Where are WP’s missing millions? by Gavin Rich
Posted on 27 February 2007 - 21:57
Forget the Stormers, forget the ongoing uncertainty about the coaching future of Kobus van der Merwe – the biggest challenge facing Western Province rugby right now is how they are going to survive financially.
It became clear on Tuesday with the publishing of the annual financial statements that WP, so long regarded as one of the richest unions, have become the latest provincial union in South African rugby to feel the financial pinch. They have reported a loss of over R9-million for the last financial year.
Part of this short-fall may be off-set by the R10-million the union are to receive at the end of this month for the selling off of a portion of the Brookside fields for office developments. This money will be used to settle the overdraft facility in the union and to carry on with operations.
However, this does not explain the most disturbing aspect of the financial statements released by the WP Rugby Football Union on Tuesday, which is the massive drop in the cash reserves available to it. A year ago the reserves stood at over R23-million, but today there is just R1.6-million in the bank -- a staggering drop in just 12 months of R22-million.
In addition, the current liabilities exceed current assets by R14 898 354. The Group, which is the WPRFU and the commercial arm, the WP Rugby (Pty) Ltd company, lumped together, made an operating loss for the year of over R12-million.
As can be gathered from this, the commercial operations at WP have still run smoothly, despite poor performances by the Stormers in the past year. WP Rugby managing director Rob Wagner pointed out that match gates do not impact on the financial performance of the union, as all commercial interests relating to the senior representative teams are absorbed by the company.
“We actually exceeded our budget for gate income in 2006. This was because the Stormers’ final match of the Super 14 against the Bulls was a sell-out, and we also had a larger than expected crowd for the test match against France,” said Wagner.
“The income generated out of the team is doing well. However, we are treating the possible ripple effect from the current onfield failures as a massive concern, which is why we are calling a Stormers board meeting for Friday to discuss the Stormers' performances.”
If you break up the statement in such a way as to make the commercial and amateur arms of WP distinct from one another, an interesting picture emerges. The union loss for last year was over R16-million, which effectively means the company made a profit of just over R7-million.
This is in keeping with a disturbing but common trend in South African rugby -- the professional administrators, who work in rugby on a daily basis, are in touch with the realities and the expenses of the modern game, and know how much there is to spend, but elected officials are too often out of touch with reality and perhaps lack accountability when it comes to spending.
The loss sustained by the union in 2005 was R765 810, but the company dragged the group into the clear to record a profit for the year of just under R6-million. The bottom line though is not whether the professional arm is doing well or whether the union is dragging WP down, it is that WP rugby as a whole is in dire financial trouble and some would argue that technically they could even be declared insolvent.
WPRFU chief executive Theuns Roodman was not available on Tuesday night to comment on where the money has all gone.
