Written evidence submitted by The Rugby Football Union
IMPACT OF COVID-19 ON DCMS SECTORS – RUGBY FOOTBALL UNION WRITTEN EVIDENCE
1.1. The Rugby Football Union (RFU) is the governing body for Rugby Union in England. Across England there are 2.5m people enjoying rugby, 500,000 regular players with more than 100,000 volunteers across 2,000 clubs. All of the profit made by the RFU is invested back into the community game and the men’s and women’s England age grade and senior teams. On 5 May, the RFU gave oral evidence to the committee alongside the ECB and EFL. This written submission will expand on the evidence provided.
2.1. Covid-19 has significantly impacted both the community and professional game in England. With the introduction of social distancing measures rugby stopped being played and the game’s sources of revenue were cut off. Additionally, all club leagues below the Premiership were ended early on March 20th.
2.2. Financially, the impact on rugby has been devastating. The RFU has undertaken financial scenario planning to understand our financial position as we seek to recover from Covid-19. To note, our forecasting work is at a more advanced stage than when we gave evidence to the committee and the data below differs from that presented. In the best case scenario (Autumn Internationals against Southern Hemisphere competition and Six Nations in front of capacity crowds, if safe) the RFU would see a £32.4m reduction in revenue (this scenario is now highly unlikely). In the medium case scenario (Autumn Internationals behind closed doors and Six Nations go ahead as normal) we would see a £105.8m reduction in revenue. Finally, in the worst case scenario (Autumn Internationals do not happen and Six Nations is behind closed doors) the revenue reduction would be significantly higher and challenging to recover from.
2.3. Based on the above, we believe it will take the RFU four to five years to recover financially. In response the RFU has taken a series of cost saving measures including a zero based budgeting approach for the next financial year and temporary pay cuts for all staff. Those staff earning over £33,000 took a 10% pay cut for three months and the Men’s Senior Team coaches have taken a 20% pay cut for the same period. The executive team and Head Coach have taken a cut in remuneration equating to 25% of their annual salary and the Board has taken a 75% pay freeze for the remainder of our financial year. The cuts in remuneration for the executive team and Head Coach have now been extended into the next financial year.
2.4. To support the community game through this challenging time, the RFU created a £7m relief package to support clubs. The £7m was made up of monies ring-fenced for and diverted to the community game as well as additional funding. The Relief package comprised of:
2.5. However, the impact of Covid-19 is more than financial and the RFU recognises the role that our clubs play in their communities and as a support network to the rugby family. The RFU communicates regularly with the community game with a view to getting everyone back playing rugby as soon as it is safe to do so. To help keep people fit we had Jonny May (England Men’s international) and Vicky Fleetwood (England Women’s international) filming workout videos and we also encouraged everyone to get involved with the 2.6 challenge as a way to fundraise for charities. So that training and education can continue we have held online coaching and refereeing webinars and Eddie Jones, the England Men’s Head Coach has been involved in these. Our webinar with Stuart Lancaster (former England Men’s Head Coach) had over 2,000 people join. Finally, we have held sessions online to help Constituent Bodies and volunteers understand how best to access support (both RFU and government) to make sure that rugby survives.
3.1. Government’s financial interventions have been a lifeline to both our clubs and ourselves. The RFU has benefited from the Job Retention Scheme, furloughing over 60% of staff, the business rates holiday, VAT/PAYE deferral and potentially the Coronavirus Large Business Interruption Loan Scheme in conjunction with our bankers NatWest. Collectively these measures have reduced financial pressure on the RFU in the immediate short term, allowing us to protect our staff and core operations. Additionally, our clubs have benefited from the business rates holiday, Coronavirus Retail, Hospitality and Leisure Grants and VAT/PAYE deferral, with the grant in particular providing a vital financial lifeline.
3.2. However, community and professional sport rely on large numbers of people getting together, whether that is to train, play or watch. It is likely that mass gatherings are going to be one of the last activities to return and rugby (due to its contact nature) one of the last forms of sport to return to normal. For Rugby Union the impact will be felt longer than some other professional sports due to the fact that 55% of the RFU’s revenue is made from match days (ticketing and hospitality) with broadcast being a smaller percentage of our income. Consequently, this means sport returning behind closed doors alone is not the solution to our financial challenges.
3.3. At the earliest the RFU will start to generate some income (although not as much as originally forecast) in November 2020. With community rugby likely to return sooner than the RFU is generating revenue, we will need continued financial support to ensure we can fund the game at the level required. Consequently, in the medium term, to support the recovery of those sectors most impacted by Covid-19, we would strongly argue for an extension to the Job Retention Scheme. Additionally, we would like government to consider extending the deferral period for VAT and PAYE, as well as considering writing off VAT and PAYE debt for the original deferral period for the most impacted sectors. Furthermore, we would like the government to consider extending the business rates holiday for those sectors and/or businesses that are unable to operate at capacity, or as normal, for longest due to government restrictions. Twickenham Stadium is a valuable asset and generates significant revenue for the RFU but only when it is operating at capacity.
