PLUS: RECORD WRU REVENUES
THE Welsh Rugby Union has posted record revenues and reinvested its highest-ever amount back into the game at all levels.
For the financial year to the end of June, 2016 – which in October saw Martyn Phillips take up the reins as chief executive from Roger Lewis – the Union generated revenues of £73.3m, representing a rise of 13% on the previous year.
Total investment in the game was up from £29.7m in the previous year to £33.1m.
It also reduced its net bank debt from £14.2m to £11m – largely achieved through a focus on working capital management and reduced capital expenditure.
The total investment in community clubs increased by 16% from £6.8m to £7.9m, principally due to the investment in the school club hub programme, in digital strategy costs associated with a decision to better promote the community game and facility grants.
The investment in the Premiership increased by 14% to £1.6m, while investment into the four professional regions rose 12% to £19.3m.
The group welcomed 346,000 (2015: 395,000) rugby spectators to the Principality Stadium during the year.
The average attendance per match was 69,000 (2015: 66,000) and equated to an average of 93% (2015: 89%).
The average ticket income per attendee at matches held at the Principality Stadium was £39 (2015: £47).
It was partly able to reinvest more into the game as a result of a refinance deal with Barclays in the summer of 2015, which released a longterm £10m liability in the unlikely event of the Union selling the Principality Stadium or refinancing the debt with another bank, as well as other more favourable banking arrangements.
While the net bank debt was down, the Union’s revolving credit facility of up to £20m with Barclays constantly fluctuates during the year.
While most of its major TV and sponsorship deals are in place for the long term, the current shirt sponsorship deal with Admiral expires next summer.
The Union is currently talking to a number of interested parties about a new deal, which potentially could see the FTSE 100 insurance giant Admiral renew for the third time.
The Union is also exploring the possibility of utilising hospitality boxes at the Principality Stadium, not let out for the long term, as serviced accommodation space for businesses.
Its joint venture company with Compass, MSEL – in which the WRU has a majority 83.5% equity stake – also increased hospitality and catering revenues at the stadium during the year to £11.4m from £8.2m.
Mr Phillips said “We have been able to invest more heavily in all levels of the game, specifically targeting the community game, the Premiership clubs and the regions..
“Our clubs, the community game and all the players, coaches and other volunteers at that level are the lifeblood of our national sport.
“We are proud to be able to say that not only have all the group’s revenues been reinvested back into the game, but that investment is at record levels in each specific case for the regional, premiership and community game, as well as on an overall basis.
“This is pleasing as the percentage growth in the reinvestment in rugby is broadly tracking the percentage growth in revenues.
“Looking forward, we face a new set of challenges.
“On the one hand we are fortunate in that we have a number of strong long-term commercial partnerships,
with Under Armour, Principality [10year stadium naming rights deal] and broadcasting as examples; on the other, we will now need to identify and grow new revenue streams as our need to invest is likely to grow more rapidly than revenues.
“Our first and most obvious focus will be to drive an increased number of events at Principality Stadium.
“Additionally we are trialling an office rental option for local businesses who can utilise our hospitality boxes as office space. We will also look to increase merchandise sales, stadium tours and we are considering implementing a rugby museum.”
During the year there was a £2.5m rise in Welsh national player squad costs. However, the increased remuneration was due to participation in the Rugby World Cup, bonus payments for finishing second in the RBS Six Nations Championship – third a year earlier – and the costs of touring New Zealand when there was no summer tour in 2015.
For the October-to-June period, Mr Phillips had a total remuneration of £254,000.
Group finance director Steve Phillips said: “We are delighted to once again be able to report a financial performance robust enough to increase our level of reinvestment into Welsh rugby. As a result of the refinancing in June 2015, the net assets of the Group significantly increased and the financial covenants of the new arrangement were improved in favour of the Group.
“Consequently, we have now taken a strategic decision to seek to reinvest more into the game rather than retaining any profits to enhance net assets.”
The retained profit for the year was £100,000, compared to just over £12m a year earlier.
Chairman Gareth Davies said: “We are very conscious of our responsibility to community clubs.
“We will always look to increase our support for clubs and we will increasingly look to facilities grants as the vehicle for us to do this.
“Helping clubs to invest in their facilities allows them to become more attractive to their local communities as a social hub.
“We want to ensure that our clubs are at the heart of their communities which particularly attract families, women and children.”
The WRU has liabilities relating to debenture repayments, due up to 2050, of £37.6m.
During the year it received a business rates rebate of £400,00 on its national academy facility in the Vale of Glamorgan.