I was reading a financial report this week with regard to England Rugby and how they have been struggling. I kind of find this a little mind boggling because how can anyone screw this business up.
A winning side will normally reflect what is happening behind the scenes in the board room and England having won only 5 of their last 12 matches is definitely not the team they once were. A winning team sells more merchandise and sponsors are lining up outside the door so at some point the results need to improve. I do not believe they have the right person in charge with Steve Borthwick as the head coach and any improvements will not happen until he as gone.
The England Rugby Union reported an operating loss of £37.9m for the last financial year. Checking the numbers every side of the business is down including ticket sales which is due to hosting less games. The ticket sales were down by £25.4m and there is o excuse even if there was a World Cup that reduced the number of fixtures. As a business you need to plan ahead and make sure the number of fixtures remains the same as the paying public will attend.
Less games as a direct impact on catering and hospitality revenues which were also down by £22m plus broadcasting tv rights took a knock of £6m. In total the ERU took an operating loss of £37.9m which one would expect if the number of games had been reduced.
What baffles my mind is the board room squabbles taking place behind the scenes with the Chairman giving himself a bonus. The bonus was £358K and also received an extra 8.5% increase taking his salary to £752K. If you deserve the increase then I have no problem, but if you clearly do not then you should be the first one to put up your hand.
The part I find most disturbing is that the ERFU retrenched 42 staff members in September yet it felt it morally right to award a £385K bonus to the Chairman. If you are in the hot seat for the love of the game these are not decisions that would have been made. This is what is wrong with the sport as the rugby people are not running the sport and decisions are being made that are benefitting others.
The numbers taking up rugby are in decline which is mainly down to the number of players coming forward with brain damage. There is very little one can do to make the sport safer besides having bigger squads meaning each player has less game time. A corporate view point would be smaller squads with increased game time as that would be bigger profits and where the rugby people versus the business people differ.
Over the last few years we have seen the 6 Nations sell off a 14.3% stake (CVC) in future revenues which diminishes the revenue pot. New Zealand have done a similar deal which they are already regretting. England Rugby Premiership who run the club tournaments also sold off a large slice of their stake to CVC which should never have been allowed. If the business model is running as it should then there would be no need looking for investment.
The board room has been in upheaval over what has been going on and my guess these are the rugby people who believe the Chairman deserves to be removed. I suspect he will receive a vote of no confidence and to be voted out because clearly he is not putting the sport first. There is a big difference between how the corporate world and the sporting world does things and the sport always has to come first.
The England Rugby Union is a money printer and a bit luck the goose that lays the golden egg and you have to be a complete moron to mess this business model up. The rest of the clubs rely on the ERFU to do well as they rely on funding so the ERFU cannot afford to make mistakes.
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