Record investment in Welsh rugby

The WRU’s Annual Report, published here, provides a breakdown of the Group’s financial performance during the year ending 30 June 2018 (“YE18”) and shows match income from the Group’s core economic driver, international men’s rugby union, has also increased, by £9.9m (to £44.9m).

The significant upturn has allowed for record re-investment across the whole of Welsh rugby as well as the retention of £2.3m in profit, part of contingency planning to maintain levels of investment in YE19 where revenues are forecast to decrease.

From a rugby perspective, improved profit margins are largely due to having one more home match in the season at Principality Stadium – a result of the home and away rotation of NatWest 6 Nations fixtures – an inflation matching £1 increase in average ticket price (to £46), increased average attendance (up to 69,000 from 63,000 YE17) and increased broadcast income.

Increased income from non-rugby events at the Cardiff venue, brought in £4.8m (up from £2.1m) and a related increase in hospitality and catering income of £7.1m (up from £12.9m to £18.0m) is added to that secured from hosting rugby internationals (which accounts for 46% of overall income) of £44.9m (up from £35.0m).

Principality Stadium hosted Coldplay, the Rolling Stones, Ed Sheeran (four nights) and Beyoncé and Jay-Z during its concert season, which – when put together with two sold-out World Title boxing bouts featuring Anthony Joshua and FIM British Speedway and Monster Jam – accounts for the largest non-rugby footfall through its turnstiles since it was first built in 1999.

“Our latest set of positive financial results are an endorsement of our strategy and testament to the high level of commitment and hard work of everyone involved in Welsh rugby,” said WRU CEO Martyn Phillips, on confirming turnover has increased by £22.1m, up from £74.9m YE17 and that a £6.2m increase in re-investment into the game improves on £36.6m YE17.

“We have guarded against a boom and bust scenario by putting money aside to cover for a projected loss next year, whilst continuing to improve re-investment throughout the game at all levels.

“The nature of our business means that our revenues fluctuate to quite a significant extent year on year.

“However our ambition is always to maintain, if not grow our investment into all levels of rugby, hence our objective is to allocate modest and welcome increases each year. We know that rugby responds best to affordable, sustainable and reliable increases.

“Whilst we also know that our investments are often viewed through a lens that splits contributions between professional and community rugby, in reality one cannot exist without the other.

“Our investments in clubs and communities safeguard the long term future of the game. Our investments in professional rugby are made with an ambition to drive success on the pitch which in turn drives our revenues.
“Both are interdependent and so, to a degree, any investment is an investment in all forms of rugby.

“It is our key focus to ensure every component of Welsh rugby is sustained as we target success in our senior professional game, to increase participation and engagement across the whole game in Wales and to ensure success off the pitch in the business of sport, event and venue management.

“We know that it is a tough environment out there and that, whilst some clubs are thriving, others are feeling the strain and new impetus in the year ahead will be provided to helping those clubs who are struggling.

“We have had a record year for non-rugby event revenue and will continue to drive this side of our business with new event formats being explored.

“But, whilst we have had a good year financially, we haven’t shied away from making the more difficult decisions and removing previous compromises – a move that will benefit the future sustainability of our game.
“Our core purpose focuses on laying long term foundations to deliver a sustainable future for rugby in Wales.”

The re-investment in Welsh rugby of £42.8m is shared amongst the community game, which is up from £8.7m to £9.1m; performance rugby (managing age-grade structures, the national 7s sides, player development referee costs, national centre of excellence and insurance), up from £5.2m to £5.5m; and the regional game.

The Report includes the Dragons for the first time as they now form part of the WRU Group, with the Group having acquired the relevant trade and assets and all of the land and other assets at Rodney Parade in late June 2017.
The other three Welsh rugby Regions, Cardiff Blues, Ospreys and Scarlets received £20.5m between them whereas in YE17 £21.0m was divided between all four entities.

“We have concentrated on putting the right foundations in place at the Dragons, which is run as an independent subsidiary with its own Board,” said Phillips.

“This work is largely complete and next season will be about continued evolution, improved performance on the pitch and improved commercial performance off it.

“We have also been engaged in ‘Project Reset’ for much of the year.

“The purpose of the project is to implement a strategy whereby the five professional entities (Wales and the four Regions) work together to ensure that, ‘the whole is greater than the sum of its parts’.

“The key principles are increased collaboration from both a rugby and commercial perspective and to share in order to drive productivity improvements.

“We will collaborate effectively and a find a way to work more closely whilst still preserving the identity and tribalism necessary for competition on the field and co-operation off it.

“The challenge will be to preserve the fundamental elements of our sport which pit us, necessarily, against each other in competition at different times during this collaboration process.

“And we are also very conscious that we need to improve the connection between community and professional rugby at a local level – another key ambition of this project.”

Although the Group is able to report a strong financial year it has retained profit of £2.3m in order to maintain re-investment in the game in YE19, when it plans to invest more than its earnings and therefore record a loss.

Phillips explains that whilst some 482,000 attended Principality Stadium to watch Wales play in YE18, compared to 377,000 in the prior year, and the stadium’s event list bulged, the forthcoming season is expected to produce a smaller yield.

“We know our income will decrease next year with a narrower window for concerts due to World Cup warm-up fixtures and a number of other factors, but have of course planned for this eventuality,” he added.

“Our clubs are the lifeblood of our game and we very much hope that investments such as ‘game on’, rugby festivals and our focus on women and girls’ rugby will see our clubs busy all year round in the season ahead.

“As always there are notable challenges: the need to stay relevant as a sport for consumers who have more choice than ever; the quickly changing broadcasting and digital landscape and the shift in how commercial partners invest in sport.

“We are also constantly balancing the need for short term funding with a determination to make the right decisions for the long-term health of the game.

“Record revenues, delivered through the growth of our national game, effective marketing of Principality Stadium as a multi-purpose venue and multiple success with event execution, have provided a significant boost this year, but as the speed of change gathers pace we are determined to remain ahead of the game on all fronts.”