The Financial Challenges Facing Irish Rugby

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O’Brien recently delighted Leinster fans and his cattle with the news he would commit to the province, and his farm

It has been a welcome few weeks for Irish rugby with the announcement that O’Brien, Heaslip, O’Connell and Earls have all committed there medium to long term futures to their provinces. While the latter two were realistically never going anywhere there was genuine surprise that the IRFU were able to hold on to both O’Brien and Heaslip. Both made it clear from the outset that they wanted to stay but as is the general theme in European rugby these days, money was the underlying concern. Coming off the back of other player contract renewals including Conor Murray announced before Christmas, it has been a busy few months.

When O’Brien signed a new contract, I like many felt that it would result in Heaslip departing for the Mediterranean. In truth Heaslip always seemed a more natural fit for Toulon. A top player in the Autumn years of his career, a self-confessed culture vulture and a player with an excellent injury profile, it seemed as if the lure of Toulon would prove irresistible. While question marks remain concerning the IRFU contracts process, the Union has worked very hard and deserve great credit for retaining these talents.

While I am delighted, I have found myself asking can the IRFU realistically meet the expectations of the established and emerging talents in the future? For example, what happens when Cian Healy’s contract is coming to an end? There will undoubtedly be interest from France and will the IRFU have the funds to meet his valuation? While various sums have been reported for O’Brien and Heaslip it stands to reason that the Union had to increase their budget to meet their demands. This week we saw an increase in the Premiership club salary cap to £5 million and we can only assume that the French will continue to be a financial powerhouse in Europe.

Tom Grace 22/7/2011

Tom Grace

Some might ask, so what? Increase the budget to keep key talent in Ireland. I broadly agree but only if it is financially viable and ultimately sustainable. Based on the most recent financial statements from the IRFU, this however does not appear to be the case. In the 2012/13 IRFU Financial Statement from the IRFU, Tom Grace Honorary Treasurer states that future outlook for the Union has “significantly disimproved”. Grace doesn’t pull any punches and a top-line review of the figures shows a decrease in income combined with a general increase in costs. These trends set within the context of a challenging economic climate point to a difficult few years for the Union.

Overall the Union reported record a surplus of €14.9 million in 2012/13 however this was due to an exceptional one of income settlement of €11.5 million. While the balance sheet is stronger, when the layers are peeled back, the Union actually suffered a cash deficit of €4.5 million. It is worth noting that there were standard reasons for decline such as the absence of a Rugby World Cup etc. which will balance out in the future. Overall however the Union has witnessed a decrease in revenue across the board combined with a general rise in operational costs. Areas such as sponsorship, Government funding and property assets are just a few of the areas to see a decline in income.

The IRFU had hoped to raise €40 million with the sale of ten year tickets but ultimately only raised €14.5 million, an incredible over estimation of the market which has resulted in the need to take on significant debt of €25 million to fund the shortfall. This combined with the need to find a new sponsor to cover the loss of PUMA (reported to be Canterbury and nowhere near the value of the PUMA deal) and the reported financial difficulty of Connacht and Munster all points to a challenging future. These are just a sample of the issues and make no reference to the ongoing challenges being faced domestically at club level. The 2013/14 statements will make for interesting reading.

Kearney

Dave Kearney recently cast doubt over his Leinster future. While undoubtedly a bargaining ploy it is indicative of the IRFU predicament. A player of potential but with a lot to prove stating he has options abroad

This brings me back to individual player contracts where I believe the IRFU may become victims of their own success. Since the introduction of the professional game in 1997, the Union has worked hard to put in place the structures required to develop indigenous talent at domestic level to the ultimate benefit of the national team. 6 Nations and provincial success on the European stage is evidence of the success of this work. The IRFU deserve huge credit with Heaslip, O’Brien, Earls, Murray, Healy, Henshaw and Bowe just a small selection of players who are perfect examples of this ongoing work. The IRFU 2008-12 and 2012-16 Strategic Reviews both recognise this success and need for further development. Ultimately the aim is to build a pathway by which all underage players can develop to achieve professional careers within the game both domestically and nationally.

Halfpenny

Leigh Halfpenny. The latest Welsh front line player to opt for foreign soil. A clear warning to the IRFU?

These documents are potentially excellent strategies to guide the development of emerging talent however they make no reference as to how established players can be retained in Ireland. Ultimately it comes down to funding and if the financial obstacles cannot be addressed then there is the potential for the clubs/provinces to essentially become feeders, providing high quality players and near finished players to other European leagues.

Add the uncertainty concerning the Celtic League and Heineken Cup to the financial question and you have a perfect storm on the horizon. With the prospect of a 2023 Rugby World Cup in Ireland, the last thing anyone wants to see is a primarily foreign based Irish XV. If however the IRFU cannot overcome its current financial issues I fear that we could end up developing a high quality conveyor belt system that ultimately prepares players for life abroad.

 Comments and abuse welcome to @dbkinch or below.

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