Francis Baron lays bare the RFU financial woes

Francis Baron, the former Rugby Football Union chief, executive, is calling for a radical reform of the governing body including the axing of ”inappropriate” multi-million pound funding of Premiership Rugby despite the current crisis that has seen Wasps and Worcester enter administration.

Baron has produced an exhaustive review of the current financial difficulties facing the RFU and PRL in the Rugby Paper and has put forward radical proposals in a far reaching document, including restoring adequate funding for the Championship.

He said: “It is no longer possible to justify, in my view, the continued large and unaffordable RFU grant funding to PRL. PRL is no longer an organisation solely of RFU Member Clubs. It is now an organisation which is 27% owned by CVC Capital Partners, a global financial giant with assets under management of US$118 billion. It is therefore now wholly inappropriate for the RFU providing grant funding to benefit, in part, that 27% shareholder who is not an RFU Member.

“The alternative, if PRL do not accept the changes, is for the (EPS) players to have RFU central contracts (as in the ECB) with the clubs paying the RFU a pro rata share of the annual salaries of the EPS players under these central contracts based on the number of days the EPS players spend on Club duty, i.e. reversing the current arrangements.

“The RFU should, of course, continue to pay the agreed international match fees and bonuses to EPS players but these should in future be paid direct to the players and not via their clubs who could end up in administration and not pay on those fees on to their players.”

Baron held the CEO role for 12 years and was in charge for the 2003 Rugby World Cup win. He believes the current RFU management headed by CEO Bill Sweeney need to make key decisions to bring down mounting debt. He said: “RFU has gone from being financially the strongest Union in the world in 2011/12 to one of the weakest in 2019 (pre-COVID).

“The Game is crying out for clear leadership that has, sadly, been very absent in recent years. The silence from the new Chairman (Tom Ilube) is deafening. The CEO setting up yet more task groups and working parties to tell him what to do is, to say the least, worrying.

“The RFU’s cumulative losses since 2012 have been £73m, reserves have disappeared, and total net debt has risen to £265m whilst the Community share of rugby investment has fallen from 46% to 29% resulting in male adult participation in the Community game, the base of the rugby pyramid, falling fast. PRL’s financial woes have been all too apparent in the events of recent weeks.

“A radical new approach is needed post COVID to address the material issues and dangers facing both the professional and Community games in England. To do this I believe a new approach is needed by both the RFU & PRL. As far as the RFU is concerned a necessary and fundamental rethink of recent RFU priorities and policy direction is required.

“With Wasps in administration, Worcester facing liquidation and at least two other PRL clubs reportedly ‘up for sale’, one third of PRL clubs are in various degrees of financial difficulty. It is difficult not to conclude that the current PRL business model is no longer working, viable or attractive to investors.”

Baron is scathing in his verdict on the Union he used to run and added: “The actual policy followed by the RFU Board since 2012 appears to have been to run the RFU at a loss each year and use reserves to cover these losses and normal everyday expenditure, in order to maintain rugby investment at a headline ‘PR spin’ figure of £100m although most of this was to fund the Andy Cosslett’s ‘costly’ PGA agreement.
“It is therefore difficult not to conclude that the PRL business and financial model has failed, and a fundamental rethink is required. Not only are all PRL clubs to a greater or lesser extent in serious financial difficulty but the current RFU/PRL agreement, which the then RFU Chairman belatedly and euphemistically called ‘costly’, has materially contributed to the RFU’s own serious financial difficulties which have resulted in the cutbacks in support of the Community Game leading to the sharp decline in adult male participation.”

Baron’s figures show that :

• Over the period 2012 to 2019 the RFU made a cumulative net loss of £73.4m (excluding the one-off ‘ring fenced’ £26m RWC2015 profit). This compares on a like-for-like basis with cumulative net profits being made over the same period by the WRU of £9.6m, SRU of £7.7m and the IRFU of €53.4m.
• The total net debt (debentures plus bank loans less cash balances) of the RFU over the same period increased from £131m to £250m, a rise of £119m. In comparison the WRU’s total net debt fell by £19.8m, that of the SRU fell by £14.3m and that of the IRFU fell by €83.1m.
• The investment in professional rugby by the RFU between 2012 and 2019 has totalled £417m. The comparative figure for the WRU is £190m, the SRU is £195m and the IRFU £250m. Has the large RFU excess funding been well spent? The England performance section below sets out the analysis in this respect.

He continued: “What is embarrassingly absent from any CEO statement or statements in the RFU Annual Reports is the appointment of any Task Group to review and recommend on the RFU’s failing financial performance with recommendations about how to address this.

“Championship funding from the RFU to be restored and augmented from the current £1m to c£4m p.a. for facilities investment to prepare clubs for possible promotion to the Premiership. This amounts to an additional c£25m phased in over the 8 years”

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