With the start of the new season approaching, we thought it was a good time to update you on recent developments at the RFU.
Since the end of last season we have been faced with the difficult task of restructuring and reducing the size of the RFU organisation. This has led to some changes to our structure right across the whole organisation, with redundancies both at Twickenham and in our field based teams. It is without question very difficult and sad that we have to say goodbye to some good people.
Now that this process is nearly complete, we would like to explain more fully why this was necessary and how any changes will impact your CB.
To give you some context, we always plan to put the maximum possible amount of investment back into the game from all the income we generate. For current planning purposes though we are having to face up to four key challenges to our income that we have not had to face in recent years.
We have enjoyed an unprecedented period of growth and investment into Rugby over the last 7 years. Now, with growing uncertainty in both the UK sports market and the wider economic environment, assumptions about future revenue are having to be re-set.
Our four-year cyclical business is facing the impact of a ‘normal’ Rugby World Cup Year loss in 2019/20 for the first time in 8 years (the 2015 home World Cup delivered c£30 million profit). Rugby World Cup years are normally loss making for the RFU as we have no Autumn Internationals at Twickenham.
The onetime major income boosts we have benefitted from in recent times - including the profits from hosting RWC2015 in England - are no longer on the horizon.
Our contracted investment in the Professional Game has increased. Success at the elite end of the game - and the Senior England Mens Team in particular - drives our business model and provides the funding for community rugby so it’s essential we keep our England teams winning and Twickenham Stadium in good repair. This translates into significant committed investment that reduces the amount of discretionary spend at our disposal.
As a result of these forward predictions of our financial position, we have decided to tighten our belts now to ensure our spend levels are both prudent and sensible in the new world we are facing as well as ensuring we can continue to deliver our Rugby priorities at a significant level for many years to come.
We are committed to investing as much as we can in promoting and developing rugby. Our plans are based on anticipating an economic downturn, rather than having to react to one.
We can now confirm the following as a consequence of our actions and some key highlights of what we are still able to achieve:
Whilst we have reduced our budgets and spending for the 18/19 season, we will still invest over £100 million in the game, including almost £48 million in the Community Game (£34.4m in cash from the P&L, plus £13.4m of capital investment into Artificial Grass Pitches).Ten years ago, we invested around £20 million in the Community Game.
As we conclude the last stages of our employee consultation process, it looks likely that around 62 roles right across the RFU will have been made redundant. Around 35 of these are in the Community Game - although the process is not yet concluded for everyone. Rugby Development is likely to now employ around 225 people and rightly remains the largest workforce in the Union. All RFU departments have made proportionately similar reductions and our most senior redundancies are at Twickenham HQ. There is no doubt that this has been an extremely challenging process for all involved; none more so than for the employees that have left or will shortly be leaving the union.
The unfortunate, but necessary reductions in the community game budget and people numbers this year follow recent years of record levels of investment. Even this year’s reduced budgets are still higher than they were 5 years ago. Clearly this doesn’t make the reductions and staff losses any easier for the game or the RFU, but similarly we should not forget what we have all achieved in recent better times.
Although our future income is likely to be flatter than we hoped for, we are doing everything we can to protect revenue. The new East Stand, which will open in the Autumn, is designed to bring more corporate hospitality in house to maximise income to be spent on rugby, rather than the previous hospitality model which meant not all profits were returned to the game. As you are aware, the budget for the East Stand has increased significantly (£16m more than the previously approved £65m budget), largely as a result of significant and urgent changes made to fire safety regulations following the Grenfell Tower tragedy and counter terrorism requirements. However, it is important to note that it will still pay for itself fully within seven years and the ongoing profits generated from hospitality will all be invested into rugby – and that the recent redundancies are not linked to the revised budget.
As many of you will be aware, but to give some further assurance, since 2011 we have continuously improved our financial governance to ensure that we operate at a standard which is appropriate for an organisation the size of the RFU
Our financial position is still strong – the RFU is not in financial difficulty. We have net assets of over £200m as per our last annual report, we own our key asset, Twickenham Stadium, and we have a £100m bank loan facility that will be fully repaid by the end of the 23/24 season and this is enabling the current capital investment into the East Stand and protecting our future revenue.
It goes without saying, that we will do all we can to support the game through any impact of these changes. All CBs will be contacted by a member of the Rugby Development team to discuss any changes with you.
In concluding, we want to assure you that the Executive team at Twickenham are constantly driving efficiency across the RFU to achieve every one of our strategic rugby priorities; even with lower budgets. Whilst the last few months have certainly been challenging for everyone, we hope that we have demonstrated that we are still on a very sound financial footing and our commitment to ensure that rugby flourishes in England is as strong as ever.
We want to share as much information as possible now that our employee consultation process is ending and also deal with some of the understandable concerns and some misconceptions out in the game.
Our Executive team intend to visit all CBs in the coming months, and Steve Grainger and your Council member will be in touch with you shortly to plan how we can best do this together.
We have an ambitious strategy, including some exciting initiatives for the Community Game, and a World Cup in Japan on the horizon in a year’s time which we aim to win.
We would personally like to thank you all for your support over the last few months. Our volunteer community do a brilliant job and, in tougher times, it is a real privilege to be part of an organisation that works positively and collaboratively in determining the best way forward.