Philip Browne does not expect the Munster Branch to be able to meet repayments on the €9 million they owe the IRFU.
The union’s annual general meeting reported an increase of almost €6 million in player and management costs arising “in large part” due to Munster’s malfunctioning professional wing, both administratively and on the field, in recent years.
"One of our provinces is experiencing financial difficulty and one of the main reasons for this is poor match results," said IRFU honorary treasurer Tom Grace. "It is no secret that the increased revenues available to French and English clubs are having a serious inflationary impact on player remuneration."
‘No repayment’
Grace did note, during his speech at last night's agm at the Aviva Stadium, that the Ulster Branch have repaid "in full" their loan to redevelop Ravenhill into Kingspan Stadium.
"There was no repayment received this year in respect of the Munster loan which relates to Thomond Park, " said Grace.
A €200,000 payment was due last April with €4.2 million due in April 2017 and €500,000 to be paid every year until 2026 with a final lump sum of €761,778 expected in 2027.
“I am pleased to report the Ulster Branch loan in respect of the Ravenhill development has been repaid in full. Well done Ulster.”
Unlike the FAI who still owe €34.75 million on the Aviva Stadium, the IRFU paid off, up front in 2010, the amount they owed for the stadium redevelopment following the successful sale of corporate boxes and 10-year tickets.
However, the Munster debt remains a serious concern as the radically changing nature of the northern hemisphere club scene threatens to reduce Irish provinces to second-tier competitors.
Browne was asked if it is realistic to expect Munster to be able to make a payment of €4.2 million next April?
“At the moment probably not,” he responded.
Can he see the €500,000 being repaid annually over the next 10 years?
“At the moment that is probably not possible.
"But in fairness [Munster CEO] Garrett Fitzgerald, [director of rugby] Rassie Erasmus, [IRFU high performance director] David Nucifora and Philip Quinn, the accountant, are all working together to try and manage the cost base, to make sure whatever decisions that are taken provide value for money.
Bail out
“But the one thing for certain is we have to collectively live within our means.
"By the way, this could happen to any of the provinces," said Browne. "It could happen to Leinster, less likely, but if performances drop and people decide to spend their money doing something else. We have had to bail out Ulster in the past, we have had to bail out Connacht in the past. Munster are where they are now."
But Browne, in his chief executive’s report, appeared to draw a line in the sand when writing “the IRFU can no longer be the ‘lender of the last resort’ for the professional game as the governing body does not have the capacity to absorb ever increasing player wage inflation.”
Browne rejected the suggestion of poor management at all levels in the Munster Branch.
“I don’t think it is a case of them running their business very badly,” said Browne. “There is a serious problem but the reason why there was a cash flow [issue] this year was due to a number of reasons.
"The first was they had to run the Pro 12 up against the Rugby World Cup. That had an impact on their gates. Secondly, because of the broadcast nature of the Pro 12, where you have multiple broadcasters, Munster ended up with a number of matches where they played on a Friday night, which just doesn't work for Limerick because people in Cork can't get there. So, that had an impact.
"The third part of it was the performance of the team. Effectively, by December, they ended up in a situation where their two home matches in Europe were effectively dead rubbers so their gates just fell away.
“The gates only picked up towards the end of the season when they were fighting for (Champions Cup) survival.”
As a result Munster gate receipts dropped by €2 million from one season to the next.
‘Set of circumstances’
“The economy doesn’t help either as it has not picked up in Limerick like we have been fortunate to have experienced up in Dublin.
“But to say it is badly run is wrong. It was a set of circumstances. Yes, the performance of the team was not like they would have liked or we would have liked. We have addressed that. You can have the best administrators in there but if people don’t turn up for matches you got a problem.”
All four provinces received an unbudgeted sum of €250,000 from the IRFU to help cope with “difficulties experienced by all in the player contracting market”.
Grace added: “The union’s response to this is to increase the player funding going forward for the provinces but more significantly to invest greater amounts into our player development pathways from the grassroots game upwards. In our budget for 2015/’16 an additional €3.2 million was allocated to elite-player development and €800,000 to the domestic game. For 2016/’17 we have enhanced the domestic game investment by a further €1.2 million.
“It is the view of the union that these investments in our game represent the most effective way forward for the union given the financial constraints under which we operate.”
Overall, the message coming from Lansdowne Road is the days of recruiting southern hemisphere players like Brad Thorn, Isa Nacewa, Ruan Pienaar and Charles Piutau is coming to an end.
"The provinces simply can't go out into the global market place and expect to pick up world-class players with the budget that they have," Browne stated. "They have got to live within their budgets, which is why it is better value for us to invest in the pathway. To produce our own players. We simply can't compete with what is happening in France. "
The union recorded a surplus of just over €5 million for the 2015/’16 season. Costs over the same period increased, due to the World Cup, increased from €66.2 million to €71 million to ensure the union achieved a “close to breakeven result in net cash terms”.
Stephen R Hilditch succeeded Martin O'Sullivan to become the IRFU's 129th president.
