WRU Group reports record profit for second successive season
4th August 2006, 1:52 pm By Principality Stadium
If 2004 / 2005 delivered a Grand Slam on the field, in a business sense, 2005/06 has delivered the same effect off it.
Continued improvements in the business performance of both the WRU and Millennium Stadium plc over the past year resulted in the WRU Board of Directors last night (Thursday) signing off accounts that showed a record turnover of £40 million across the WRU Group for the 12 months ending 31 May, 2006 – an increase of 27% (£9 million) on the previous year.
For the second year in a row both the WRU and Millennium Stadium plc returned pre-tax profits to enable the Group’s pre-tax profits to rise from £3.6 million at the end of the previous financial year to £5.1 million – a massive hike of 42%.
"For the second year running our business performance has been exceptional and any company would be delighted to have turned in a 27% incease in turnover and a significant rise in operating profit," said WRU and Millennium Stadium chairman David Pickering.
"We enjoyed record attendances at the Invesco Perpetual Series matches in November 2005 and for the first time all three RBS Six Nations matches were sell-outs. Those seven capacity crowds helped to generate record gate receipts. This was largely due to success on the field and the £99 ticket bundle for the three SANZA nations which proved popular with supporters. The Lions tour also made a profit for the first time with a significant return shared equally between the four home nations.
"Both the WRU and Millennium Stadium attracted more sponsors over the year with all WRU League competitions now commanding a title sponsorship. Merchandise was highly successful with royalties amounting to £650 000 which was boosted by the sale of the black jerseys created to commemorate the 125th anniversary of the WRU."
WRU Chief Executive Steve Lewis added, "The introduction of an Anglo-Welsh Cup competition for the first time has had an impact on the level of funding the WRU can plough back into the Regions while the first part of £1.6 million in Objective One funding from the Welsh Assembly has enabled us to set up and begin to run the four WRU Regional Academies and the national Women’s Academy which are developing our professional players of the future."
Pickering stressed that the rewards to the Welsh Rugby Union from this year’s accounts will be shared amongst the WRU Regions and clubs in increased funding.
"The WRU Board of Directors has decided to share the profit from our record breaking financial year with our four professional Regions and 245 member clubs by releasing £1.7m in extra funding for the 2006/2007 campaign. Behind the increase in club funding is our strategic aim to increase grassroots participation levels in our sport. However, the extra funding – along with the fact that we will have six home international matches this season and not seven will undoubtedly have an impact on next year’s finances but we are delighted that our clubs and Regions will enjoy the benefit of our recent success.
"It is also important to recognise that the Stadium is seven years old and is beginning to show signs of requiring investment in capital projects. Work will need to be carried out during the course of this financial year which will also affect our year end results.
"We are now 10 years on from the day that rugby union went professional and we have now had the Millennium Stadium open for seven years. It has taken its time, but I think we can now confidently say that the WRU Group has got to grips with the harsh realities of running a professional sporting business," said David Pickering.
"It has been a tough task for the Directors and executive staff of both businesses to turn around a business that only three years ago lost almost £4 million and owed £70 million. We have adapted our working practices, improved our performances both on and off the field, restructured our debt and achieved what many people thought was impossible.
"The Millennium Stadium had its best ever year since 1999 with 45 major event days attracting 1.5 million customers. This growth in the utilisation of the stadium has helped to increase turnover from £11.1 million to £13.1 million. The installation of the drape system to create an indoor arena boosted the venue’s popularity and credibility and it is now really living up to its title as a multi-events venue. The arena concept is a vital component of the Stadium’s business moving forward, especially outside the traditional rugby and football markets.
"Millennium Stadium is now attracting world wide names and REM and U2 entertained huge crowds last summer and Noise & Confusion was a great success as a winter music festival only possible because of the Stadium’s roof. Since the year end, Madonna, Take That and the Eagles have all performed with the Rolling Stones on their way. We are now considered by many as the number one major entertainment venue outside London.
"The WRU Group is currently in its strongest ever position and has regained the confidence of the business community, politicians and most importantly our customers – the public. The outstanding business performances of the past two years will provide a springboard for even greater investment in Wales’ national sport over the next few years.
"The role played by David Moffett over the past three years, as our inaugural Group Chief Executive, played a huge part in the transformation of our business and we thank him for his work and we will now be looking to his successor to continue that progression.
"The new Stadium hospitality policy has generated increased income and further revenue to the Stadium has been generated through improved catering, merchandise and ticket sales. Even the stadium tours had a bumper year with close on 100 000 visitors passing through the doors.
"World Championship Speedway, the Wales GB Rally, a hugely innovative Winter Wonderland experience, the B2B exhibition and the recent World Championship Boxing bonanza were all held at the Millennium Stadium and it was also the film location for such varied productions as Dr Who and the Il Divo / Toni Braxton World Cup video, all of which shows the huge versatility of the Millennium Stadium concept."
Cash flow remained strong over the year and improved by £5 million. It meant that by the end of the year the Group coffers could boast £5.75 million at the bank.
"We have four games in the 2007 Rugby World Cup to look forward to and the Millennium Stadium has also been included in the 2012 London Olympic schedule," added Pickering.
"There is so much to look forward to and the WRU and MS Boards and staff of both businesses are determined to keep the game and the business of Welsh rugby and the Millennium Stadium moving forward.
Millenium Stadium Chief Executive Paul Sergeant said:
"Millennium Stadium Plc is now regarded as a world class business operation which has earned the respect of promoters and event owners around the globe. Our reputation and credibility in the market place is high and testament to the commitment of our staff who have delivered a relentless and magnificent events schedule. We are confident that the stadium will continue to go from strength to strength in attracting events and business from all fields of sport, business and entertainment."
David Pickering added a word of caution to the bumper figures:
"While it is fantastic to be able to report such a great year in financial terms, we expect that next year will be a tough business prospect but one that will reap the benefits for other areas of our business. We have pledged extra investment into professional and grassroots rugby in order to improve the competitiveness of our regional teams and increase participation levels in the community game; we will put capital investment into the Millennium Stadium, and we will have one international game less than this past year and no Lions tour. However, we can expect our balance to be significantly more healthy in the season 2007 /2008 with the Rugby World Cup to look forward to."
THE HEADLINE FIGURES
Turnover up by 27% to £40m (2005 £31.5m)
Operating Profits before interest up to £8.769m (2005 £2.293m)
Interest Charges down by £630k
Profit before tax up by 42% to £5.1 (2005 £3.6m) after taking into account exceptional expenditure of £1.5m and last year’s exceptional income of £4.5m
Group cash balances improve by £5.1m
Turnover up by 27% to £26.9m (2005 £21m)
Profit before tax up by 39% to £4.9m (2005 £3.5m) after taking into account exceptional expenditure of £1.5m and last year’s exceptional income of £2.8m.
Turnover up 18% to £13.1m (2005 £11.1m)
Operating profit before interest up to £3m (2005 £1.66m)
Interest charges down by 380k
Profit before tax £239k (2005 100k)