Baron: RFU heading for £59m loss this year

Francis Baron has accused the RFU hierarchy of publishing misleading interpretations of its own financial position, which he believes is increasingly precarious, and is being ‘misrepresented' to its 1,200 member clubs.

Baron, a former RFU chief executive with 25 years' Board level experience in five PLC companies, including an impressive 12-year record in managing RFU finances, points to the massaging of a £6.3m loss in 2022-23 as the tip of a huge financial iceberg which the RFU's own forecasts predict will result in a £50.1m loss in 2023-24.

Baron's own projections, based on figures in the 2022-23 RFU Annual Report published last week, are that this year's loss will be closer to £59m.

He believes this position is unprecedented among National Governing Bodies in sport, such as the FA, ECB, or LTA, and could not only put the RFU in peril, but leave its member clubs without a functioning governing body.

Baron's warning could not be clearer: “No National Governing Body has ever incurred anywhere near this scale of loss. What is more, no company listed on the London Stock Exchange has incurred such losses and survived. The reason for this is straightforward – companies incurring such losses go bust”.

Concern: Francis Baron

Of equal concern to Baron is the RFU Board's failure to act after CFO Sue Day's “Detailed Long Term Financial Forecasts” dropped the RFU's £50m loss bombshell almost six months ago.

Baron focuses on Day's statement to Council at that time. “The CFO's report to Council in June, said: ‘Although we are currently unable to meet our cost base target, the BFRG (Board's budget committee) agreed that we did not need to make urgent changes to correct that'. So, we have the CFO producing dire financial forecasts of continual and existential levels of loss-making, but the RFU Board and executive have decided they don't need to do anything about it.”

Baron says the inertia and lack of transparency was also evident in an RFU press release on the 2022-23 Annual Report, which focused on an operating profit of £4m, while ignoring the net balance of a £6.3m loss.

Baron told The Rugby Paper: “In my professional opinion, it is deliberate obfuscation to take a line from the P&L account before the costs have come out. It is disingenuous. The only line that matters in business is the bottom line – and that is the net profit which is available to your shareholders”.

It also glossed over that the deficit would have been significantly worse, at £11.8m, but for a special one-off funding grant of £5.5m from Sport England.

Baron says the claim by the RFU's current chief executive, Bill Sweeney, that the operating profit figure represented a positive result, “due to robust financial management”, was totally inaccurate.

He added: “It is up to the RFU Council and member clubs to hold the current RFU Board and chief executive to account, and to demand urgent and detailed plans for immediate financial reform – including a complete reappraisal of the unaffordable £296m PGP.”

An RFU spokesperson said: “It has been a challenging few years financially for rugby in England. The RFU is facing these challenges too, but from a position of stability because of our strong financial discipline. It is critical that we maintain that discipline so that we can continue to support all elements of the game now and in the future. We have made an operating profit in the year of £4m, but are facing challenging future economic conditions, and so it remains very important to manage our finances very tightly.

“Rugby finances work in four-year cycles based on the number of men's home inter nationals staged at Twickenham Stadium. 22/23 is the third year in the Rugby World Cup cycle when there are the highest number of home internationals at Twickenham Stadium and, as such, these higher revenues were expected. Next year, as England Autumn Inter nationals were replaced by the men's Rugby World Cup, the 2023/24 annual results will show a significant loss.”