Ulster in Financial Trouble

[Sue Dename]

Someone is telling porkies

Ulster financial report for 2018/2019 states

Revenue £10.6M up £.4M
Gate £3.2M down £0.1M
Sponsorship £2.9M up £.18M
Grants £2.4M
Players and Teams cost £5.9M up £.8M

There was an an accounting change from year end April to year end June which brought forward costs and changed £.8M surplus into a £.2M deficit which left a casg surplus of £1.6M.

So the Grants of £2,4M will have been recieved this year, the season ticket money from 8600 season tickets and the Sponsorship of £2.9M, assuming the same as the last financial year is in the bank, plus the gate receipts from the home matches played before the crisis.
There are no outstanding loans and no rent to pay plus all players wages have been deferred and staff have been furloughed so I have to disagree with Ulster being on financial trouble the numbers speak for themselves.

£1.6M in the bank
£2.9M in sponsorship
£2.4M in grants
£6.9M

Cost of the teams £5.9M so that leaves a surplus before the season starts of £1M plus season ticket payments and Gate reciepts.

I think whoever is telling you this is talking through their rear as FIRFU have just over 70M Euro in cash and Ulster are part of FIRFU so neither Ulster nor any of the other provinces will be allowed to fail

I think you are sadly deluded. The headline 'Ulster in Financial Trouble is as accurate as it gets.

[Setanta]

Methinks I believe ScottishBrian rather than Sue Dename!!!

[WestDr]

No doubt Audrey Harrison has more than a few of these types of I&E scenarios on her lap-top....

The 2018-19 are the actuals from the UR 2018-19 report pp35-37. This is where ScottishBrian got his figures.There is no I&E/P&L table in the report and all values are from the commentary with some estimates on stadum costs to get to the £12.0m total. Also these were all in a nice set of tables, but this site doesn't allow them.... income/revenue is generally to the left and expenditure/expenses to the right.

The 2019-20 & 20-21 are my guesses...... Take your own pick at what you'd like to change...

UR – 2018-19 (actuals: 14 months)
Revenue £m Expenditure £m
Gate 3.2 Players & Team 5.9
Sponsorship 2.9 Match-day costs 1.05
Grants (incl. from IRFU) 2.4 Stadium costs (incl. rates) 0.85
Other income – corporate 1.0 General rugby expenses 0.5
Other income – UR-generated 1.1 Admin expenses 1.8
Development expenses 1.9
Total 10.6 12.0
Surplus -1.4

Notes:
• For 12 months, then income was £10.1m and expenditure £10.5m (a deficit of £0.4m)
• Development expenses is the RDO’s etc
• Cash in bank as at 18/19 year end = £1.6m
• Source: UR Annual Report 2018-19

UR – 2019-20
Revenue £m Expenditure £m
Gate 3.0 Players & Team 3.9
Sponsorship 2.7 Match-day costs 0.7
Grants (incl. from IRFU) 1.8 Stadium costs (incl. rates) 0.7
Other income – corporate 0.8 General rugby expenses 0.3
Other income – UR generated 0.8 Admin expenses 1.4
Development expenses 1.6
Total 9.1 8.6
Surplus 0.6

Notes:
• Match-day income & costs are for 10 games and £100k repayment to match ticket holders/hospitality.
• Sponsorship and corporate – fewer matches (although depends on contracts).
• Player & Team - assumes full payment as per 2018-19 up to 31st Mar. Remainder FY1920 covered 100% by UK Govt via furlough for 5 months & IRFU grant (for central players).
• Stadium costs - assumed 0% rates (COVID-19 relief).
• Grants – DfC grants are tailing off (Nevin Spence staff now down from 3 to 1), and probably partially dependent on ground being open for school visits. Assume IRFU would pay back any money due to broadcasters. Includes any prize money payments via IRFU for EPRC QF and any money from 2x inter-pros in Dublin/further UR progress in Pro14 is included in FY19/20.
• Other income - UR generated = lower due to ground being closed from March.
• Admin expenses- assumes a £200k contribution from UK Govt via furlough for 3 months.
• No repayment to season-ticket holders

