The Awful Truth About The ARU's Financial Position

[Scott Allen]

I've just published an article on the ARU's finances which reveals how dire the financial position was at the end of 2012. The hole the ARU has dug can only be fixed by the windfall from the Lions tour!

You can also see where the money went that could have been used to develop our game.

Part 2 will be published on Monday which benchmarks the ARU's financial and organisational performance against the NZRU.

http://www.greenandgoldrugby.com/aru-financial-position/

 

[Hugh Jarse]

Very scary reading.

I suppose that a similar analysis of State unions finances would end up revealing money being lost hand over fist on non-productive overheads rather than finding its way down to Grass Roots or 3rd Tier.

And then lets not get started on Shute Shield Club Finances. There has been some discussion on this on these boards, and in the SMH. IIRC their analysis somehow had Easts as the third most financially healthy club. Inside Shoulder's read of the Easts financials revealed that the club is rather far from being financially stable.

The first part of dealing with a problem is actually to realise that there is a problem. Recently Gaggerlanders have outlined the parlous financial state of the ARU, and the real decline in participation in terms of overall regular player numbers.

There is little doubt that there are some pretty serious issues for ARU and State Unions to address not to mention implementing the Arbib report on governance.

The next step must be the Pulveriser and Kick Too Farr-Jones (and other State RU Presidents) addressing the real issues, and not getting sidetracked on issues that appear to have consumed much of the previous regimes intellectual efforts such as the menu in the Chairman's private box for the Bledisloe Test, the wine list for the ARU boardroom, or how to maximise the use of frequent flier points accumulated for rugby related business travel on personal travel with the family.

IMHO issues in Juniors, Subbies, and Premier Rugby have been seriously neglected over the last decade, and we are now starting to see the impact of that neglect. Unfortunately it will take a long long time to resolve and take a lot of blood, sweat, tears and honest graft. I would love to be proven wrong, but I have little faith that the current mob in charge have the ability to do what needs to be done.

 

[Hugh Jarse]

Open letter to the ARU

Dear Mr Pulveriser,

Why does it take a bunch of simple rugby tragics on the World's Best Rugby website to identify the serious issues facing the game that you have the honour of being the head custorian of?

Have none of the high priced "overheads" told you this previously? Don't bother answering that rhetorical question, because we accept that it wasn't your fault.

Apart from relying on the Lions tour to bail the game out of financial do do, what is being done, and how are you going to continue to invest in community rugby and spread the game beyond the Sydney and Brisbane GPS/CAS schools whilst undergoing whatever cost cutting is decided is needed?

We had a massive surplus from 2003 RWC. That has gone. We should make a massive surplus from the Lions. Please ensure the long suffering rugby public that this will not be pissed up against a wall.

yours in Rugby
Hugh

PS. While you are at it, tell us how you are going to get the Bledisloe Cup back here. Hint: With the drawdown of Australian Troops from Afghanistan, the SAS may have some time on their hands. How about getting Cossie to call some of his mates still in the Army to see what can be done?

 

[Sidbarret]

Thanks a lot for that. I am not in the business going through these sort of reports so I enjoy someone else doing the leg work to make sense of it.

A couple of things stood out for me.

1- JoN's salary seems disproportional to the size of the organisation and his own performance.

Nearly 3 percent of 2012's revenue will be paid to one individual. That seems like a awfully large line item. I think it should also be noted that this is a cash payment, not a share-options or other mechanism where the costs are deferred in time or includes a element or risk.

But could it be that he was in fact worth all that amount. On the face of it, it looks bad as the organisation that he has been leading has been making a loss. But the truth is that is a pretty poor way of looking at the question. I am sure BHP's CEO makes far more money than JoN off their impressive profits, but figuring out if that profit is due to the labour of their CEO or high commodity prices is little less clear. The reverse argument might apply to JoN. One should look at his marginal benefit rather than gross performance when evaluating his value to the ARU.

Maybe it is time that rugby realises that it isn't that big a business. You don't get Richard Branson to run your local KFC franchise because no matter how brilliant a businessman he might be, there is no way that KFC franchise can match the salary he will demand.

