Headlines:

• Core business continued its bounce-back from Covid with revenues finishing at £68.3m * (21/22 £57.9m), the highest revenue Scottish Rugby Limited has ever delivered, surpassing pre-Covid turnover high of £61.1m in 2019

• The £10m year on year revenue growth driven by ticketing sales which saw sell-out attendances at Scottish Gas Murrayfield, combined with record men’s national team performance at the 2023 Six Nations and the A-list concerts hosted at the stadium

• Cash position at the end of May 2023 was £20.5m (2022 – £21.4m)

• Costs of £75.4m (21/22 £61.0m) reflect c£7.1m of incremental revenue driving, structural changes, inflationary cost pressures and c£7.3m of strategic investment

• Core business (measured before strategic investments) managed to absorb inflationary pressures and generate a small profit at EBITDA[1]

• The £7.3m of strategic investment represents utilisation of a portion of the extraordinary investments received from private equity over the last four years of £52m

• This utilisation of strategic investment drives an accounting deficit for the year of c£10.01m (21/22 surplus of £29.0m) as the large income credits over the last three years continue to be released through strategic investments for the future of the game

• Investment in community rugby up £1m from £7.6m in 21/22 to £8.6m in 22/23 or 15.02% of average turnover over the previous four years

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The performance of Scotland men’s national team in the 2023 Six Nations and sell-out crowds at Scottish Gas Murrayfield on matchdays and concerts helped to generate Scottish Rugby Limited’s highest ever revenues of £67.9m** its 2022/23 Annual Report has reported.

The organisation also took the decision to continue using its private equity reserves to provide strategic investment of £4.8m to its two pro-teams over the last financial year.

The strategic investment across Glasgow Warriors and Edinburgh Rugby was to provide a deeper player foundation for the Scotland national team, given its central revenue generating role supporting the whole of rugby in Scotland, and to off-set losses incurred by the United Rugby Championship through the Covid pandemic.

The integration of the private equity partner CVC into the United Rugby Championship as a shareholder generated a significant one-off return for each shareholding Union. It also meant revenues generated by URC were allocated across all shareholders, but as a smaller percentage dividend.

This, combined with the arrival of South African teams into the competition, saw Scottish Rugby Limited take the decision to reinvest the monies generated by the CVC transaction into its URC pro teams.

The result of these investments can be seen in the contribution both Glasgow Warriors and Edinburgh Rugby make to the Scotland national team, with on average 79% of national team players on the field from Glasgow and Edinburgh (21/22 70%) and 86% during Rugby World Cup 2023.

Scotland’s two professional teams achieved self-generated revenue growth of +7% year on year which was also +20% vs 2019 with a further 5% anticipated in the 2023/24 financial year.

Work has also been undertaken to ensure costs are being managed appropriately, with EBITDA trending to profitability within the foreseeable future.

A further £2.5m was invested from the same sources to deliver on the Women & Girls strategy, including awarding 28 full-time contracts to senior players for the Scotland Women squad in December 2022.

These investments, coupled with a challenging inflationary market felt by all UK businesses, saw a £10.01m deficit recorded in the accounts over the 12-month period as the £52m of investment gains from private equity cash injections over the previous three years are invested for future growth.

Investment in Scotland’s community game was consistent and grew circa £876K in terms of support provided by Scottish Rugby’s Rugby Development Dept. and through cash available to clubs directly via Club Support Funds ring-fenced for sustainability and participation projects.

Chair of Scottish Rugby Union, Professor Lorne Crerar CBE, said: “I’d like to thank everyone who has contributed to presenting these accounts which for the first time sees the Scottish Rugby Union in place to provide its oversight and custodian role in support of the Scottish Rugby Limited’s operations.

“It is clear rugby is not immune from the difficult economic landscape every other business has had to navigate, which therefore makes the record revenue figure achieved in our last financial year something to be applauded and acknowledged.

“We are fortunate to have the ability to invest our private equity income to underpin key strategic areas and while our deficit cannot be ignored I have confidence in the Scottish Rugby Limited Board to be assessing our financial position and acting accordingly.”

Scottish Rugby CEO, Mark Dodson, said: “Scottish Rugby Limited’s record revenues for the last financial year reflect the hard work delivered by our people both on and off the pitch. On the pitch our national Scotland men’s team delivered its highest placing in the Six Nations which was achieved in front of sell-out crowds at Scottish Gas Murrayfield, demonstrating the importance of the team performing to our financial well-being.

“Off the pitch the executive and all our people have worked tirelessly to secure commercial investment, manage cost and steer the organisation through a difficult economic market.

“The ability to draw on our private equity income to invest in key strategic areas is also to be welcomed and a testament to the vision and ambition which drove it being secured with our partners in the United Rugby Championship and Six Nations over recent years.”

Scottish Rugby’s Chief Financial Officer, Hilary Spence, said: “The performance of the core business, in the form of Scottish Rugby Limited’s finances, against the backdrop of a hyper-inflationary environment is pleasing.

“Record revenues are enabling us to face the cost and structural challenges we meet, combined with the income received over the last three years from private equity which allows us to make some necessary strategic investments. However, given the tough economic landscape we are operating in, the business will need to keep evolving and adapt if it is to be able to continue to invest in our key assets of community rugby, our professional male and female players and our stadium.”

The Annual Report also highlighted some exceptional costs. These relate to on-going measures being taken to manage expenditure and maintain financial stability by the organisation. This included spend generated to provide an internal restructuring of Scottish Rugby’s operations to efficiently manage headcount costs, supported by a voluntary redundancy programme which ran for a fixed period in 2023.

Average employee numbers grew by 13 on the previous year, with bringing services in-house, investment in state school officers and women and girl’s strategic support being the only areas of headcount expansion.

The increase in total employee costs was substantially driven by investment in the pro teams, national team bonuses for the record placing in the 2023 Six Nations and the introduction of Scotland Women’s playing contracts

A further £364k in exceptional spend relates to one-off costs incurred by Scottish Rugby Limited to set up the legal, tax and accounting processes and procedures required to establish the new governance structures for the Scottish Rugby Union.

This spend also takes into account the fact-finding exercise established in August 2022 which reviewed the medical care provision provided to 19-cap Scotland international Siobhan Cattigan, who tragically passed in November 2021. The exercise saw 48 people contribute to provide their experiences on this matter, which were then collated and presented to the SRL and SRU boards in summer 2023.

The Scottish Rugby Union’s own accounts show a one-off cost of £450k which was incurred to establish its new governance board, recruitment for the Board’s membership and respective operating functions. On-going costs to support the functions of the SRU are estimated at £175k per year.

To view the full 2022/23 Annual Report please click the link here:

[1] Earnings before interest, tax, depreciation and amortisation, a proxy for good financial health introduced in last year’s financial statements.

*£68.3m revenue reduced by a one-off £450k cost incurred by Scottish Rugby Limited on behalf of Scottish Rugby Union to fund the implementation of the new governance structure, **resulting in revised revenue figure of £67.9m.