Statements, Accounts and the WRU

With the usual fanfare and seemingly on message spiel it was with no small amount of bemusement that I read the BBC article on the WRU’s “record” investment into Welsh rugby. Having perused some of the quotes included, I deemed it better perhaps to go direct to the WRU’s website to get further information.

Their article detailing all of their investment does, on the face of it, make very positive reading for the WRU. It is only when you dig deeper, and look at the accounts themselves that the concerns start to show themselves.

Take for instance this line in the article released by the WRU* (Please see edit note below):

“”£16.9m distributed to the four Regions from ERC and RaboDirect tournament income plus c£6.4m directly from the WRU”

This is what it should say:

“£16.9m distributed to the four regions, from ERC and RaboDirect tournament income plus c£6.4m directly from the WRU” 

Or even better:

“£16.9m distributed to the four regions, made up from ERC and RaboDirect tournament income plus c£6.4m directly from the WRU” 

Minor differences perhaps, where the simple use of a comma can make a world of difference but it is an important one.

The line included in the WRU article lends to the reader the impression that a total of £23.3million is provided to the Regions. This is simply not true. It is in fact a total of £16.9million made up from the money owed to the Regions from ERC and RaboDirect competition money (c£9.5m), the c£6.4m from the WRU and the one off £1million pot of money that the Regions can apply for funds from to aid them in retaining International players (although there is a lack of clarity as to whether that can be used or not without all four regions signing up to a new agreement).

In this instance I will allow for a simple typographical error on the WRU’s part, yet despite requests via social media it has yet to be changed, and while the error is small, it is hugely misleading to those reading it as per the allocation and realistic figure of funds that the Regions receive.

Now we move on to the accounts themselves. I confess that accounts tend to baffle me, yet even I am able to discern a few worrying issues.

With regards to the money from ERC and RaboDirect tournament income, it would appear that the WRU is including this in their turnover and in their “record” investment in to Welsh rugby. You have to stop and ask yourself for a moment how on earth it is possible that they are doing this? This money is the Regions’ money. It is generated by the Regions, for the Regions. The WRU are simply acting as the distributor, and it seems strange that the funds can be included in their turnover or investment figures.

Another issue; the WRU’s debt has in fact increased. Considering the message coming from Roger Lewis and Co that the debt repayment is the number one priority at the moment for the sustained financial future of the WRU, it is hugely worrying that this has happened. With the debt increasing, this means that the level of re-payment will also increase and if the WRU are not quite meeting those levels now, where are they going to find the extra money from? Looking at the accounts it appears that the remaining re-payment of £2.4m that was due by 30 June 2012 was not made and instead the payment of that is to be split into further instalments to be paid over the next two years. It seems strange that they were unable to make this re-payment and yet have been able to announce that they have made a profit this year. It would be helpful if they could elaborate further as to why this re-payment date was missed.

The WRU have also spoken a lot about running a business in times of austerity. The PWC report rightly highlighted that Welsh rugby (notably the Regions) had to make changes with regards to how they operated and indeed we have seen massive changes at all the Regions with regards to personal, wage caps and reducing the overall costs of running their businesses. It seems perplexing then that the WRU are flying in the face of this and have in fact increased its payroll each year to £9.4million (an increase of 14%), and all of this with an increased debt and reduced turnover.  

If this increase in staffing is mainly in the running of community and rugby developments then that at least is a positive step, but with the Chief Executive’s wage increasing from £321,000 to £337,000 it does make you stop to think just where and who these increases in wages are truly going to. Perhaps in this some greater clarity is needed.

These are all worrying things to find, and not something that should be ignored or trivialised.

There is a lot of good in what the WRU are doing; the investment in infrastructure at international level is excellent. The grant scheme for the community game also seems to have been received very positively.

But the fact that they are implying that the money owed to the Regions has actually in some way come from them, that their debt is increasing, that their costs are increasing and that their turnover is down (although a large part of this can be attributed to having one less home game in this year’s Six Nations) is not something they should be hiding from their investors in what is a one sided article that is cherry picking only the positives (sometimes ambiguously) from their accounts.

Transparency is needed more than ever in Welsh rugby in an age where the political spinning of figures is abhorred and with the threat of the European Competition failing, finances in Welsh rugby is at the forefront of the minds of everyone involved. Indeed, it would be up to the WRU to provide the stop gap in revenue for the Regions if they were to lose this part of their income.

One thing the WRU could do is to support the Regions if they were to seek entry or the means to establish themselves into a new competition. It would allow the Regions to generate an increase their income and help them to “fulfil their potential on and off the pitch”. This would help relieve any future pressure on the WRU with regards to funding any financial losses and helping to keep the Regions solvent.

However the latest statement from the WRU appears to put a dampener on that idea. They state:

“The Welsh Rugby Union wishes to clarify that it will not grant permission for any of its clubs or Regions participating in future tournaments which do not have the full approval of the IRB and the WRU”

It is difficult to know just where this leaves the Regions. It seems that they could well be unable to go down the rebel route of joining in with the English and the French, yet without a European competition for next year it is difficult to see just how they can survive. The WRU must look at what is important for the future development and survival of the professional domestic game in Wales; and that is to help the Regions survive. We have already seen in recent years just how well the Regional setup works in contributing to a successful international side. If the WRU do not do their part in aiding them, it could be helping to enforce a process of demise that could truly see devastating long lasting effects in Welsh rugby.

WRU article on their accounts: http://www.wru.co.uk/eng/news/28323.php#.UkR6o4Z_6EM

WRU accounts: http://www.wru.co.uk/downloads/ARA_Final.pdf

WRU Statement: http://www.wru.co.uk/eng/news/28341.php#.UkR48YZ_6EM

*EDIT 11.25pm: Since publishing this article at 7.46pm, the WRU have amended the sentence to this:

“£16.9m distributed to the four Regions from ERC and RaboDirect tournament income including c£6.4m directly from the WRU”

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s