SARU reveals deficit after 'extraordinarily challenging' year

NEWS: The South African Rugby Union reported a deficit of ZAR6.8 million before tax in 2023.

This was due to significant game-related expenditure in an “extraordinarily challenging” financial year, the Union’s members were told at the Annual Meeting in Cape Town on Thursday.

The result was described as a “major achievement” by Rian Oberholzer, CEO of SARU, against a global rugby landscape in which many other national unions had reported significant losses.

A sizeable 38 percent of annual union revenue of ZAR1.35 billion was expended on the investment in participating in the United Rugby Championship and European Professional Club Rugby (EPCR) competitions (ZAR385 million) and the ultimately successful Rugby World Cup campaign (ZAR133 million).

Other Springbok and national team activities (ZAR326 million), and securing player image rights and local insurance (ZAR124 million) accounted for 33 percent while the ZAR347 million distribution to member unions was 25 percent of income.

The escalating costs arrived in a year in which revenues traditionally decline because of a reduction in the Springbok fixture programme which resulted in a seven percent decrease in group revenues from ZAR1.54 billion in 2022 to ZAR1.44 billion.

“It was an extraordinarily challenging financial year,” said Oberholzer, “and to achieve the outcomes we did, both on and off the field, was a major achievement.

“Income declines in World Cup years, while costs go up, and for the first time that challenge was compounded by the fact that we continue to invest in Northern Hemisphere participation.

“Those investments continue to pay off, but it makes for a very challenging balancing act on an annual basis. Those challenges will lessen once we become shareholders in the URC, but the general financial sustainability of the South African rugby ecosystem remains an ongoing concern.”

The non-participation in the traditional inbound and outbound series and a truncated Rugby Championship impacted on revenue while the contractual commitment towards World Cup player and management win bonuses increased team costs, although the impact was softened by securing a performance-based insurance product and a sponsorship incentive arrangement.

The absence of a Currie Cup sponsor was offset against better-than-expected revenues from merchandising royalties, and Test guarantees for World Cup warm-up matches against Wales and New Zealand.

The potential deficit was offset by group grant income recognised from World Rugby increasing significantly from ZAR36.4 million in 2022 to ZAR290.6 million. Grant income is not reported as revenue, but as other operating income.

“All international federations are struggling to make ends meet, if you look around the rugby world,” said Oberholzer. “We are no different to our peers in that, except for the fact that we have managed to report a far more modest operating loss than others have reported.

“Unlike many of those peers, we do not have any debt and have reported an unqualified audit once again.

“This is a significant position we have managed to retain, considering the legacy of the pandemic and the scale of the annual investments we make in the playing of the game.

“I’d like to thank all in the sport for their support and contribution in making such an outcome possible.”

*Meanwhile, Francois Davids was re-elected as the Deputy President of SARU at the meeting on Thursday.

He will serve a four-year term.

Davids was opposed by Jerry Segwaba, the former President of the Free State Rugby Union.

Two positions on the Executive Council were also contested. Jannie Louw was re-elected for a second term and Willie Small was elected as a new member for a four-year term.

The full membership of the Executive Council now comprises (in alphabetical order, elected unless stated): Mark Alexander (President), Francois Davids (Deputy President), Hennie Baartman; Belia Karsten, (independent), Melody Lekota (independent), Jannie Louw, Ms Mary-Anne Musikewa (independent), Rian Oberholzer (CEO), Tryphosa Ramano (independent), Abubakar Saban (CFO), Randall September, Willie Small, John Smit (players’ association nominee), Mimi Tau (independent).