The impact of the spectator-less pandemic at the Principality’s stadium and the loss of lucrative hospitality income has seen the Welsh Rugby Union take a £ 22million hit on its income, according to its latest year-end accounts .
The union, which is optimistic about the prospects of strong ticket sales for the next international autumn series and the return concerts at the Principality’s stadium, was able, thanks to the mitigation of costs, to post a small profit before taxes of £ 400,000 (loss of £ 7.9 million in the previous year) for its most recent financial year ended at the end of June 2021.
Without 350,000 spectators, the union generated revenues of £ 58.1million from £ 79.9million a year earlier – although this was also hit by the pandemic with the cancellation of the last game of the Wales in the Six Nations against Scotland, which was then played behind closed doors for the last time. fall.
Ahead of the pandemic, in the WRU’s 2018-19 fiscal year, and as, like last season, Wales played two home games in the Six Nations, the union generated $ 90 in revenue, £ 5million.
Last year’s revenue losses were offset across the group by a significant reduction in operating costs, to £ 27.2m (2020: £ 40.3m), and trading costs and administrative, which fell 30% to £ 6.9million.
The majority of the group’s income, 69% (2020: 78%), comes from the organization of international matches and related business activities.
Revenue from the match was reduced to £ 22.6million (2020: £ 33million) as all home games were played behind closed doors, although commercial revenue increased to £ 20.2million. pounds sterling (2020: £ 15.4 million).
As a result of its impacted revenue, gaming investments across the board have declined to £ 34.6million (2020: £ 47.5million).
The three regions – Gwent Dragons are owned by the WRU – in the, Ospreys, Scarlets and Cardiff Rugby, were originally facing a total settlement of £ 3million, but a union payout of £ 2million and the Compensation for a shortfall in competition revenue, saw them sharing £ 12.5million (£ 25million a year earlier). The union was also able to pass on £ 20million in response to Covid which it negotiated on behalf of the four regions.
This consisted of £ 18million funding for the Large Business Coronavirus Interruption Program (CLBILS) from its existing banker at NatWest Bank, as well as £ 2million funding from World Rugby.
Under the CLBILS, set by the Treasury, the amount must be repaid within three years.
WRU said they were confident they would refinance both loans with the Welsh government, with a new term comparable to that of the English clubs to which the UK government has offered 20-year repayable loans.
On the latest accounts, WRU Group CFO Tim Moss said: “The group’s result for the end of 2021 has again been heavily impacted by the disruption caused by the Covid-19 pandemic.
“This included all Six Nations and Fall Nations Cup games that were held behind closed doors and no third party events were staged.
“We kept a small profit, which partly offsets the large losses of the previous year. Saving this small profit was an achievement in itself and is largely due to the efforts of our employees, our cost mitigation efforts and the support of the Welsh Government.
“During this time of unprecedented disruption, the group has taken decisive action. Non-core costs have been reduced and non-core and uninvolved capital expenditures have been reduced. We have sought to protect the long-term health of the company by reducing the salaries of senior executives and most other employees by 10-25%.
We have used the UK government leave program and sought support from other sources of government grants.
“We have also secured tariff relief for group properties and, with the natural reduction in costs resulting from the reduction in rugby activities, these measures have contributed overall to around £ 16.3million for the year,” compared to around £ 1.9million for the year. before.”
On the refinancing of the £ 20million CLBILS loan transferred to the regions, he said: ‘Discussions are underway with the Welsh government to refinance the £ 18million financing with NatWest, repayable over three years, but also including loan with World Rugby.
“It will be a struggle for us to repay £ 20million in three years, which is why these conversations are underway to fit this into a more sustainable repayment plan. We want something comparable to what RFU and Premiership Rugby have with their 20 year funding terms. “
The Welsh government could potentially refinance the £ 20million with long-term, low-interest repayable loans through so-called financial deal capital. This is where it can provide finance, and it has made significant investments to the Development Bank of Wales in this regard, provided it can guarantee payment of the interest in return.
The first repayment of the CLBILS loan to NatWest, for which the regions were responsible, was covered by WRU, pending it could refinance the debt. This amounted to just over £ 5million.
With New Zealand’s game in October already sold out, Mr Moss said games against South Africa and Australia also have the potential for capacity crowds.
He added: “We are definitely optimistic for the coming year and there is a huge amount of positivity right now. Our fall sales are going incredibly well. New Zealand is sold out and South Africa and Australia are also doing very well. There is definitely a chance that we will sell, although there is a lot to be done to get there. The fact that New Zealand is already sold out will help boost sales of two incredibly attractive devices.
“So we are very happy with the current sales situation, especially since there is still a pandemic going on. If we get anywhere in the 60s (60,000), we will all be happy with it. If we can push this higher, which there is a chance to do, then I think we’ll all be happy.
“Looking forward to fall, we also announced two concerts with Tom Jones and the Stereophonics. It also shows the versatility of the stadium as we can organize the fall internationals and then a few weeks later turn it into two nights of concerts. “
The syndicate’s net debt, which is defined as bank loans, bonds, finance lease obligations less cash balances, stood at June 30, 2021 at £ 114.4 million (2020: 75, £ 6million). The increase for the year is mainly due to the CLBILS loan as well as to financing by leasing specifically for the development of the Union Parkgate hotel next to the Principality stadium. The hotel, which will be operated by Celtic Manor, the cost of which is funded by more than £ 40million in long-term repayable funding from financial services giant L&G, will open next month.
The WRU is confident that the hotel can generate a profit, close to £ 1million per year, after factoring in the annual reimbursements to L&G and the hotel management costs of the Celtic Manor Resort.
Mr Moss said all facets of the game in Wales have come together to ensure its survival during the pandemic.
He added: “The fact that we still have the same number of clubs that we had when we entered the pandemic is an incredible testament to the volunteers and the people within these clubs who make them tick.
“It was the efforts of everyone across Welsh rugby, from the community clubs and volunteers, to the regions, our players who have suffered salary cuts and the staff at WRU, that have helped us through last year. Although we did not stand out, there is a lot of optimism for the future. “