Rugby Union

Saturday Serve

ACT Brumbies in precarious financial position

Are the ACT Brumbies on borrowed time and, if so, how long do they have to turn things around?

Brumbies fans
Brumbies fans Photo: Melissa Adams

The financial figures to be presented in this year's annual report on Tuesday are scary.

The Brumbies have recorded a financial loss of $1.07 million.

But the most frightening figure of all is that the Brumbies have about $2 million remaining in the bank from the $11.375 million sale of their former Griffith training site last year.

Of course, $5 million of that has been injected into the construction of the new training and administration base at the University of Canberra. There were other costs and debts, totalling about $2million, covered in that sale, too.


But this time last year, approximately $4 million was to be invested into an independent trust, known as the Brumbies Rugby Provident Fund, for the future funding of ACT rugby. The investment in that trust is yet to be made and the figure has virtually halved.

In December last year, outgoing Brumbies chief executive Andrew Fagan said the sale of the Griffith site had "cleared our debt" and allowed the Brumbies to invest in new facilities at UC "that will give us a new home for at least 40 years".

But it would take only another two years like the one just passed before the Brumbies' savings would be gone. Where could they turn then?

The Australian Rugby Union is in a precarious financial position, sweating on a new 2016 broadcast deal that promises to be underwhelming, especially when compared with the billion-dollar deals enjoyed by rival codes AFL and NRL.

Annual funding to clubs from the ARU's broadcasting deal has dropped about $1.5 million in the past decade, from approximately $5.2 million in 2004 to $3.7 million this year.

The ACT government is not in a position to be throwing extra money at football teams when people's homes are filled with deadly loose-fill asbestos.

The big issue with the Brumbies' financial status is where do they find more revenue?

Expenditure has basically remained steady. There's no escaping that it costs approximately $19 million to run a competitive Super Rugby organisation out of Canberra. But finding the money to cover that cost is getting harder every year.

As a playing group, the Brumbies are in the best shape they've been in for a decade. They made the preliminary final this year, following on from a grand final appearance last year.

Before that, the Brumbies hadn't even contested a finals match since their championship-winning season in 2004.

But that hasn't translated into off-field success.

This year sponsorship, gate-takings, corporate hospitality and merchandise sales were all significantly down.

The Brumbies are also heading into 2015 without a major naming-rights sponsor, and if that void is not filled it would leave a black hole of about $1 million.

The sponsorship search is also compromised, given the Brumbies are also looking for their third chief executive officer in a year. Long-term board member Doug Edwards is leaving the role to pursue his business interests in Queensland.

Player registrations at the junior and grassroots levels are rapidly rising, along with frustration from clubs which perceive they are dipping into their pockets to prop up the Brumbies. There's already been threats of breakaway competitions from clubs under the auspices of the ACT and Southern NSW Rugby Union.

Tuesday's Annual General Meeting threatens to be fiery, although no one is prepared to publicly state their battle plan.

It's understood John Gillespie, the board representative for clubs, is set to challenge for the chairman's role held by Sean Hammond.

Gillespie, founding principal of Woden-based financial firm the Gillespie Group, would not comment when contacted by The Canberra Times during the week, even to confirm or deny a potential challenge.

But regardless of who fills the chairman's seat, a shake-up of the board is looming and necessary.

Every board member faces an individual review over the next two months.

The future of a player's representative on the board, to be filled next year by Scott Fardy, is also being considered. It's an interesting development, given the former player representative on the board - captain Stephen Moore - stepped down from the position this year and indicated that all board positions should be filled on merit. 

Other drastic changes may need to be considered by the Brumbies, too. The Brumbies' agreement with Canberra Stadium expires at the end of the 2015 season and it would be prudent to at least explore the opportunity of selling some home games to areas outside Canberra.

Under the current agreement, the Brumbies must play all eight home games at Canberra Stadium. But some low-drawing matches at the venue cost the Brumbies money.

To his credit, Hammond has showed leadership by answering questions confronting the club in a detailed interview with The Canberra Times.

But this time last year, Hammond spoke to me about the 2012-13 financial figures and his concern about an operating loss, before depreciation and amortisation, of $141,085

"The reality is without the sale of the site at Griffith we wouldn't have been able to fund last year's loss," Hammond said at the time, admitting "we would have been insolvent at the end of the year if the sale hadn't gone through, if the sale was never going to go through".

He stressed the organisation's ongoing need "to become profitable". Instead, this year's loss is more than seven times the 2012-13 deficit. As I said, scary.