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Anthony Joshua And Ed Sheeran Land Heavyweight Cash For WRU . . . But The Bell Is Ringing

By David Williams

The Rolling Stones, Coldplay, Ed Sheeran, Beyoncé, Jay-Z and Anthony Joshua all helped the Welsh Rugby Union announce a record turn-over of £97m last year.

Concerts, boxing and other non-rugby events at the Principality Stadium played a huge part in a 30% increase in revenue at the home of Welsh rugby. Away from international rugby, takings rose to £4.8m with hospitality and catering income rising more than £7m to £18.0m as a direct result.

The hosting of rugby Tests in the Welsh capital still accounted for 46% of the Union’s overall income – up to £44.9m from £35m – but CEO Martyn Phillips still opted to carry forward a profit of £2.3m to act as a contingency fund moving forward with fewer games in World Cup year.

“We have guarded against a boom and bust scenario by putting money aside to cover for a projected loss next year, whilst continuing to improve re-investment throughout the game at all levels,” said Phillips.

The WRU’s latest Annual Report, published on Thursday (http://www.wru.co.uk/downloads/WRU_ARA_2018.pdf), has shown that the recent 2017-18 financial year has a very good one for the WRU.

Turnover rose from £74.9m to £97m, a 30% increase, with costs increasing from £33.5m to £45.8m and leading to an increased overall surplus from £41.4m to £51.2m.

The visit of the All Blacks, three home Six Nations matches, two sold-out world title bouts featuring Joshua and a gig season including four Ed Sheeran concerts all contributed towards enabling the WRU to re-invest a record £42.8m – an increase from £36.6m – across the game.

Match income from the core economic driver of international rugby, increased by £9.9m to £44.9m and such match income and related commercial activity now account for 79% of the WRU’s total turnover.

Beyonce performs on stage during the “On the Run II” tour opener at the Principality Stadium. Pic: Getty Images.

“Our latest set of positive financial results are an endorsement of our strategy and testament to the high level of commitment and hard work of everyone involved in Welsh rugby,” added Phillips.

“Our ambition is always to maintain, if not grow our investment into all levels of rugby, hence our objective is to allocate modest and welcome increases each year”.

Whilst recognising that WRU investment is often viewed through a lens that splits contributions between regional and club rugby, the chief executive candidly admitted that the WRU are “very conscious” that they need to improve the connection between club and regional rugby at a local level and “in reality one cannot exist without the other”.

The re-investment in Welsh rugby of £42.8m is shared amongst the club game, which is up from £8.7m to £9.1m; performance rugby (managing age-grade structures, the national 7s sides, player development, referee costs, national centre of excellence and insurance), up from £5.2m to £5.5m; and the regions.

The Annual Report includes the Dragons regional subsidiary for the first time as they now form part of the WRU, with the WRU having acquired the relevant trade and assets and all of the land and other assets at Rodney Parade in late June 2017.

The other three Welsh rugby regions, the (Cardiff) Blues, the Ospreys and the Scarlets received £20.5m between them, whereas in 2016-17 £21.0m was divided between all four entities.

There is also a potential ticking time-bomb coming in the future with the WRU due to repay more than £10m to debenture holders by 2024. A total of £9.9m of that is due in 2024 as one of the biggest tranches of debenture holders get their money back for investing in the new build at the old National Stadium.

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The problem for the WRU will be in trying to get as many of their 20,000+ debenture holders to re-invest at a time when tickets are easier than ever to come by. Apart from Six Nations matches against England and Ireland, it is comparatively easy to buy on-line and, while attendances remain high, sell-outs are rare in the autumn series.

This is something they have always known was coming, so Steve Phillips, the Financial Director, has been planning ahead. With the stadium debut now down below £7m, the debenture pay back is the biggest financial concern for the Union.

The last WRU Debenture issue was in 2010, when 2,000 seats in the middle and upper tiers of the South Stand were put up for sale at £6,000 each in a bid to raise £12m.  They were for 15 years.

The annual report reveals the CEO is paid £346,000 pa, including benefits, and that the Chairman, Gareth Davies, received £65,000 for his role. It cost £5.5m to complete the purchase of the Dragons and Rodney Parade, and the land asset at Newport has swelled the WRU Group’s land portfolio to £41.8m.

Aware that 2018-19 will be a more difficult year, without the All Blacks visiting this November, with only two home Six Nations matches, with Joshua committed to title bouts at Wembley and without Ed Sheeran in a concert season disrupted by World Cup preparation warm-up matches, a year when the WRU plans to invest more than its earnings and record a loss, the WRU has retained profit of £2.3m in order to maintain re-investment in the game.

The next stage in the “transformational change projects” will be new governance proposals to be put forward at the Annual General Meeting of the WRU’s club and regional members next month as the leadership seek authority to devolve the responsibility for regional and club rugby to two separate sub-boards of the WRU board (amongst other governance proposals).

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As Davies concludes on the subject of governance reform, a difficult issue for successive WRU leaderships in the professional era, “We have a responsibility to be agile and inclusive and we will implement the right governance systems, with suitability qualified individuals reflective of modern society as we move to improve our own structures.”

Attention will next turn to the WRU’s Annual General Meeting and the efforts to conclude a successor agreement under “Project Reset” with the regions in a less confrontational environment than the previous renewal in 2014.


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