UR – 2020-21
Revenue £m Expenditure £m
Gate 1.8 Players & Team 3.4
Sponsorship 1.8 Match-day costs 0.8
Grants (incl. from IRFU) 2.0 Stadium costs (incl. rates) 0.6
Other income – corporate 0.7 General rugby expenses 0.4
Other income – UR generated 1.1 Admin expenses 1.3
Development expenses 1.3
Total 7.4 7.8
Surplus -0.4

Notes:
• Match-day income & costs assumes a Nov home start with 13 home games but with only 5k in ground (smaller crowd = less match day costs from EventSec etc - probably close at least one stand entirely).
• Player & Team - assumes full payment as per 2018-19 from 1st Dec onwards. Remainder covered 100% by contribution from UK Govt via furlough for 5 months & IRFU grant.
• Grants - very much reduced and probably partially dependent on ground being open for school visits. Also includes subsidy of approx. £1.5m from IRFU.
• Other income - UR generated = lower due to ground being closed from June to November.
• Sponsorship and Other income – corporate. Assumes fewer matches and general local recession.
• Admin costs – assume a £500k contribution from UK Govt via furlough for 5 months and some further reductions in staff/expenses.
• Stadium costs – no rates payable for 2020-21 (NI Direct website). Other costs also reduced.
• Development expenses – assume some reduction in RDO numbers and activity.

The monthly cash burn rate would seem to average at approx. £750k/month, which also corresponds to the costs of the 2 extra months in 18/19 (p35). Even with £1.6m in the bank at 1st July 2019, without external support (UK Govt furlough and whatever IRFU might provide), then UR would be due for some uncomfortable conversations with the bank manager round about now..... BUT we don't know whether UR is eligible/has taken up any of the COVID-19 business support schemes. With no debt then it might seem a viable option for UR to consider, which I'm sure they've done.... (Btw, the IRFU had €38m cash in the bank as at 30/04/19 - IRFU annual report p37) . Hope this helps..... Sue Dename or ScottishBrian - anything to add/amend ?

[WestDr]

What are Ulster saving in the rates?

The LPS website has the NAV on the ground at £438k, with a rateable value of £235,727.71. The key bit is whether UR are able to claim the 80% discount for sports & leisure facilities on this rateable value.

p36 UR 18/19 Annual Report notes that in 18/19 they paid a net zero since a rate review generated a rebate that paid for the 18/19 rates.... this implies that they don't get that discount (Malone RFC, Ballyclare RFC, Bready CC etc might....).

For 19/20 they probably paid something (?£200K) but it may also depend on when the Executive COVID-19 rate support scheme started (so they won't have paid anything at all for the four months from April 20 - July 20). UR rates may well also be zero in 2020-21 - see here: https://www.nibusinessinfo.co.uk/conten ... businesses.

In the grand scheme of a £10m p.a. business, not heaps, but worth having. A chartered surveyor would be better placed to know if UR qualified for the 80% relief.... however UR will also be saving on their non-domestic water and wastewater charges....

[ScottishBrian]

That's excellent detail WestDr, something has occurred to me if we had no matches during the tax year extension does that give us the actual cost of running the province before income in that season?

[ScottishBrian]

That's excellent detail WestDr, something has occurred to me if we had no matches during the tax year extension does that give us the actual cost of running the province before income in that season?

[WestDr]

That's excellent detail WestDr, something has occurred to me if we had no matches during the tax year extension does that give us the actual cost of running the province before income in that season?

Thank you, but all based on the UR 2018-19 Financial Report on the UR website and some 'reasonable' forecasts/guesses/estimates.

As for your question, it's hard to say; the report (p35) notes £1.5m of 'normal' costs and £0.5m of revenue in those 13th (May) and 14th (June) months in 2019. However, without knowing what was the income (for example the home QF v Connacht was 4th May and the away SF v Glasgow on 11th May), then it's difficult to do more than use an adjusted value from the £1.5m of 'normal' costs - but then these might also include the costs of staging the QF....

Btw, I note that Gerry Thornley's Irish Times article of 17th June quotes a cost of between €100k and €160k for opening the Aviva, so I don't think my estimate of £100k/match is too far off, albeit perhaps a bit high for Ravenhill, although I'd say the P&R/bus costs due to Translink aren't insubstantial, and are probably a condition of the ground expansion planning permission (I don't think there's any such provision at the Aviva, so it's a cost they don't bear ?).

