IRFU report deficit of almost €36m as Covid-19 impact laid bare in accounts

Tom Grace, the honorary treasurer of the IRFU, has painted a bleak financial picture in his annual report with an emphasis on the enormous losses incurred by the ongoing ban on supporters from attending matches.

“The union suffered a deficit for the 15 months of €35.7 million,” Grace states. “Income falls from €87.5 million to €79.2 million whilst expenditure increases from €84.2 million to just under €115 million.

“The last six to eight months have been extraordinary and outside the experience of most, if not all of us, and not surprisingly this has had a significant impact on our accounts,” writes Grace, who stands down from his position after 13 years guiding Irish rugby to a record surplus of €28 million in 2019.

“Normally at this point I would be saying that Rugby World Cup distorts our result when compared to the previous year but this impact is dwarfed by the effect of Covid-19 and the change to our accounting period.”

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This year’s accounts were extended to a 15-month period, up to July to ensure a closer alignment with the provincial branches.

Gate receipts fell by €5.8 million in the 2019/20 season due to the replacement of the normal three Test series in November at Aviva Stadium with two World Cup warm-ups in August 2019, while the postponement of the Ireland versus Italy last March had “a further significant impact”.

“The greatest impact however is that with no crowds permitted in the foreseeable future branches have not been able to sell their season tickets and as a result will not be able to pay their share of player salaries to the union,” Grace reports. “As we have seen this resulted in a €16 million movement in bad debt provision for the union and this amount will continue to grow month by month unless remedial action is taken.”

As a direct result of this financial uncertainty, the IRFU high performance director David Nucifora has not begun contract negotiations with Johnny Sexton, Tadhg Furlong, Iain Henderson, CJ Stander, Peter O'Mahony and Keith Earls, all of whom are out of contract in June 2021.

“The IRFU has prided itself on being able to adapt to changing financial circumstances and whilst the scale of the challenge facing us is enormous, I am confident that we can meet it but there will be pain across all aspects of the game,” Grace, a former partner with PwC, continues. “It is essential that we emerge from this crisis in a strong, competitive position and the union will continue to work toward that end.”

Grace adds: “The decrease in net assets of over €36 million is almost entirely due to our loss for the year.”

The union’s fixed assets amount to just over €23 million after purchasing their headquarters at 10/12 Lansdowne road following the sale of land at Newlands Cross in 2018.

“The decrease of €22 million in debtors and prepayments is due to the bad debt provision movement of €16 million, no broadcasting amounts due at period end together with reductions in corporate box and ten year ticket debtors.

“We have been very fortunate that almost all of our commercial partners have maintained their financial relationship with us throughout this crisis and we are profoundly grateful to them for their support.”

Philip Browne, the IRFU chief executive, struck an equally downbeat tone in his report: "It is no surprise that Irish Rugby has experienced one of its worst financial years ever. Covid-19 will continue to challenge us all until a vaccine is available and we are very grateful to the government, our sponsors and our patrons for continuing to stand with us at a time where we are unable to fill the Aviva Stadium with our fantastic fans.

“At a time of despair for many, sport can provide a welcome distraction to the reality of our situation. Over the coming weeks our women and men will pull on the green jersey to represent us all, and in doing so will give many of us all a welcome lift out of the doom and gloom of Covid-19, even if just for a short while.

“Application is also being made to a special emergency fund of €40 million to be used to support the GAA, FAI and IRFU and their clubs. What this does is buys the IRFU sufficient time up to December 2020 at which point we may have a clearer line of sight as to what the outlook is in terms of returning spectators to matches and some semblance of normality. There will need to be a careful review in December to assess whether we can continue with the current level of activity.

Browne adds: “Whilst the provinces and the IRFU are currently solvent, that ultimately is a time limited situation and unless there is a return to some level of normality within the next 12 months, with matches being played in front of some reasonable level of paying spectators, the IRFU and the provinces will have to drastically cut their budgets to ensure costs are covered by the lower revenues.

“The return of the game is in a fragile state and a major outbreak of the Covid-19 virus could set us back.”

On the 2019 World Cup disappointment, Browne says Ireland were “out played and out thought by an excellently prepared Japan team” before being “overpowered” by New Zealand.

The “underlying reasons for the failure to progress beyond the quarter-final stage” included a game plan that needed to evolve after the success of 2018, injuries and “over focus on what was seen as a key match against Scotland.”