3.4. In terms of support from arms-length bodies, we have been working with both UK Sport and Sport England. UK Sport classifies Rugby Union (Sevens) as a self-funded Olympic sport, meaning to date neither the RFU nor GB set up (men’s or women’s) has received funding. However, self-funded sports are the hardest hit by Covid-19 as they are currently unable to generate significant revenue. With the postponement of the Olympics resulting in added financial stress during a challenging time, the RFU (in collaboration with the Welsh and Scottish Unions) has approached UK Sport for financial aid and are awaiting a decision. We would welcome the committee’s support in securing this much needed money so that our teams can realise their Olympic potential.
3.5. In addition to the financial support offered by the RFU, a number of our community clubs have benefited from Sport England’s support. To date, 229 clubs have received Sport England grants worth £1.35m to make sure they can survive in the short term. Now that clubs short term futures have largely been secured, the focus must shift to getting community sport being played again, as this will enable clubs to open their doors and generate revenue. The RFU has been involved in the working group drafting the return to play protocols for elite sport. Collaboration between DCMS, UK Sport, Public Health England and National Governing Bodies has ensured that guidance issued is of the highest quality. However, the same level of collaboration and urgency has not been evident to date in drafting the return to play guidance for community sport. It is essential that focus now shifts to getting people back playing sport as soon as it is safe to do so and that national governing bodies are central to the drafting of these plans.
4.1. Based on our financial scenario planning and forecasting we believe it will take four to five years for the RFU to recover financially and this is only if the Autumn Internationals go ahead in 2020. This is due to financial losses as a result of the virus and then not hitting financial targets due to changes in consumer, broadcast and sponsor behaviour. Consequently, investment in all areas of the game, both community and professional, will have to decrease in line with the percentage reduction in revenue.
4.2. The RFU is also concerned that the virus has had a disproportionate impact on team sports and that people may be hesitant to return to rugby. We are currently undertaking some research to better understand what the rugby community is thinking and how we can ensure as many people as possible remain active in our sport. However, with contact sports likely to be the last form of sport to return to normal and a possible decline in participation as a result, this should be taken into account when Sport England is reviewing its investment. One measure of success and a prerequisite for maintaining funding levels is usually maintaining or increasing participation levels as reported in the Active Lives Survey. Any decline in participation due to Covid-19 may take time to recover from (longer than the one year of rollover funding guaranteed by Sport England) and it would be counterintuitive to penalise the RFU in the next round of funding should participation drop as a result of the epidemic.
4.3. In general, sport is part of the solution to the Covid-19 problem. Obesity has been identified as one of the risk factors and a healthy, active lifestyle, including participating in sport, can create a healthier nation better able to fight of this virus. To support sport in making the nation healthier, government must continue to deliver on its manifesto pledges to improve the provision of sport in schools and invest in sports facilities across the country, ensuring greater access for all. Additionally, government should continue to invest in the hosting of major events as a way to inspire people to get involved and stay involved in sport.
4.4. Collectively, sport has also supported finding ways for government to raise money to reinvest in sport. Currently, Sugar Tax revenue is ring-fenced for investment in sport. A review of this tax and extending the range of drinks it applies to could help increase the amount that could be invested into both school sport but also sport more widely. Another proposal put forward by a number of sports was for the government to introduce a betting levy. Although the gambling industry has been hard hit by the virus, the RFU believes that as part of the review of the Gambling Act a levy should be considered as a way to raise additional revenue to be invested in sport. The impact the lack of live sport has had on gambling revenues has proved the value of our product, something they can currently use for free and without investing in its development (community or elite).
5.1. The main lesson learned is the need for clear public guidance. Furthermore, this guidance is most successful when drafted collaboratively with those charged with delivering and acting on it. In turn, this could be translated into more collaborative policy making in the future.
6.1. As noted above, a fitter and healthier nation, is part of the solution to tackling obesity and relieving strain on the NHS. Investing in sport both via national governing bodies and schools should be a central part of a preventative health strategy.
6.2. In addition, the nation’s response to the virus has shown that young people are willing to and can be truly inspirational volunteers. An aging volunteer workforce is an issue across sport and we need to work together to find a way to get these young people involved in rugby and community clubs generally. Volunteers are the lifeblood of community sport and community sport would not exist without them.
6.3. The Rugby Football Union, like many other organisations, has had to adapt its ways of working and embrace technology during the epidemic. Online video meetings have given us the ability to meet with rugby stakeholders across England in a more flexible and efficient way. Our online coaching and refereeing webinars have proved extremely popular with one being watched by over 2,000 people. This shows us how technology can play a more central role in engaging with the rugby ecosystem and we have to capitalise on this to help us provide a better service to the game. All sports will have learnt a great deal during the pandemic and it will be important that we have the opportunity to share this learning amongst ourselves and with policy makers.