SA Rugby reports minor deficit despite record income

The SA Rugby Union (Saru) has reported record broadcasting and sponsorship revenues for 2022 but still posted a minor deficit because of its considerable investment to gain entry to northern hemisphere competitions, member unions heard at its annual general meeting in Cape Town on Tuesday. 

Group revenues increased to R1.54bn (2021: R1.28bn) thanks principally to increases in income from broadcasting (R828m from R654m) and sponsorship (R396m from R222m), but the group’s pretax deficit of R2.62m included expenditure of R330m attributable to participation in the United Rugby Championship (URC) and European Professional Club Rugby (EPCR) competitions. 

The increased broadcasting revenues were in part due to the higher value attributed to the 2022 Springbok calendar, featuring a home series against Wales and a full Rugby Championship programme. 

However, CEO Rian Oberholzer warned that broadcast revenue would be significantly reduced in 2023, in the absence of a touring Test team from the northern hemisphere and due to a truncated Rugby Championship programme. 

Broadcasting revenues were offset against the participation fees being paid by SA Rugby to gain entry to European rugby. 

“From being a recipient of net income from Super Rugby as a founding member of Sanzaar, we are now a net contributor to European club rugby as our participation costs on the way to again becoming a net recipient in the medium term,” Oberholzer said. 

“Historically, SA Rugby might net about R160m from Sanzaar. But we are now in a situation where we are having to pay our way into an already established entity.” 

Those participation costs — plus the responsibility of carrying all the international travel and accommodation costs of the SA teams — amounted to R330m in 2022. 

Saru president Mark Alexander said continued investment in the URC and EPCR competitions is essential as it carves its way to full membership and shareholding, even though the financial aspect of this pathway is hurting it in the short term.  

“The long-term goal and returns that will come will validate this position, both from financial and high-performance points of view. Our participation in the URC and EPCR happened in quick succession and came at a significant cost to Saru, but the commercial opportunities to be realised within the next two to three years will render the competitions profitable and strengthen the financial sustainability of SA rugby,” Alexander said. 

Oberholzer warned that SA Rugby will have to continue with austerity measures in its other activities until the successful conversion to shareholder status at the conclusion of the 2024/25 season. 

The return to full rugby activity in 2022 also resulted in a return to pre-Covid-19 levels of investment in the Springboks and other national teams (R347m from R280m) with additional camps and Rugby World Cup warm-up matches for XVs and sevens women’s teams, Junior Springbok men’s overseas participation, Under 18 series participation among other investments in the department. 

The operational and commercial delivery costs associated with tournament commitments (including the URC and EPCR) increased from R292m to R429m. There was an increase in player insurance and image rights costs from R73m to R104m. 

The expenditure was justified by improved results on the income side, said Oberholzer. 

“It is testimony to the success of a winning, transformed Springbok team that the appeal of the team has probably never been higher,” he said. “The anecdotal evidence supports the theory that the team and sport represent one of the few beacons of hope on SA’s troubled socioeconomic landscape. 

“To prove the point, nine new companies joined the SA Rugby family in 2022, while another five either renewed, returned, or added to their sponsorship portfolio within the sport — the appeal of the team and sport is in good health.”