I'd also suggest that the 'normal costs' bit is tweakable by how much UR/IRFU want to put into the local game through the Rugby Development Officers - which was some ?£1.2m?. But I'd go for approx. £650k/month as the 'monthy' cost of UR under this set of budgets (i.e. supporting the wider RDO/amateur game development programme, the academy progamme/scale/size and the role of UR supporting the IRFU programme to develop players for the national team etc etc).

[ScottishBrian]

Thanks for that WestDr. You seem to be very close to the mark . I now am wondering about the other provinces especially the Turnip money pit?

[Sue Dename]

No doubt Audrey Harrison has more than a few of these types of I&E scenarios on her lap-top....

The 2018-19 are the actuals from the UR 2018-19 report pp35-37. This is where ScottishBrian got his figures.There is no I&E/P&L table in the report and all values are from the commentary with some estimates on stadum costs to get to the £12.0m total. Also these were all in a nice set of tables, but this site doesn't allow them.... income/revenue is generally to the left and expenditure/expenses to the right.

The 2019-20 & 20-21 are my guesses...... Take your own pick at what you'd like to change...

UR – 2018-19 (actuals: 14 months)
Revenue £m Expenditure £m
Gate 3.2 Players & Team 5.9
Sponsorship 2.9 Match-day costs 1.05
Grants (incl. from IRFU) 2.4 Stadium costs (incl. rates) 0.85
Other income – corporate 1.0 General rugby expenses 0.5
Other income – UR-generated 1.1 Admin expenses 1.8
Development expenses 1.9
Total 10.6 12.0
Surplus -1.4

Notes:
• For 12 months, then income was £10.1m and expenditure £10.5m (a deficit of £0.4m)
• Development expenses is the RDO’s etc
• Cash in bank as at 18/19 year end = £1.6m
• Source: UR Annual Report 2018-19

UR – 2019-20
Revenue £m Expenditure £m
Gate 3.0 Players & Team 3.9
Sponsorship 2.7 Match-day costs 0.7
Grants (incl. from IRFU) 1.8 Stadium costs (incl. rates) 0.7
Other income – corporate 0.8 General rugby expenses 0.3
Other income – UR generated 0.8 Admin expenses 1.4
Development expenses 1.6
Total 9.1 8.6
Surplus 0.6

Notes:
• Match-day income & costs are for 10 games and £100k repayment to match ticket holders/hospitality.
• Sponsorship and corporate – fewer matches (although depends on contracts).
• Player & Team - assumes full payment as per 2018-19 up to 31st Mar. Remainder FY1920 covered 100% by UK Govt via furlough for 5 months & IRFU grant (for central players).
• Stadium costs - assumed 0% rates (COVID-19 relief).
• Grants – DfC grants are tailing off (Nevin Spence staff now down from 3 to 1), and probably partially dependent on ground being open for school visits. Assume IRFU would pay back any money due to broadcasters. Includes any prize money payments via IRFU for EPRC QF and any money from 2x inter-pros in Dublin/further UR progress in Pro14 is included in FY19/20.
• Other income - UR generated = lower due to ground being closed from March.
• Admin expenses- assumes a £200k contribution from UK Govt via furlough for 3 months.
• No repayment to season-ticket holders

UR – 2020-21
Revenue £m Expenditure £m
Gate 1.8 Players & Team 3.4
Sponsorship 1.8 Match-day costs 0.8
Grants (incl. from IRFU) 2.0 Stadium costs (incl. rates) 0.6
Other income – corporate 0.7 General rugby expenses 0.4
Other income – UR generated 1.1 Admin expenses 1.3
Development expenses 1.3
Total 7.4 7.8
Surplus -0.4

Notes:
• Match-day income & costs assumes a Nov home start with 13 home games but with only 5k in ground (smaller crowd = less match day costs from EventSec etc - probably close at least one stand entirely).
• Player & Team - assumes full payment as per 2018-19 from 1st Dec onwards. Remainder covered 100% by contribution from UK Govt via furlough for 5 months & IRFU grant.
• Grants - very much reduced and probably partially dependent on ground being open for school visits. Also includes subsidy of approx. £1.5m from IRFU.
• Other income - UR generated = lower due to ground being closed from June to November.
• Sponsorship and Other income – corporate. Assumes fewer matches and general local recession.
• Admin costs – assume a £500k contribution from UK Govt via furlough for 5 months and some further reductions in staff/expenses.
• Stadium costs – no rates payable for 2020-21 (NI Direct website). Other costs also reduced.
• Development expenses – assume some reduction in RDO numbers and activity.

