Welsh Rugby Union: Governing body announces £3.2m profit in annual report
- Published
Wales men's team lost to Italy at the Principality Stadium in March 2022
The Welsh Rugby Union (WRU) recorded a profit of £3.2m for the year ending June 2022.
The organisation also reported a turnover of £94.3m which was the second largest in its history.
The figures were included in the WRU annual general report which covers the period to 30 June 2022.
Net bank debt has fallen from £22.9m to £13.9m while net debt has been lowered from £114.4m to £110.8m.
Net debt is defined as bank loans, debenture loans and finance lease obligations, less cash balances. Net bank debt is bank loans, less the cash balances.
Profit margins
The profit recorded is compared to the smaller figure of £400,000 last year. The governing body say it is a result of the first instalment of private equity from CVC partners for the WRU's 11% stake in the Six Nations.
That totals £40.5m over five years with a first instalment of £6.1m in the last financial year and four further payments to come.
The governing body say the majority of the money will be used for long-term projects.
This includes introducing a roof walk on the top of the Principality Stadium with a potential date of the summer of 2024.
"Our stated financial strategy continues to be to reinvest the maximum amount we can in rugby, which means we look to break even and not make any profits," said WRU finance director Tim Moss.
"A variation to this strategy covers plans for proceeds from the recent private equity (CVC) investment into the Six Nations.
"The retained profit of £3.2m in year end 2022 is driven by the first tranche of the capital receipt arising from this sale of equity.
"The current plan, and indeed a current condition of our banking arrangements, is we use those receipts to fund projects that will generate future financial returns and therefore help to alleviate the dilution that will occur on the future Six Nations' revenues, fulfilling our responsibilities to the game as a whole."
A hotel has been built next to the Principality Stadium ground which opened in October 2021.
The WRU has a 75% equity stake in the Parkgate Hotel but it is operated under a management fee by the Celtic Collection, whose hotel portfolio includes the Celtic Manor Resort in Newport.
The WRU claim the hotel has traded well, posting revenues of £5.7m "against some lockdown challenges around Christmas 2021 and beyond." Hotel costs spent totalled £4.2m over the eight months.
Domestic issues
The four Welsh professional sides have questioned the policy of not investing more money in the domestic game but the WRU claim in the report they gave £62.9m back into Welsh rugby.
They say a record £34m was given directly to the professional regional sides in Wales which includes £26.9m to Ospreys, Scarlets and Cardiff and £7.1m to the WRU-owned Dragons.
This also includes the competition receipts which the sides are entitled to anyway.
There was a further £16.3m spent on performance rugby at all levels and the ring-fenced amount of £10.6m provided to the community game.
During the year, the WRU refinanced the £18m CLBILS loan facility with Welsh Government.
The revised facility is now repayable over 18 years, with £0.5m having being repaid in the last financial year.
The £18m and a further £2m loan from World Rugby were passed onto the regions to "support them through the pandemic".
The regions will have to pay back the loans but the WRU say the repayments have been amended to match the terms of the Welsh Government loan, significantly lengthening the repayment period.
"This refinancing aligns with the original plan to facilitate our regions to have arrangements akin to those between the English clubs and the UK Government," added Moss.
When asked whether the WRU would take on the repayments, Moss added: "The problem with that is if we took it on, that is essentially writing off £18m, so we have an immediate £18m hit to our PnL (profit and loss).
"The agreement with the regions is the WRU is seeking to break even anyway so it end up being circular because it would just reduce the available funding.
"It is not just in our arrangement with the regions, it's with our banking deal as well which says we have to be breaking even.
"If we had an immediate £18m write-off, that restricts our ability to what we can fund going forward.
"This is the point everybody made at the start when the loan was taken out, it's net nil really, it's circular, it's Welsh rugby that's paying for that loan."
Wales' top women players have been given professional contracts in the last 12 months
The amount for performance rugby, which includes the Wales men's and women's teams and Sevens, has risen from £14.1m to £16.3m.
Wales women have been awarded professional contracts for the first time with 32 players awarded full-time deals.
Moss refused to answer how much money had been spent on the women's contracts but insisted the £2.2m increase in performance rugby was not just for the female game.
Turnover stats
Only once previously has the WRU turnover topped this year's figure when it reached £97m in 2018, with the 2021 Covid-19 affected turnover standing at £58.1m.
The £94.3m figure for the last 12 months included match income of £43m following a return to full crowds, a commercial showing generating £14.5m and a concert season which included Ed Sheeran, Ramstein, Tom Jones and Stereophonics.
"Summer 2022 brought a vibrant event season to Principality Stadium, welcoming close to 400,000 people through our gates in under three months," said Moss.
"This resurgence in third party events, together with record crowds over the Autumn Nations Series and a strong commercial showing for the year has led to a robust financial performance in YE22."
The turnover is still dependent on money raised from Wales games held at the Principality Stadium which generated 46% of the group's income, while 72% of the total income is derived from staging these matches and commercial activities associated with senior Welsh teams.
The average attendance per match was 66,000, 90% of the stadium's capacity, the mean ticket income per attendee was £52.
The report says Covid-19 uncertainty in late 2021 had a "negative impact" on 2022 Six Nations tickets sold.
Top earner
The annual reports states the highest paid director's salary of £359,000 was compared to £234,000 the previous year.
That highest paid director is chief executive Steve Phillips with the report saying he was a director for only nine months in the previous year when he also had a pay reduction because of the Covid-19 pandemic.
"It is important for me to stress as the governing body of the game in Wales, it is our ambition to re-invest as much profit as possible into the game while living within our means," said Phillips.
Steve Phillips has worked at the WRU since 2007 and replaced Martyn Phillips as chief executive in 2020
"It has been especially pleasing to see rugby return to our clubs, in an albeit truncated, carefully managed, way.
"We have not just returned to normality in terms of our turnover levels, but surpassed pre-Covid records on certain income lines.
"Re-investment levels are back where we need them to be across the game in Wales.
"This is credit to the hard work of the WRU team, Welsh rugby's passionate supporters and member clubs and players and staff in our professional game."
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