SA Rugby announces modest profit for 2019

David Skippers

SA Rugby have reported a post-tax profit of R8.5million (US$500,000) at the end of 2019, despite the major challenges they have faced.

Those challenges have subsequently been dwarfed by the Covid-19 virus, said the union, but the strict financial discipline the organisation had practised in recent years meant it was able to face the pandemic from a position of relative strength, according to SA Rugby CEO Jurie Roux.

“The measures that we have implemented in recent years allowed us to deliver a very satisfactory result at the end of 2019,” he said. “We improved our overall solvency and financial position through fully impairing all loans, investments or receivables where the recovery of such was in doubt.

“That meant that when the crisis struck our improved financial position allowed us the required time to formulate corrective measures to address the financial challenges unencumbered by any underlying weakness that could have worsened what is an extremely threatening situation.

“If this crisis had hit us two or three years ago it might have been a very different story.

“The pandemic has had the effect of tearing up all our approved budgetary plans but we have taken an aggressive approach to the potential impact of the virus. We have agreed our Industry Financial Impact Plan, which will cut R1,2-billion (US$70588.235) from the budget of the entire South African rugby industry if required.

“It will be painful to endure for all rugby businesses, but it will mean that we will walk from the burning building still intact.”

The pandemic has overshadowed what was another good year for SA Rugby, considering the major challenges other rugby federations and sporting bodies have encountered, even prior to the onset of Covid-19.

Revenues increased by 2.5 per cent to R1.29bn (2018 – R1.26bn) with increases in broadcasting, sponsorship, grants, insurance proceeds, royalties and the Cape Town Sevens event offset by a reduction in Test guarantees due to fewer Test matches, Rugby World Cup performance obligations and the closure of the Springbok Experience Rugby Museum.

Roux said operations continued to be funded by way of a bank overdraft for significant parts of the year and solutions had to be found to address a number of issues, including the loss of a broadcasting partner, budgeted lottery income that did not materialise, further loan impairments and the R62m required to honour player and management performance commitments for winning the Rugby World Cup.

However, the significant World Cup obligation was offset by insurance mitigation plans, while the investment in the rugby department (R372-million in total) was rewarded with a Rugby World Cup victory in Japan.

Financial support for the 14 member unions and player welfare, through the use of player imagery and injury insurance, accounted for another 32 per cent of operating expenditure (R275million).

Roux said: “One of the benefits of our approach is that we go into this crisis with a level of comfort that we can expect the financial support of our bank and key stakeholders in these difficult times.

“We reduced the overdraft from R68million to R7million but we have subsequently agreed an increased facility for 2020 to manage the inevitable cashflow issues create by the pandemic.”

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