The monthly cash burn rate would seem to average at approx. £750k/month, which also corresponds to the costs of the 2 extra months in 18/19 (p35). Even with £1.6m in the bank at 1st July 2019, without external support (UK Govt furlough and whatever IRFU might provide), then UR would be due for some uncomfortable conversations with the bank manager round about now..... BUT we don't know whether UR is eligible/has taken up any of the COVID-19 business support schemes. With no debt then it might seem a viable option for UR to consider, which I'm sure they've done.... (Btw, the IRFU had €38m cash in the bank as at 30/04/19 - IRFU annual report p37) . Hope this helps..... Sue Dename or ScottishBrian - anything to add/amend ?

Good assessment WestDr, and I think you highlight how perilous the situation is.
Yes the IRFU had a nest egg of €38m banked from the the sale of the Newlands land, the majority of that was then spent on buying property to raise funds to support the domestic game. It may well be a white elephant at the end of this financial debacle.

The timing of the CVC money is opportune, although that money could have been put to better use to grow the game rather than bale out four provinces and the IRFU.

[WestDr]

Thanks for that WestDr. You seem to be very close to the mark . I now am wondering about the other provinces especially the Turnip money pit?

Well Brian...
Here is the turnover for each of the provinces: https://www.irishtimes.com/sport/rugby/ ... -1.4280864. Not a great fan of Gerry T, but no reason why his numbers aren't accurate here (his match the UR ones when converted to €).

Here is the most available on the web in respect of the 2018-19 Munster branch report - https://www.munsterrugby.ie/2019/06/13/ ... -update-5/ [Note the lack of publishing any formal report compared to UR..... and the glorious puff !]

Here is the IRFU Annual Reports: https://www.irishrugby.ie/irfu/annual-report/

In the IRFU 2018-19 report, the accounting notes 1g (p40), 5(ii) (p45) and notes 8 and 9 (p48) and 9 : Joint Ventures (p49) provide some limited insight and demonstrate the scale of IRFU involvement in Munster Rugby. It would be good to have a rent payment of €9,600 p.a., but it's reasonably fair to say that given that in 2018-19 the IRFU 50% share of the Thomond Park loss was €477k, then this number is likely to be higher in 2019-20 as a result of Thomond being closed. And of course, there's the cost of running the Cork ground too....but again what is included in the ground costs is opaque although these are management accounts values so probably are closer to actual profits/losses. It should be noted that in the absence of any Munster branch accounts being publicly available, then it's really hard to construct a P&L for them....

On another note, how much of the €70m that the Irish Govt has said it will make available to sport (GAA/soccer/rugby etc) will arrive at Lansdowne Rd will be interesting to note. Given that the FAI has already beaten a path to their door, then perhaps rugby might get a bit too ..... As Sue Dename notes above, it does depend too on when and how the IRFU share of the CVC money arrives (I've seen that reported as being staggered over a number of years as well. It would be very unlike PE/VC to hand all that over in one go).

All in all, however, I'd suggest that the scale of the issues facing the IRFU in the case of UR and Connacht are limited, purely due to the scale of their operating commitments and ground costs/debt, when compared to Munster. Leinster I would think is manageable - not least as there is no stadium ball-and-chain and also the likelihood of prize money (albeit it comes to IRFU) is higher ! I would also expect that sponsorship and corporate income will recover faster in Dublin than Limerick/Cork. Munster would seem to be the biggest short and medium term financial challenge for the IRFU amongst the branches.....

[ScottishBrian]

Thanks again Westdr, I was wondering if it was just me that couldn't find them!
The Turnover numbers show quite a striking difference especially Munster who are losing just under 1 Million Euros a year on a 17 Million Euro turnover. That is a very poor financial performance, and the two SA players will not be cheap, Is this shortfall made up by FIRFU?

Leinster's turnover of 18 Million Euro and Munsters of 17 Million Euro just shows the gulf in funding that we have at Ulster although without the financial reports there is no way to see where their money goes but with both these other provinces having a turnover 50% greater than Ulsters it makes you wonder what they pay their players and in the case of Munster making a loss I would hazard a guess at too much?

