SA Rugby has been able to tackle challenges posed by the coronavirus pandemic from a position of strength after reporting a profit of R8.5 million for 2019.
The announcement was made following SA Rugby’s annual general meeting on Wednesday.
Revenues increased by 2.5% to R1.29bn (2018: R1.26bn) with increases in broadcasting, sponsorship, grants, insurance proceeds, royalties and the Cape Town Sevens event offset by a reduction in Test guarantees due to fewer Test matches, Rugby World Cup performance obligations and the closure of the Springbok Experience Rugby Museum.
SA Rugby chief executive Jurie Roux said the strict financial discipline the organisation had practised in recent years meant it was able to face the pandemic from a position of relative strength.
‘If this crisis had hit us two of three years ago it might have been a very different story.
‘The pandemic has had the effect of tearing up all our approved budgetary plans but we have taken an aggressive approach to the potential impact of the virus. We have agreed our Industry Financial Impact Plan, which will cut R1.2bn from the budget of the entire South African rugby industry if required.
‘It will be painful to endure for all rugby businesses, but it will mean that we will walk from the burning building still intact.’
Roux said operations continued to be funded by way of a bank overdraft for significant parts of the year and solutions had had to be found to address a number of issues including the loss of a broadcasting partner, budgeted lottery income that did not materialise, further loan impairments and the R62m required to honour player and management performance commitments for winning RWC 2019.
The significant RWC 2019 obligation was offset by insurance mitigation plans while the investment in the rugby department (R372m in total) was rewarded with a Rugby World Cup victory in Japan.
Financial support for the 14-member unions and player welfare, through the use of player imagery and injury insurance, accounted for another 32% of operating expenditure (R275m).
‘One of the benefits of our approach is that we go into this crisis with a level of comfort that we can expect the financial support of our bank and key stakeholders in these difficult times,’ Roux said.
‘We reduced the overdraft from R68m to R7m but we have subsequently agreed an increased facility for 2020 to manage the inevitable cashflow issues create by the pandemic.’
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