SA Rugby reports minor deficit despite record income

The South African Rugby Union reported record broadcasting and sponsorship revenues for 2022 but still reported a minor deficit because of its investment to gain entry to northern hemisphere competitions, member unions were told at Tuesday’s Annual General Meeting in Cape Town.

Group revenues increased significantly to R1.54bn (2021 – R1.28bn) thanks principally to increases in broadcasting (R828m from R654m) and sponsorship (R396m from R222m) income.

But, the group’s pre-tax deficit of R2.62m included expenditure of R330m attributable to participation in the United Rugby Championship and European Professional Club Rugby (EPCR) competitions.

Full Bok programme

The increased broadcasting revenues were in part due to the higher value attributed to the 2022 Springbok calendar, featuring a home series against Wales as well as a full Rugby Championship programme.

However, CEO Rian Oberholzer warned that broadcast revenue would be significantly reduced in 2023, in the absence of a touring Test team from the northern hemisphere and of a shortened Rugby Championship programme.

Broadcasting revenues were offset against the participation fees being paid by SA Rugby to gain entry to European rugby.

Oberholzer said: “From being a recipient of nett income from Super Rugby as a founding member of SANZAAR, we are now a nett contributor to European club rugby as our participation costs on the way to once again becoming a nett recipient in the medium term.

“Historically, SA Rugby might nett around R160m from SANZAAR. But we are now in a situation where we are having to pay our way into an already established entity.”

Playing in Europe

Those participation costs – plus the responsibility of carrying all the international travel and accommodation costs of the SA teams – had amounted to R330m in 2022.

Mark Alexander, president of SA Rugby, said: “The continued investment in the URC and EPCR competitions is essential as we carve our way to full membership and shareholding, even though the financial aspect of this pathway is hurting us in the short term.

“The long-term goal and returns that will come will validate this position, both from financial and high-performance points of view.”

Oberholzer warned that SA Rugby would have to continue with austerity measures in its other activities until the successful conversion to shareholder status at the conclusion of the 2024-2025 season.

The return to full rugby activity in 2022 also resulted in a return to pre-COVID levels of investment in the Springboks and other national teams (R347m from R280m) with additional camps and Rugby World Cup warm-up matches for XVs and Sevens women’s teams, Junior Springbok men’s overseas participation, Under 18 series participation among other investments within the department.

The operational and commercial delivery costs associated to tournament commitments (including the URC and EPCR) also increased from R292m to R429m. There was also a significant increase in player insurance and image rights costs from R73m to R104m.

Provincial level

At provincial level, distributions to SARU’s 15 members accounted for R285 million in expenditure, although the return to pre-COVID levels would only be possible in 2023.

“Loans to member unions of R84.7m in the accounts, highlights the need to continually address the financial health of the game – as is being required in every rugby federation in the world.”

Alexander said that the role of private equity investors in the sport at national and provincial level was extremely important and necessary.

“Private equity investment contributes in a significant way to our rugby ecosystem nationally,” he said. “We must ensure that everyone benefits on an equitable basis from our growth as an organisation – and that we don’t kill the golden goose within our franchises in the process.

“It stands to reason that the more we succeed in international competitions, the more marketable we become, and the more all rugby will benefit. We need to address ways to include the private equity structures in our decision-making processes, to ensure that everyone has a seat at the table, and always be mindful of how membership is constituted. I am sure we can find the model that will be to the benefit of the greater good of the game.

“Managing the sport’s finances is a daily challenge but our basic asset – the Springboks and rugby in South Africa – remains a blue-chip resource in the market.”

The full annual report for 2022 is available at www.springboks.rugby/general/annual-reports/