SA Rugby are in the red despite record broadcasting and sponsorship revenues for 2022, it was confirmed on Tuesday.
Participation in the United Rugby Championship (URC) and the EPCR competitions – the Challenge Cup and Champions Cup – are credited as the reasons for the ‘minor deficit’.
The costs of participating in European competitions
Last year, SA Rugby posted a small surplus of R8,9 million (around £300,000) following the Springboks‘ return to play following the COVID-19 pandemic.
At Tuesday’s Annual General Meeting, the South African Rugby Union (SARU) told member unions that the investment to gain entry to northern hemisphere competitions led to the deficit.
Group revenues increased significantly to R1.54 billion (£67 million), up from 2021’s R1.28 billion (£55 million).
However, the pre-tax deficit of R2.62m (£113,890) included expenditure of R330m (about £14.3 million) attributable to the participation of the Bulls, Lions, Sharks and Stormers in the United Rugby Championship and European Professional Club Rugby (EPCR) competitions.
The participation costs in both competitions – plus the responsibility of carrying all the international travel and accommodation costs of the SA teams – amounted to R330m in 2022. SA Rugby will continue to carry the costs until the successful conversion to shareholder status at the conclusion of the 2024-2025 season.
SA Rugby also confirmed that broadcasting revenues were offset against the participation fees being paid by SA Rugby to gain entry to European rugby.
The return of a full Springbok calendar aided the increase in revenues with three home fixtures against Wales and a full Rugby Championship programme.
Broadcast revenues to be reduced in 2023
In the statement confirming the deficit, CEO Rian Oberholzer warned that broadcast revenue would be reduced in 2023 with a truncated Rugby Championship and no July Tests.
“From being a recipient of net income from Vodacom Super Rugby as a founding member of SANZAAR, we are now a net contributor to European club rugby as our participation costs on the way to once again becoming a net recipient in the medium term,” Oberholzer said.
“Historically, SA Rugby might net around R160m from SANZAAR. But we are now in a situation where we are having to pay our way into an already established entity.”
Long-term investment
SA Rugby president Mark Alexander further explained that this was hurting the union in the short-term, but the long-term returns would be beneficial.
“The continued investment in the Vodacom 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,” he said.
“The long-term goal and returns that will come will validate this position, both from financial and high-performance points of view.
“Our participation in the Vodacom URC and EPCR happened in quick succession and came at a significant cost to SARU, but the commercial opportunities to be realised within the next two to three years will render the competitions profitable and strengthen the financial sustainability of South African rugby.”
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