2- The losses on the exchange hedges just shouldn't happen. The strength of the Ozzie dollar makes things harder for the ARU, but the strength hasn't been a surprise to anyone and losing money on hedging in such a predictable market just shouldn't happen.

3- What if the lions tour isn't the windfall that everyone is expecting. The UK economy is very soft at the moment and the ARU shouldn't be banking on a large contingent travelling fans to sell out the non-test matches.

 

[Scott Allen]

Sid - regardless of what happens from here with the Lions tour, 100% of test tickets are sold (at very high prices) and the massive broadcasting dollars are locked in by contract.

Short of the test matches not being played (can't imagine what disaster could happen to knock over all the stadiums or whatever else), it won't matter if not one B&I Lion fan arrives in Australia, the ARU will receive a windfall well above anything that will come in in any of the next 12 years.

We should all thank the B&I Lions!

 

[Hugh Jarse]

../...snip..../..

We should all thank the B&I Lions!

after we beat them.

Halleys Comet is on a 86 year cycle (or thereabouts).

Some things in rugby happen on a 12 year cycle.

B&I Lions tours.

Bledisloe Cup Series Victories.

RWC victories.

So:

2013 for B&I Lions Tour.

Due for the Bled.

The 3rd 12 yr RWC cycle started after RWC 2011. It is fair game in 2015.

During these cycles we make money.

 

[blues recovery]

Reckon Uncle Bill is shitting himself. The position is far worse than we all know publicly. The Lions surplus will be gone by the end of 2014. So the reality is if nothing else changes the game in this country will be bankrupt within 18 months.
And the sponsorship position is really frightening.
No Super Rugby comp sponsor
No Lions Tour sponsor
HSBC pulling out of the Tahs this year
Rabodirect may pull out of the Rebels
Really is ugly

 

[p.Tah]

HSBC pulling out of the Tahs this year

I hadn't heard that. Where is that from?

 

[blues recovery]

First hand knowledge. Waratahs and ARU are bumping into each other talking to prospective sponsors.

 

[Sidbarret]

Sid - regardless of what happens from here with the Lions tour, 100% of test tickets are sold (at very high prices) and the massive broadcasting dollars are locked in by contract.

Short of the test matches not being played (can't imagine what disaster could happen to knock over all the stadiums or whatever else), it won't matter if not one B&I Lion fan arrives in Australia, the ARU will receive a windfall well above anything that will come in in any of the next 12 years.

We should all thank the B&I Lions!

Colour me skeptical.

Our experience in 2009 was that tickets were very very tough to get, but swaths of the stadiums were empty. I assume these tickets were allocated to traveling fans that never quite materialised. (Less of an issue with the test matches though).

Also the lions do take a fair proportion of the revenue generated for themselves.

 

[Sidbarret]

Another thing that stood out for me was how much money the ARU generate from matchdays (I take this to mean people actually showing up at the stadium.

Whenever people talk about poor crowds, you hear people say that it doesn't really matter because most of the money comes from broadcasters. Though this is true, little can be done to improve revenue in the five years between contract negotiations, it is basically not in the control of the unions. If they want to grow revenue they should focus on the things that they have more control over, like getting more bums on seats at the games.

 

[Badger]

Great analysis Scott.

The corporate expenditure for the Tahs would be pretty high as well with two sets of administration for the NSWRU and Waratahs Rugby. As an outsider looking in, the split has added no discerning value to the state of rugby in NSW. Throw in the Sydney Rugby Union and Country Rugby and it would appear that it is very top heavy in NSW as well.

First hand knowledge. Waratahs and ARU are bumping into each other talking to prospective sponsors.

When you have had a sponsor for over ten years which has a clear commitment to rugby, then it is really disappointing. Not a good look for the current Tahs administration. The marketing machine at the Tahs is pretty ordinary now and it's really the marketing done by HSBC which has been worthwhile with their Jersey 23 promotions, Flash for Cash and the current Flag promotion. I doubt that the Tahs will be able to come up with another sponsor which will be able to provide the marketing oomph that HSBC does.

I hadn't heard that. Where is that from?

Get ready for cheap Tahs gear at the end of the season!

 

[p.Tah]

I find this all so depressing.

