THE IRFU’S ANNUAL report was delivered with a word of warning by chief executive Kevin Potts today as the Union navigates its way through the damage inflicted by the Covid-19 pandemic.

Speaking to media at Aviva Stadium, Potts described the pandemic as ‘a torrid period’ for Irish rugby but added that the ‘ship has been stabilised.’ However the IRFU chief executive also revealed the Union is forecasting deficits over the next three years and that as a result, Irish rugby will have to ‘live within its means.’

Potts led today’s briefing ahead of the IRFU AGM with the news the Union reported an operating surplus of €5.9m for the year ended 31 July 22, against a budgeted deficit of €4.9m. The result compares with combined losses of almost €47m in the previous two Covid-hit years.

However, Potts outlined that without the help of the special Government grant to the tune of €18m in December 2021, the Union would have suffered an operating deficit of €9m for the year.

Income for the season was €116m, an increase of €32m, while professional game costs fell by €7.6m to 60.5m.

“The key for us in Irish rugby is we live within our means,” Potts said.

“We are forecasting deficits over the coming three years, but that’s on the expectation that after three years there should be an uplift in broadcast revenues in the next cycle from the Six Nations.

If that doesn’t happen, we’ll have to look at our cost base again. We are clearly concerned, very aware of the economic situation, the energy crisis and the cost of living issues, and we’re very aware of what’s gone on in other jurisdictions with some of their clubs. We will live within our means, ourselves and the four provinces, and that’s the key to getting through any of these issues in the future.

“We can manage over the next three years, the deficits, and they’re in our cash forecasts. We run cash forecasts for 10 years and are constantly updating them so the union is prepared to invest. We do have an expectation that the next TV cycle will increase. If it doesn’t, well then we’ll have to review our programmes and our costs, because what we won’t do is live outside of our means.

“Before depreciation we’re looking at on average about €3-4m of a deficit. Add depreciation and you’re looking at about €6-7m of an accounting deficit per year.

“From a cash perspective, you’re looking at about €2m or €3m, broadly.”

Potts then provided further explanation on why the Union are forecasting three years of deficits after recording a surplus in the latest financial year.

“The surplus this year only arose pretty much because of the government grant in relation to losses back in 2021, the England and France games behind closed doors cost about €18m alone.

IRFU chief executive Kevin Potts during today's annual results media briefing at Aviva Stadium. Bryan Keane / INPHO Bryan Keane / INPHO / INPHO

“The reason we’re happy to run with deficits – happy is probably not the word – because there are programmes we want to invest in, the women’s programme being one, our various schools and clubs programmes. We want to be able to invest and get our game back up and running fully.

“We believe we can do that and to do that we will fund up a deficit but we are doing that on the assumption that, after three years, we’ll be able to recoup that.”

The report also highlighted an exceptional item of €44.6m which relates to proceeds received and receivable in future years by the Union as a result of CVC’s acquisition of 14% of the net revenues generated by Six Nations.

This was described as money which has been received ‘at a most opportune time but comes at a significant future cost’ – namely, the 14% reduction of the IRFU’s future Six Nations and Autumn Nations Series income.

“So effectively the Six Nations have sold 1/7th, which is the 14%, and obviously within the Six Nations we all have different sizes, England is the biggest so they have a higher share of the net pot,” Potts continued.

“Our strong expectation is that CVC’s influence and laser focus and experience on the commercial side will increase the size of the overall pie by at least 14%. In fact, they believe they can do that, otherwise they wouldn’t have invested in it. So over time we’re expecting that that 14% deficit will be surpassed by new revenues. That’s the plan.”

Potts was then asked what the Union’s plan is should TV revenues fail to increase over the coming years.

There are lots of Plans Bs and Cs and lots of discussions around the Six Nations and the URC about how do we generate new sources of income, looking at all sorts of innovative things, some of which are challenging to understand at times, but that’s what we want. We need to look at new sources of income, those discussions are happening, but we are expecting the broadcast market should increase.”

Another notable new cost for the IRFU this year saw the Union offer professional contracts to women’s 15s players for the first time. During the year the IRFU committed to an additional spent of over €2m in the women’s game.

The IRFU’s direct investment in the women’s game is now over €5.5m per year, up €2.1m on what was budgeted in previous years.

However Potts stressed the Union will require ‘significant additional investment, which we do not have’ if they are to make the desired progress around the women’s game, and that the IRFU will need financial assistance from external sources to achieve this without impacting current programmes.

Details of the Women in Rugby Report are set to be announced in the coming weeks.

The IRFU’s full annual report for the year can be found here. 

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