Irish board faces cash crisis

[profitius]

First topic message reminder :

Irish board faces cash crisis


The woes of the Irish economy has impacted on sales of five- and ten-year debenture tickets meaning the Irish Rugby Football Union is facing a deficit of €26 million (£22m) on projected revenue figures.

The board had expected to make around €40 million (£34.5m) from the sale but only managed €14 million. Less than half the 3,700 tickets that recently went on sale for €9,000 and €5,500 were actually sold and these will now be made available on a match-by-match basis.

The news means the IRFU will have to borrow to fund the professional game and hope that sales improve and IRFU chief executive Philip Browne admitted this will mean the the funding of all professional squads will need to be reduced.

"We've been to the market and the it has said what it has said, we sold just under 50% of the tickets," Browne told the Irish Times. "We will all have to tighten our belts but we are going to continue to operate at the levels we are at. We will continue to fund four professional teams and the national team and the domestic game.

"It is business as usual we are just going to have to borrow to fund that cash deficit over the next six years."

Treasurer Tom Grace told the IRFU's AGM that borrowing was the only option as operations were heavily dependent on the national team and the income it brought.

"[They're] the key provider for all activities undertaken by the union. Without the dividend this generates there would be no IRFU funding for provincial teams and consequently the branches would be relying on what they themselves can generate.

"There is absolutely no doubt that times are hard but we are extremely fortunate that we have managed our cash conservatively over the last number of years. The disappointing result with the sale of 10-year tickets reflects what is happening in the economy."


http://www.espn.co.uk/ireland/rugby/story/191117.html

Interesting article. Not only is the economy at play but I also believe the lack of demand is down to how the team have played over the last 3 years. Would you pay big money to watch that rubbish? I wouldn't even if I was a millionaire.

[Exiledinborders]

Perhaps the IRFU should go with the PRL's proposals for European competition as this comes along with guarantees of more money from BT.

[profitius]

I saw the figure of €40m mentioned. Either way this news strikes me as the IRFU playing the poormouth again. The tickets poor sales means some millions lost but things are well on target. Funding for the provinces have not been cut at all.


The IRFU made a balls of the stadium. Most people said it when they saw the original plans. As well as having a small capacity compared to most other stadiums they handed the FAI (soccer) part ownership. They should have sold the land (which was worth a fortune) and built a bigger, better stadium somewhere else. They would have had full ownership so charge the soccer for its use, more HEC finals would have been awarded to them, it could have accomodated more fans and of course it would have been easier to get to for fans outside South Dublin ie most of the country. Whats done is done now.

[Notch]

Too sum up our opinion on the IRFUs flagship stadium-

"It's far too small and we can't fill it!"

[Big]

Perhaps the IRFU should go with the PRL's proposals for European competition as this comes along with guarantees of more money from BT.

I had wondered that. Irrespective of whether or not the existing ERC tournament structure is maintained, it does raise questions as to whether they have been too cosy with Sky and have signficantly undersold the rights - to the detriment of their all their members.

[SecretFly]

Too sum up our opinion on the IRFUs flagship stadium-

"It's far too small and we can't fill it!"

Perfect summation, Notch.

"If you build it, they won't come"

[RubyGuby]

[quote="SecretFly"]

"It's far too small and we can't fill it!"

 

[LeinsterFan4life]

We can fill it though. Every 6N game is near full to capacity.

The AIs are a shambles. You literally couldn't put 3 tests at a worst time in the year. Its no surprise they don't sell out.

[Jenifer McLadyboy]

We can fill it though. Every 6N game is near full to capacity.

The AIs are a shambles. You literally couldn't put 3 tests at a worst time in the year. Its no surprise they don't sell out.

They averaged over 70000 in croker.

[Scrumdown]

I'm rather surprised there wasn't more demand for the debentures.

They are extremely popular with welsh businesses at the millenium stadium and you can understand why because there is a certain kudos with being able to offer clients tickets to big sporting or musical events. A debenture holder at the millenium stadium would be able to guarantee a ticket for the rihanna concert held last month.

The WRU currently has nearly £40million of debentures in issue.

Plus, although the price of a debenture appears expensive, it is just a loan and can be redeemed in 5/10 years.

The IRFU probably need to be more proactive in explaining to the irish business community the benefits of holding a debenture.

[Sin é]

The IRFU couldn't owe €130m for the Aviva, since it cost €400m. €200m came from Irish Gov. which leaves €200m between FAI & IRFU which would be €100m if they hadn't paid off anything, which they have. The New Stadium Company sold the name rights for one thing.

Off the top of my head, the IRFU had reserves of €70m to pay for the stadium initially, so owing €30m sounds just about right.

On the Balance Sheet, it says the IRFU's current assets less liabilities is €143.5m. When deferred naming rights, ticket sales etc. are included, the IRFU's assets are worth €52m.

look under note 7 'joint ventures'. re: new stadium limited. IRFU share of non current liabilities of 'new stadium ltd' is €130million.  

You can't just deduct various assets to arrive at €30m!

