‘We talked about going amateur’: Rugby Australia records $27m loss
By Tom Decent
April 29, 2021
Rugby Australia has announced a $27.1 million loss for 2020, with chairman Hamish McLennan saying a period that was significantly affected by COVID-19 could have resulted in the code in Australia going amateur.
Speaking at RA’s annual general meeting on Thursday, McLennan also criticised unnecessary spending by previous administrations and said they had not invested enough in grassroots rugby.
‘We openly talked about the game becoming amateur’: Hamish McLennan says the governing body’s balance sheet was ‘horrible’.CREDIT:EDWINA PICKLES
McLennan, who was formally elected chairman at the meeting after he was appointed by the board as a casual vacancy in June last year, said the game had been in dire trouble.
“We were very nervous,” he said. “Had we not been able to get cost out of the business and get some certainty into some of our revenue numbers ... we openly talked about the game becoming amateur. It was a real possibility. It wasn’t just idle talk.
“It was very challenging and probably one of the most challenging periods I’ve had in my business career. We’re by no means happy with where we’re at but at the end of the day, it is what it is. We’ve caught the falling knife and know what we need to do is turn the rest of it around.”
McLennan called the governing body’s balance sheet “horrible”, revealing the game had suffered a 41 per cent drop in revenue ($45.7m) in 2020.
The loss of earnings was a result of major cuts in broadcast revenue due to fewer home Tests and a significant drop in gate-takings during the global pandemic, which meant no Super Rugby matches were played from March until July and Test matches were also cancelled.
By way of comparison, New Zealand Rugby announced on Thursday it had last year made a loss of NZ$34 million ($A31.6m), a 26 per cent decline.
“It’s a tough set of results during a nightmare COVID-19 year,” McLennan told the Herald. “In truth, the balance sheet is horrible but we’ve kept the game alive and we’re fighting on and making real progress.
“All codes have lost money, which is a fact of life. This highlights the importance of finalising a private equity deal and strengthening our balance sheet. We knew it was going to be brutal ... it’s not really a surprise.”
The revenue decline came as RA cut $31.2m in costs, including staff ($9.9m), player costs ($7.7m) and member union funding ($8.1m).
McLennan said the cuts had been necessary to keep the game afloat and that money was being wasted, even before the pandemic.
“We’ve cut $30m of costs out of RA and it’s operating better than before,” McLennan said. “I lament the fact that in good times we could have easily put $20m to $30m into grassroots rugby, which was a missed opportunity over the years.”
Asked whether player pay cuts would be considered as a measure to reduce costs in the future, McLennan said: “Yep. I think the priority is grassroots. We want to alleviate some pressure at a Super level if we can. We’re not going to be giving out tens of millions of dollars to players and/or clubs.”
As flagged by the Herald earlier this month, Jane Wilson, Karen Penrose and Matthew Hanning have been appointed as new board members. One-time Wallabies captain David Codey has become RA’s new president, replacing Tim Gavin.
On a day when NZR gave the green light for plans to sell a 12.5 per cent stake of its commercial rights to Silver Lake Partners for $NZ387.5m ($361.2m), McLennan said RA was making good progress with its own private equity discussions.
“We’ve started organising documents, we’re off and running in that regard,” McLennan said. “We have absolute alignment [with New Zealand]. The stake will be between 10 and 15 per cent, probably 12.5.
“In a perfect world, you wouldn’t have to do it. There is an extra stakeholder we have to deal with but, having said that, I think any injection of good financial marketing sponsorship is a good thing. I don’t fear it.”
The Wallabies played only six Tests in 2020 and RA was forced to split profits with New Zealand and Argentina during a condensed Tri-Nations tournament, hosted in Australia.
RA announced an 11 per cent drop in participants during the COVID-19 affected year but reported an increase in junior and female participation.
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