[WestDr]

Thanks again Westdr, I was wondering if it was just me that couldn't find them!
The Turnover numbers show quite a striking difference especially Munster who are losing just under 1 Million Euros a year on a 17 Million Euro turnover. That is a very poor financial performance, and the two SA players will not be cheap, Is this shortfall made up by FIRFU?

Leinster's turnover of 18 Million Euro and Munsters of 17 Million Euro just shows the gulf in funding that we have at Ulster although without the financial reports there is no way to see where their money goes but with both these other provinces having a turnover 50% greater than Ulsters it makes you wonder what they pay their players and in the case of Munster making a loss I would hazard a guess at too much?

Well, you could surmise (can't think of a better word...) that €500k of the loss is Munster's share of the Thomond loss (IRFU have the other 50% of the €1m operating loss), with another €500k of loss floating about from Irish Independent/Musgrave Park. From looking at UR's accounts, I could imagine that IRFU agree a budget that includes all costs, including the club rugby RDO's etc, and then provide a grant to cover the gap between those forecast costs and forecast income. Any income that pushes this into 'profit' above budget /break-even point UR get to keep - which would explain how items such as ticket sales and corporate/hospitality packages gets reported separately in the UR accounts. And are so important to UR. I'd be surprised if IRFU do much different with Munster. The downside for Munster is that due to the deal with IRFU on Thomond, they only seem to get 50% (not 100% in UR's case) of any extra long-term (10 year?) tickets/packages they sell and other such income. But that was the punt they took on Thomond when they could have settled for 15/17k like UR did. Makes one wonder why Munster took on the re-development of Musgrave Park as well though.

So, from out of this, I'd say the 2 SA players' cost come out of the agreed player budget. And such stuff like moving on Ably Matthewson was part of making room within the existing budget for those two (or similar players) ? The other big bit we don't know is quite how the central contracting works - from reading the UR report, I'm not clear whether UR pay IRFU for the time UR have them, or it's the other way round..... from the UR report where it talks about 're-charges' it would seem the latter ?

But if the turnover at Leinster is some 40% higher, then I'd suggest that their excess of income over expenditure is quite high, whereas Munster it's the other way round ? I'd not be expecting much higher salaries per head at those two - just that they have more players at that higher level than UR and Connacht ? I'd give a lot to see an anonymised distribution of player salaries for each of the provinces....

Finally, I'd also suggest that a province has to demonstrate a reasonable path to greater income - not just a wish for a bigger budget to sign more expensive players. Doing the latter would inevitably mean a bigger grant from IRFU to cover the gap. If, of course, you can raise the money outside the IRFU ambit (e.g. someone like Denis O'Brien) then I would assume you'll be allowed to pay for them, especially if they are Irish-qualified.....However, it would seem the IRFU secret sauce for success is (a) a cheap ground and (b) securing value in playing and coaching staff (e.g. from your academy or a great reputation as a place to play).

[ScottishBrian]

I wish, like you, that we could see the detailed accounts as it seems to me that the other provinces, I accept that Connacht need to be, are gaining money from FIRFU that we don't partly through Central contracts and, in Munsters case, allowing them to fund their profligacy. I listend to a Head coach of one of the big Dublin schools with a budget of 4 Million Euros for Sport none of which comes from Leinster so although we don't know how many players they have on Central contracts I find it hard to believe that their running costs without players are exponentially higher than ours based on this simplistic calculation. Everything based on an exchange rate of 1.1 Euro to the pound and assuming Leinster do not make a profit

Ulster player budget £5.9M or 6.5M Euro Ulster Operating costs £4.2M or 4.6M Euro

Leinster Turnover 18M Euro assume same level of Player Budget then Operating costs are 11.5M Euro

This can't be right so Leinster must be turning a profit purely because if Munster had the same turnover they would break even?

I know this is howling at the moon but the number don't add up even on the minimal information in your excellent summation

[Bobbievee]

Any rumours on how many of the 8/9000 ST holders donated, asked for credit, or following Westdrs advice , asked for and got a refund?

[Bobbievee]

Replying to myself, a sign of madness in the lockdown. Eventually decided that I would not donate my £94. I was unsure how much of it would end up in IRFU, or subsidise designer t shirts for squad players to ponce around the Lisburn Road. So have taken the credit and will see what happens