Exclusive RFU chief warns of further £20m cuts over next four years
Chief executive expects revenue to fall by £60m Twickenham naming rights will not be sold
Steve Brown, the Rugby Football Union chief executive, has defended the swingeing cuts that led to 60 members of staff being made redundant – but warned that the sport faced further savings of up to £20million in the next four years.
In an exclusive interview with The Daily Telegraph, Brown claimed that financial forecasts had left him with no choice but to act “no matter how hard it would be”. The £5million annual cuts will start next July. Brown also admitted:
RFU revenue was expected to fall by £60million over the four-year World Cup cycle;
England head coach Eddie Jones would not be allowed to overspend on a ring-fenced budget for the World Cup in Japan;
Twickenham naming rights would not be sold after the RFU signed a “seven-figure” stadium deal with British Airways;
The artificial-grass pitches programme, a key legacy investment from the World Cup, would be stopped for at least a year.
Reflecting on a turbulent first year as chief executive, Brown said that if spending and staffing levels had been left unchecked then it could have resulted in an “Armageddon situation” which would have led to a drastic drop in investment and painful cuts to the grassroots game within two years.
It is understood the RFU is also budgeting for a loss in excess of £10million in its business plan for 2019-20 because of the costs associated with the World Cup in Japan and the absence of autumn Tests at Twickenham.
Spending on the redeveloped East Stand has soared from an original budget of £54million to more than £80million largely because of firesafety requirements in the wake of the Grenfell Tower disaster and extra security requirements.
Brown ruled out any further redundancies, which hit the community game the hardest but also included many senior staff, including the RFU finance director and head of strategy and corporate affairs, but admitted that tough times still lay ahead.
“It is not going to be easy,” said Brown. “We will have to get to a level of rugby investment that is lower than we have had in the past and we will show losses.
“We will have transactions that look worse than they are in our annual reports. But the fundamentals will remain the same. We effectively report like a public company, we are fully audited and all the checks and balances are there.
“We will invest everything we make or save back into the game but we just have to take care looking forward that we don’t end up in the situation where we have to make drastic decisions in a very short space of time.
“If you were in an Armageddon situation, it would have been really tough and a drastic drop rather than a progressive softening. That would have been very painful even though the union would still have been in a good position.”
Brown, who was the RFU’S chief financial officer as well as briefly acting CEO in the six years before his appointment last September, said it would have been easier for him to maintain spending levels in his first year in charge but felt compelled to act within months of taking over.
“The question in my mind was, had we got a bit too big as an organisation compared to what we were trying to achieve in the community game?” said Brown. “The bigger, more significant, piece was when we started to see what was happening in the commercial world: there was the general hum of things like Brexit – there was uncertainty in certain sectors and they are the people that pay for rugby and the people that invest in our game.
“But I think it was the Premier League football deal that sent a signal last December. Although it was still a massive number, there was quite a big chunk taken off that and what it was telling us is that highcompetitive tension for very valuable rights was starting to change.
“For me, it was a no-brainer but I also knew what was coming as well. It was going to be a tough, tough position but I have no issue with that because it was the right thing to do.”
Brown’s decisions were a hard sell to the game, given that the RFU had raked in record profits of £30 million from the World Cup just a year earlier and a one-off cash injection of around £20 million from the catering and corporate hospitality deal with Compass.
The question asked most by Brown’s critics is simple: where did all the money go?
“All the money we generated, as approved in all the plans that the council and board had seen, and as received by the game, went into the game,” Brown replied.
“The most compelling point is that if we had gone back one or two years and I had stood up as CFO or CEO and said, ‘We have currently got £50 million in the bank from the World Cup and we are thinking of not spending it on the game because we think there is something coming down the road’, I can guarantee that we would not have been allowed to do that.
“People would have said that you can’t starve the game of investment. The professional rugby clubs were saying the players are costing more, we are losing money and are investing our own money to drive England’s performance ultimately.
“The community game needed more facilities and support to drive participation. If we had sat there with £50million, I think we would all have been fired, frankly.
“Starting in the year 2007-08, £170 million was invested in the game in four years. In the cycle that we have just finished in 2015-16, it was £330million. In the one that we will finish in 2019-2020, even with the adjustments, it will be £400 million.
“So, we are not collapsing or crashing and burning, we are coming off a base that has been much higher and not for that long.
“But to get down from investing just over £100 million every year down to around £96million, we do have to make some changes. We will be spending less on rugby, no question about it.
“We can rule out more people cuts at this stage because we have made that decision and moved on and that was the hard bit. But what comes next is that we need to be much more efficient and effective in what we do.”