Rugby is an escape for me I don't want the realities of the commercial world invading and threatening it. I'm just going to try and avoid the treads and keep my head in the sand. Happy for others to scrutinise the numbers etc.

At the end of the day there is very little more I can do to improve the situation. I don't want to think how much money I spend on rugby each year. I buy memberships, I buy the merchandise, I buy test tickets, I make the broadcasters happy by watching the games, where I can I support the sponsors who support the game. I introduce as many as I can to the game.

Reading these uncomfortable truths about the state of the game makes me wonder why I bother.

I'll just have to keep out of these threads. Keep my head in the sand and enjoy the escape.

 

[Hugh Jarse]

Don Chipp. Someone has to keep the bastards honest.

If I am shelling out my hard earned $, I want them used effectively, not for some glorified spin doctoring mason to enjoy the high life at the expense of kids and players at the grass roots.

 

[ChargerWA]

I know first hand how hard it is to run an organisation when your direct manager is AWOL for long periods. Ideas die on the floor and reactions to adverse situations are invariably late and ineffective.

There is absolutely no way that JON's time at the casino didn't impact on the financial position of the ARU and I find it shocking he was paid a full wage and a bonus of that magnitude leaving the ARU in such a parlous financial position.

 

[ChargerWA]

And what a fantastic analysis Scott Allen

Why does it take an independent media outlet such as GAGR to produce such quality?

And the traditional media outlets wonder why the average media consumer balks at paying for their content.

 

[Badger]

HSBC pulling out of the Tahs this year

Thanks for pretty much confirming the mention below was referring to the Tahs.

Invoices causing nervous looks
Several administrators at an Australian province are getting very edgy about discrepancies over numerous invoices. Now one of their key sponsors is taking a very close look at the goings on at this troubled province. The cashed-up sponsor is thinking of walking, and the province is in enormous trouble if that happens. No wonder the province's leading official has suddenly turned into the Phantom; the ghost who walks.

Source: Ruck & Maul 12/04/2013
http://www.espnscrum.com/super-rugby-2013/rugby/story/180275.html

 

[Quick Hands]

I only manage a household budget and over the years I've also spent quite a bit of time on committees of local sporting clubs. I've always thought that the golden rule of running anything was that you don't spend your savings on recurrent expenditure - otherwise your savings will be gone pretty quickly. I think I learnt this in Year 11 Economics about 30 odd years ago.

How on earth have the ARU spent all that money from RWC 2003 in 10 years, with little or no permanent rugby infastructure to show for it?

These guys are all meant to be high-flying, highly educated corporate types.

It seems quite obvious to me that relying on a Lions tour every 12 years and hosting a RWC every 20 (?) isn't a very sound way to run an operation.

Although the figures and data in the ARU report suggest otherwise (see other thread), the game is shrinking. Less people involved = less potential for earnings. It's not that hard really.

The challenge for the ARU is not to produce dodgy figures or rely on one off events, it is to broaden the base of the pyramid. More junior players = more mums and dads = more paying supporters, who go to games, buy merchandise etc.

 

[Quick Hands]

Reckon Uncle Bill is shitting himself. The position is far worse than we all know publicly. The Lions surplus will be gone by the end of 2014. So the reality is if nothing else changes the game in this country will be bankrupt within 18 months.
And the sponsorship position is really frightening.
No Super Rugby comp sponsor
No Lions Tour sponsor
HSBC pulling out of the Tahs this year
Rabodirect may pull out of the Rebels
Really is ugly

But according to the ARU spin-meisters - everything is going swimmingly, nothing to see here folks move along.

 

[Hugh Jarse]

Quick Hands, it is not only the ARU spin-meisters that deny there is anything wrong with Heavensgame. There have been quite a few posters on here over the years that have also promoted the same message. They are either St Leonards or Moore Park Stooges, JO'N fanboys, or Junior rugby committee members.

Look at the amount of posts on the Wallabies Team Selection threads, and the NSW vs Queensland interstate parochialism threads and compare that with the discourse on Junior Rugby, Rugby's Future, and Rugby development. Everyone believes that they are a Wallaby Selector, and very few seem to care about the future Wallabies and how we can continue to develop players of quality so that we can exercise our god given right to be a Wallaby Selector.