Friday, March 2, 2007

Welcome to the Hotel California, TW1 - jonnyboy71

Back in those unheady days of the Autumn rugby internationals, Sky Sports carried an interview with Martin Johnson in which the big man laid waste to the notion that Andy Robinson was solely responsible for England bumping along the bottom of the global rugby scene. For Johnson, the idea was that the rugby buck stops at the top with the RFU’s Chief Executive, Francis Baron, and his management board. “If you are going to start saying you have not done your job properly, he [Baron] is ultimately responsible for all aspects of the business, so far as I am aware. Maybe the management board, or whatever, had some control as well.” From England’s ex-captain, a man who is less prone to media punditry than Colin Meads with lockjaw, that was a big statement. A cry for help.

Take Johnno at his word and have a look at just what the top echelon of the RFU’s 447 salaried staff has been up to while England have disappeared down the plug hole. How have they responded?

For one thing, they made it impossible to sack Andy Robinson and replace him with anyone whose CV had anything better than ‘won Allied Dunbar Premiership in 1998’ on it. Rob Andrew’s position as ├╝ber-prefect effectively meant that the RFU had to look within the coaching ranks and there was only one man there who could do the job, Brian Ashton.

What about Chief Executive Baron himself? Has he registered how bad the situation has become? Certainly. In the RFU’s 2006 Annual Report, after the bufterish “didn’t we all do well” sections by the President and Chairman (whose job it is to make sure that the Gentleman’s Relish is spread evenly on the toast in the committee boxes at home games), England’s CEO got straight to the heart of the issue: the poor performance of the England team over the last two years was the principal reason for last year’s £1.7m pre-tax loss. England has done badly and this is now bankrupting the RFU. As Baron himself says, coming 4th instead of 1st in the Six Nations cost £1.2 million. Something must be done!

The only problem with Baron’s analysis is that it’s wildly inaccurate. Not to imply that Baron is lying – he could well have as good a handle on figures as the England pack have on rucking.

This is the way it stacks up: turnover was down just £3.9m in 2006 to £82.7m. Costs were up slightly. But operating profit was still well in the black at £16.2m. That’s a highly respectable profit margin of 19.6%. So how could the RFU achieve an impressive net loss of £3.4 million?

Cherchez le huge stand, hotel and conference centre development. This cost £39.2m. £21.6m was raised from selling debentures but, as no other sources of finance were used to fund development, £17.6m had to be found from somewhere. The only other source of cash to tap was the £31.3m of operating income.

In other words, the RFU have taken the huge profits from its main business – rugby – and used them to get into another business – hotels and event management. They’re pushing their rugby business into the red to do so. Read Francis Baron’s diagnosis again. Sound accurate?

Put this into the context of the key issue in the Way Forward inquiry, player release from club to country. In football terms, £18 million is close to what Craig Bellamy spends on golf clubs every 6 months. But in rugby terms, it’s a fortune. Brian O’Driscoll is reputed to be on €400,000 a year, and he’s good. But even the average England player (and there are quite a few of those about) costs over £200,000 to sign. If they were serious about competing with New Zealand or Ireland, the RFU could have bought a squad of 50 and got a fair chunk of change for what it cost to pay off building the Marriott Twickenham within a year. Or at least offer the clubs marginally more than a paltry £30,000 for player release, and buy enough goodwill for them to release players without complaining, once and for all.

Hotels it is, then.

Last word: the RFU’s new hospitality company is called ‘Twickenham Experience Limited’. Martin Johnson would probably think it was the job description for Chief Executive.

6 comments:

Ebren said...

Just a quick note to say I have jonnyboy's hon mention from last week as well.

But considering the volume of articles that have gone on today - I'm holding off on it, another of mine, one from Marcela, and another hon mention from 50k.

They will arrive either over the weekend or more likely next week.

andrewm said...

Well, that told me a LOT I didn't know jonny :)

Didn't exactly make me want to watch any rugby anytime soon, but well-written and researched.

You see, I'm not always a total bastard to you eh?

MotM said...

Interesting, but I can't help thinking that had the RFU not invested in infrastructure (and let's face it, Twickenham could hardly be better situated for a hotel / conference facility) and diversified income streams in the aftermath of the World Cup, we'd blog in 2017 about how all the money was wasted on player salaries etc.

True, the team comes first, but would the money spent elsewhere have made that much of a difference?

I'm no expert, but it strikes me that England miss the best converter of field position into points in the history of the game (most of the time anyway) and the best captain of any England team in any sport ever. Surely that would hurt any team?

Perhaps if the All Blacks were forced to pick New Zealanders only and left the South Sea Islanders to play for their own nations, England wouldn't look quite so bad - oh, and play Mike Catt at Centre (yes I know those two points reveal hypocrisy...)

Ebren said...

JB. That's a little simplistic.

The new stand (and its never-ending ramp rather than stairs) adds 7,000 seats to Twickers. That's £2.8m a year at £40 a seat and 10 games. I know it isn't always full, but I would guess £2m a season is reasnoble.

That's what - 10 players you could buy. Or five players and their salaries every year.

The hotel, I accept they might not know that business that well, but if you're going to put up a great big building in south-west London, you might as well try and use it for more than 10 times a season. A hotel isn't a bad plan.

Baron has overseen a massive increase in professionalism and increase in revenues. As a business the RFU has done very well under him.

Perhaps he needs reminding that the business of the RFU is English rugby and not making money, but a bankrupt RFU helps no one.

Central contracts are a separate matter.

MotM said...

I should also say that I don't know the history between andrewm and JB, but I love JB's style. It's the discourse I want on the blog - none of this IMO stuff: what else is a post except the poster's opinion?

I don't always agree with JB's stuff, but it's never dull in content or style. And you don't need to look to see who has posted - there's only one JB as there is but one Hannibal (and many would say amen to that!)

Brack said...

Good article. Keeping up the high standards set at first.

Tweet it, digg it