Collided with the Modern World, co-authors Michael Aylwin and Mark Evans describe the “incoherent surges between hope and recklessness” that are born out on the balance sheets of Premiership clubs.
Without central contracts, the RFU is obviously detached from such volatility, to a certain degree. And while England may not have a thriving second tier like Pro D2 in France, the other major model featuring privately-owned clubs, they do own their stadium. The total revenue of the Fédération Française de Rugby (FFR) in 2017-2018 was £95m. Remember that that RFU generated £172m.
Wide-ranging cuts implemented by former chief executive Stephen Brown, ironically following budgeting trouble with the redevelopment of Twickenham’s East Stand, will affect the financial reports that the RFU publish for 2019-20.
However, as the coronavirus pandemic heightens awareness of professional rugby union’s uncomfortable adolescence, critics would do well to take stock and ask where any more money should – or could – come from.
Click here to access full article written by Charlie Morgan on 2nd April 2020 in The Telegraph
