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'We're spending tomorrow's money today in order to keep afloat'

Journal.ie logo Journal.ie 23/05/2020 Murray Kinsella
a group of men playing a game of football © James Crombie INPHO

A VIDEO CALL on Microsoft Teams – with all of the customary pauses for unmuting or someone’s wifi slowing down – might not be the ideal setting for getting a message across but IRFU CEO Philip Browne painted a clear enough picture yesterday.

Irish rugby needs to get back up and running as soon as possible. If it doesn’t, the financial consequences will be disastrous.

Even if rugby does get going again with inter-pro games at the Aviva Stadium in August, hopefully working up towards international games in October and November, the Covid-19 crisis will have taken a hefty toll.

Speaking yesterday, Browne underlined that the IRFU and all of professional rugby will need to take cost-cutting measures in the years to come.

Browne warned of “very radical action” with regards to player salaries if Test rugby – the only really lucrative kind – is unable to resume in 2020 and possibly even on into 2021.

In the worst-case scenario, the IRFU could lose out on potential revenues of more than €60 million through to the summer of 2021. They’re already burning through their cash reserves and Browne said that “in a matter of months, we would have to borrow.”

a football player kicking a ball in front of a crowd: The IRFU is planning for inter-pro games at the Aviva in August. © James Crombie The IRFU is planning for inter-pro games at the Aviva in August.

So, getting the show on the road is an urgent matter, which is why Browne confirmed the IRFU’s plans for inter-provincial derbies behind closed doors in the Aviva Stadium on 22 and 23 August even before they’ve actually been given any sort of sign-off by the Irish government. The IRFU simply have to get the ball rolling.

Some of the union’s return to play documents – detailed plans outlining how players and staff will negate Covid-19 risks, testing procedures, and more – have been submitted to the government but there hadn’t been any green light as Browne spoke yesterday.

What was very clear is that the IRFU will be reducing how much they spend in the years to come. Player salaries, which have risen and risen in recent years, seem likely to be most affected.

“The cash we’re using now is actually cash which would have been effectively for the next 10 years – in other words, any monies that would have been received around premium seats [in the Aviva Stadium],” said Browne.

“So, we’re spending tomorrow’s money today in order to keep afloat.

“Fundamentally, what we’re going to have to do is adjust our cost base and there’s no way around that. There’s going to end up being a pretty severe market adjustment within professional rugby around the world. You’re already seeing some of the implications of that. The reality is we’ve got to live within our means.”

At the same time, the IRFU do hope that revenues in rugby will improve as we move forward. CVC buying into the Pro14, and potentially doing the same in the Six Nations, is part of that.

“Obviously in a post-Covid environment, it becomes even more important that we generate those additional revenues but equally important is we’re going to have to readjust our cost base,” said Browne.

Irish rugby players and all IRFU staff are currently on a pay deferral scheme, but Browne acknowledged that those could change to pay cuts if a clear schedule for rugby’s return doesn’t emerge soon.

“The reality is that if we don’t see some light at the end of the tunnel, there will have to be some very radical actions taken if we want to come out the other end of this in one piece.”

There are a range of potential options for the return to rugby in the coming months.

The IRFU’s ideal is inter-pros on the final two weekends of August, then the Pro14 semi-finals, followed by the Champions Cup quarter-finals, a Pro14 final, and the Champions Cup semi-finals by the end of September.

The two postponed 2020 Six Nations games against Italy and France would ideally follow as the new 2020/21 Pro14 season also kicks off, then the 2019/20 Champions Cup final, and on into more international games in October and November.

We can all agree that would be great, but everything is dependent on the Irish government and their counterparts around Europe and further afield. There are so many moving parts to the picture that are outside of rugby’s control.

The IRFU will do everything it can to convince the Irish government of the urgent need to get the industry going again. A Covid-19 testing programme is one obvious part of that.

“It’s not cheap,” said Browne when asked if the IRFU has looked into the cost of testing. “That is going to change as time goes on, I would imagine, and there are also issues of testing capacity and access to testing. They’re all challenges that have to be met.

“There’s still a lot of work to be done. It’s eating the elephant, isn’t it? If you don’t start somewhere, you’ll never eat the elephant. So what we’re doing is trying to chip away at it and find out and establish where the major challenges are and how can we address them.”

Regarding the possibility that some players – particularly those who have family members with underlying conditions – will be hesitant to return to rugby if social distancing still applies for the rest of Irish society, Browne said the IRFU will “be conscious of any players’ individual circumstances”.

Browne added that “as part of their contract, they effectively acknowledge that playing rugby which has some level of inherent risk. To some extent it’s covered already in their contracts but it’s something that we’ll have to look at.”

Getting the professional game going again is the clear priority, of course, but amateur domestic rugby is also on hold as things stand.

With 70 clubs around the country having already applied to the IRFU’s emergency fund of €500,000, Browne called on the Irish government to led financial support to the grassroots game in all sports.

a person in a suit and tie: IRFU CEO Philip Browne file photo . © Morgan Treacy IRFU CEO Philip Browne file photo .

Asked about the IRFU’s promise in 2018 to invest the €27 million land sale fee it received for a site in the Newlands Cross area of Dublin back into grassroots rugby, Browne insisted that has already been happening.

He said the IRFU purchased their headquarters building on Lansdowne Road with the money from that Newlands Cross sale, freeing up the rent that had been going into the Lansdowne Road property to be invested into the domestic game.

“There was an additional €700,000 to €800,000 going into the amateur game as a result of the saving of rent by purchasing the IRFU office,” said Browne.

“It also gives us and the amateur game a bankable asset which is potentially available for the future. So it was about securing an income stream for the amateur game and securing some financial security for the amateur game as well.

“Our cash position is a completely separate issue to the situation with Newlands. The cash from Newlands has been spent and has been set aside for the amateur game.

“The situation in terms of our cash is that in a matter of months we would have to borrow. And no right-minded organisation is going launch themselves into taking on a significant amount of debt unless they understand how they are going to repay it.

“So that is ultimately the issue at the moment, that until we see some clear line of sight, it’s very hard for us to go off and suddenly take out a loan. Don’t forget, taking out a loan, there are certain responsibilities attached to that. You can’t do that unless you have a business plan as to how you’re going to pay it back.

“As it is, we are effectively using 10-year ticket money in the form of cash and we’re probably going to end up spending that now as a part of our cash burn over the next few months.

“The reality is that our cost base is going to have to be adjusted. There is no magic wand where that money that’s been lost is simply going to be found again. It’s lost.”

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