I don't think we are looking at the same Annual Report. The most recent one (12/13 published last week) has 'Joint Ventures' as Note 8.

https://i.servimg.com/u/f36/16/53/77/41/note8_10.png

https://i.servimg.com/u/f36/16/53/77/41/note8_10.png

[Sin é]

I'm rather surprised there wasn't more demand for the debentures.  

They are extremely popular with welsh businesses at the millenium stadium and you can understand why because there is a certain kudos with being able to offer clients tickets to big sporting or musical events.  A debenture holder at the millenium stadium would be able to guarantee a ticket for the rihanna concert held last month.

The WRU currently has nearly £40million of debentures in issue.

Plus, although the price of a debenture appears expensive, it is just a loan and can be redeemed in 5/10 years.

The IRFU probably need to be more proactive in explaining to the irish business community the benefits of holding a debenture.

There is a lot of competition for the corporate hospitality business in Dublin/Ireland with Gaelic Games, Horse Racing, Golf and several concert venues etc. all being very popular (Croke Park, Aviva, RDS & O2 Arena in Dublin alone). Then the soccer team also has access to the Aviva and they are selling corporate hospitality there as well.

[SecretFly]

With all due respect.... it's the 'debenchures' that have brought us to this point in the first place

Too many benchers not enough genuine alternatives for the big guns who get injured.

The game is and has been the problem.  

Play it (rugby) and they will come.

[thebandwagonsociety]

Are they classic debenture tickets though? Or are they 10 year upfront payment tickets?

I thought it was the latter.

Also, on the liabilities side of thngs, the Aviva naming rights will be in there and they unwind over the years of that deal. This won't be a cash hit to the IRFU, they already got the cash, just an accounting charge. How much of the 130m comes from that (or even strange accounting on the government monies that were put in).

[Portnoy's Complaint]

Forgive me if this article has already been referenced as I've not been following it very closely at all

Code:

24 July 2013 by Tim Groves

The Irish Rugby Football Union has published its accounts for the 2012/13 season and, despite a surplus of 14.9 million euros, is warning that hard times may lie ahead.

The governing body has made clear that the significant surplus is largely a result of an €11.5m compensation settlement from Puma after the sportswear company opted to terminate its sponsorship agreement earlier than expected.

The IRFU is hoping to have a new kit supplier in place before the beginning of the new season but honorary treasurer Tom Grace has warned that without the one-off payment from Puma the figures do not make for particularly positive reading.

“Rugby, like every business, continues to feel the impact of the straitened financial times; as people have less money and more options on which to spend their disposable income,” he said.

“While our current financial performance of €14.9m is welcome, it flatters to deceive, as it is largely due to a once-off item. Stripping this out our net operating cashflow has fallen to a deficit of €4.5m.”

The IRFU’s financial situation is also not quite as rosy as it might have anticipated as a result of disappointing 10-year ticket sales, with reports claiming that revenues have amounted to around €14m instead of €40m, and Grace admits that sales have been low.

“The most striking development of 2012/13 was the impact of the current economic climate on our ten-year ticket renewal which saw just 50 per cent of our 10-year ticket holders renewing,” he said.

“Thankfully the union has been conservative in its approach and we are now in a net cash position. However, as we do not have sufficient cash reserves to cover future cash deficits we now intend to borrow against future sales of 10-year tickets and corporate boxes.

“The union will continue to develop the game but cash is tight and the support from fans is increasingly important in protecting their investment in their game.”

The income from representative matches and elsewhere has only decreased by around €1.5m to €65.5m, with total costs creeping up by roughly €3m to €62.5m, and the IRFU has stressed that funding to Connacht, Leinster, Munster and Ulster remained constant at €23.5m and funding to representative teams, branches, clubs and schools went up slightly to €9.5m.

It is under no illusions about the financial results though and the challenges it faces in the years ahead and Grace is adamant that the fans have a major role to play in supporting Irish rugby financially.

“It is increasingly challenging to raise the required funding to keep our provincial and domestic game adequately resourced and while the €33m spent on the provincial and domestic games are the union’s largest costs they represent an investment in the future of our game, and must be protected,” he said.

“The union will continue to develop the game but cash is tight and the support from fans is increasingly important in protecting their investment in their game.

“The entire game, be it at international, provincial, club or schools level, can only function if we continue to enjoy packed houses at the Aviva Stadium.

“If there is one thing to be learned from this financial year it is that supporting our national team at the Aviva enables the IRFU to continue to make significant funds available to professional and domestic games.”

http://www.runningrugby.com/accounts-funding-and-financial-services/irfu-expresses-concern-over-accounts/

Senior sponsors jumping ship like a corporate Manu, 10-year ticket sales "low", operating cash flow in deficit after stripping out anomalies.

Hard economic times indeed (and no new golden generation of cash cows to milk).

Thankfully the union has been conservative in its approach and we are now in a net cash position. However, as we do not have sufficient cash reserves to cover future cash deficits we now intend to borrow against future sales of 10-year tickets and corporate boxes

i.e. We are intending to mortgage our children.

[Sponsored content]