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Wednesday, 24 August 2016
Critical Erasmus Year for Munster Rugby
It was a bleak message from Philip Browne, CEO of the Irish Rugby Football Union in terms of Munster Rugby’s finances. The war chest a long way from a number of years ago were the region was in its full splendour. It was made even starker when the head of Irish rugby said there were no more bail outs should the region be unable to meet its obligations as they stand now. Indeed, the Honorary Treasurer, Tom Grace, explained matters further;
“One of our provinces is experiencing financial difficulty and one of the main reasons for this is poor match results,” said IRFU honorary treasurer Tom Grace. “It is no secret that the increased revenues available to French and English clubs are having a serious inflationary impact on player remuneration.”
“There was no repayment received this year in respect of the Munster loan which relates to Thomond Park,” said Grace. “A €200,000 payment was due last April with €4.2 million due in April 2017 and €500,000 to be paid every year until 2026 with a final lump sum of €761,778 expected in 2027.” A stark message it has to be said. But perhaps no greater motivation than having the financial nitty-gritty aired publicly to alert all involved that the cub is currently on life support.
What remains clear is that Munster face a challenge and marginally improved by securing Champions Cup place for the new season. Albeit a group with Racing 92, this year’s losing finalists, Leicester Tigers, semi-finalists in May and Glasgow, the losing semi-finalists to Connacht in the Guinness Pro 12 last season. A sobering set of fixtures that wouldn’t lighten the heart of the Munster Rugby CEO when making the budget forecast for the season. And along way from the natural order in the days when they ruled Europe in 2006.
But some fixed costs can’t be reduced and that pressure increased with the arrival of Rassie Erasmus; the return of Darren O’Shea and the new signing Jean Kleyn on a three-year contract. The 22-year-old has made 17 appearances for the Stormers and represented Western Province on 22 occasions. Kleyn will re-join his former Defence Coach Jacques Nienaber who has also been recruited by Munster this year. U few heavy bills there no doubt on the back of a very poor season that saw Thomond Park filled very rarely.
Critical to any operation is that the current costs are met of operating income, and the investment rationalised by equalling gate income accordingly. Or financial support from sponsorship programmes or other revenue streams. But not only does Munster Rugby need to manage their operational costs but also have to accrue for the payment of €220k due to the IRFU. Along with another €4.25m due to the IRFU next April. All to be achieved through rugby income given there are no further grants or payments to be accessed. A very tough task and one that - looking on from the outside - spells danger.
Or could create an environment that will only add further pressure on Erasmus and company to deliver much needed silverware this season in the Champions Cup. However, the stark reality is that no bonuses are earned until quarterfinal and semi-finals Unlike the UEFA Champions League where reaching knockout stage delivers €1.5m. Or as Dundalk FC have seen on reaching the play-off’s was worth 7m this season – and a place in the Europa League. Even having just failed to get into the Champions League proper.
The IRFU are the central purse holders for rugby in Ireland and in the past have benefited from a disproportionate distribution of income given the nation’s size, a positive perhaps from the International Rugby Board [IRB] settling in Dublin. The financial bonus despite that the Irish TV market contributes only €5 million per annum to the central pot (c.€3m to the Six Nations pot and c.€2 million to the ERC pot). The figure shows the other TV markets contribute much more. Yet the IRFU therefore receives €16 million each year from the central pot (c.€11m from Six Nations and c.€5m from ERC). This constitutes about 24% of the IRFU's total annual turnover.
The latter though changes somewhat with the establishment of new European Rugby Champions Cup, now based in Switzerland. Really the love child in effect of Premiership Rugby and the Ligue Nacional de Rugby in France. In effect addressing those imbalances prevalent with the Heineken Cup and the ERC [ European Rugby Cup]. The losers in the revamp have been the Irish clubs as the other nations became fatigued with Ireland’s domination of the Heineken - winning it five times in seven years. Coupled with a Grand Slam in 2009. But to the victors go the spoils. Or so it was.
But from 2012 the unrest saw the English clubs agree a TV deal with new upstart, BT Sport, that, and that opened the way for an alternative broadcast route for English and French rugby and staged a breakaway in 2014. The changes impacted Irish rugby at a number of levels and coincided with a loss of dominance in the competition by both Leinster and Munster. A trend though which has now seen no Irish team reach the final since 2012 with French and English clubs now dominating that fixture. The current Champions Saracens being losing finalist on previous occasions.
Now the Premiership announced the salary cap would be raised from £5.5 million to £6.5 million in the 2016-17 season and £7 million the following year. Accounting for two marquee players who would be excluded from the cap along with home-grown player credits, compensation for missing England players and a fund to cover long-term injured players, some clubs will be able to spend upwards of £9 million. That has led to a spate of eye-catching signings. Bath, who are interested in South Africa scrum half Fourie Du Preez, have recruited Wales pair Luke Charteris and Taulupe Faletau; Leicester have snapped up the Australia centre Matt Toomua; and, perhaps most strikingly of all, Northampton have persuaded Louis Picamoles, the France No 8, to leave Top 14 Toulouse. However, not every club spends up to – and in certain cases nowhere near – that salary cap.
There are fears that while the increased spending power will narrow the gap with French clubs, the Premiership will come to be divided between the haves and have‑nots. Given that Leicester, Northampton and Saracens have qualified for the play-offs for the past six seasons, that divide is already partly established. But for a league that prides itself on its competitiveness the idea of a two tier game - such as exists in the football Premier League -will be deeply uncomfortable. Saracens are unlikely to be perturbed, especially since they boast Europe’s only perfect record this season. The signing of Schalke Burger only making them more formidable. But then that was exactly what Munster did in their heyday.
In terms of income the distribution of EPCR’s revenues will be made on the basis of an equal three-way split to the Top 14, Premiership Rugby and Prowl teams. But for the second year in succession, Munster failed to emerge from the pool stages and former player Alan Quinlan was forthright in his analysis on their as final game this season in the tournament:
“Embarrassing, humiliating, disgraceful, these are words that spring to mind,” he told Sky Sports viewers. “Munster have no divine right to win these games…It’s embarrassing. This whole organisation needs to be dissected.”
“Guys falling off tackles, no desire, no shape, it’s very distressing to watch. Borderline disgraceful, disgraceful might be a bit too strong. When guys are falling off tackles and walking around, it’s frustrating and a real worry...There’s no attack whatsoever.”
So Rassie Erasmus has a big job ahead. With the players in the squad he can win games. Or more accurately, he must win games. Then winning could get them closer to silverware so that by April the club are better placed to address the payments that come due. If not, then the burden of expanding Thomond Park and the investment in the club may prove their biggest opponent. In that sense Philip Browne’s words are only stark but understandable.
But perhaps inevitable and prophetic.
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