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USA Rugby has confirmed reports that the national governing body is in poor financial health. A public statement issued on Wednesday outlined challenges resulting from significant ‘un-budgeted expenditures’ by high performance programs that have left the organization scrambling to repay money owed to both World Rugby and its membership.
An article posted on the Rugby Wrap-Up written by USA Rugby Congress member Stephen Lewis on Tuesday identified the Senior Men’s XVs program and ongoing legal battles as chief culprits of a projected third-quarter deficit that exceeds $1 million USD. As a result, Men’s XVs Team Managers Dave Hodges and Chris Hansen have been removed with other staff members also understood to be in the firing line.
It’s the latest in a string of management disasters that has left USAR financially beholden to World Rugby. A for-profit arm of the organization – Rugby International Marketing – incurred heavy losses while the recent Rugby World Cup Sevens in San Francisco and the hosting of a neutral-venue clash between Wales and South Africa also left the union in heavy debt. USAR were subsequently forced to negotiate a $4 million line of credit from World Rugby to cover ongoing operations expenses.
The USAR statement in its entirety can be read below:
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Dear USA Rugby Membership,
USA Rugby recently completed financial forecasts for Q3/Q4. There was an overspend in High Performance, resulting from un-budgeted program expenditures in lead up and during Rugby World Cup 2019. In conjunction with non-projected legal fees and shortfalls in program fundraising revenues, USA Rugby is currently projecting a significant financial loss in 2019. We are working to close the year with expedited income streams and refinancing lines of credit to work towards ensuring financial obligations through the end of 2019 and into Q1 of 2020.
Like you, the Board is frustrated that USA Rugby will face this financial backstep, however we support the corrective measures the leadership of the national office has taken. We understand High Performance faces resource challenges; however, it is vital that we establish proper controls to assure that this will not occur again.
Given the severity of the financial situation and impact on the rugby community, the board wants to be transparent about how this fiscal situation developed. The Men’s Eagles program leading up to and during the Rugby World Cup 2019, as well as overspends in other areas of High Performance, accounted for the majority of the 2019 loss. Compounded with legal fees attributed to defense costs in the Shoninger (PRO Rugby) and United World Sports lawsuits, USA Rugby is facing a severe budget shortfall in 2019 and cash flow challenges in 2020.
Corrective measures have been made, including staffing changes and cost reductions of projected activities and projects scheduled this year. In terms of bridging the financial gap in 2019, we are working with partners to accelerate certain 2020 income streams, refinance current lines of credit, and ultimately meet existing financial obligations of USA Rugby.
We as a Board are of course discouraged to be facing another year of financial challenges. Nevertheless, we have confidence in the plan moving forward and appreciate the patience and support of the rugby community.
Barbara O’Brien, Board Chair
Ross Young, CEO
