Brumbies stop insolvency with RA centralisation

Brumbies are six months late in lodging its accounts with ASIC as Rugby Australia says its intervention has kept the franchis solvent.

Brumbies players Len Ikitau, Rob Valetini and Tom Wright watch on during the club’s semi-final loss to the Blues last month Picture: Getty Images

Rugby Australia says the Brumbies franchise will be kept “solvent” because of its takeover of the organisation, playing down concerns about the financial health of Australia’s most successful Super Rugby franchise.

Brumbies officials this week told the club’s stakeholders they had “no other option” but to agree to a rescue package with RA to avoid going into voluntary administration.

If RA had not stepped in, the Brumbies would have been the second Super Rugby franchise to have gone under this year, following the Melbourne Rebels who have been cut from the competition, a move that threatens the current value of the TV deal with Nine Entertainment.

Earlier this year then-chair Matt Nobbs admitted the Brumbies were facing “insolvency” if a private backer or other finances were not found.

The Australian can reveal the Brumbies are six months overdue in lodging its most recent accounts with the Australian Securities and Investments Commission.

The Brumbies have not lodged a financial report with the corporate regulator since late 2022 – it previously lodged an annual report around December each year – amid mounting concerns about the club’s financial situation as crowds for home games in Canberra dropped off.

However, RA said it was positive about the financial situation of the franchise.

“We are not concerned about this (late financial report),” an RA spokesman told The Australian.

“The ACT & Southern NSW Rugby Union have been working with RA on a structure to ensure the entity remains solvent and a going concern by transferring the professional rugby business to RA.

“Once the transaction is completed, ACT & SNSWRU will be able to file its accounts on this basis.

“This also means ACT & SNSWRU can prioritise its focus on growing the community game while RA focuses on the Brumbies.

“ACT & SNSWRU has also met all its reporting obligations to RA and have been open and transparent with us throughout the process, another reason why we have no concerns.”

The most recent financial statement, for the 12 months to September 30, 2022, revealed the Brumbies had 5364 paying members but revenue in that area had more than halved in six years.

The Brumbies that year recorded a $1.32m loss from $18.5m revenue. Its income included about $8.1m from RA funding and another $1.9m in government grants.

The Brumbies also had about $520,000 in cryptocurrency on its balance sheet. In November 2022 it engaged advisers to sell up to 49 per cent of the club to private investors in a transaction that management hoped would value it in the tens of millions of dollars.

“There’s a great opportunity with what Rugby Australia has put in place over the next decade, what they’re calling the ‘golden decade’ with the (British) Lions tour in 2025 and then World Cups in 2027 and 2029,” Brumbies boss Phil Thomson said at the time.

But the Brumbies were unable to attract a buyer, despite an investment proposal that said the funds would be used to shore up the club’s balance sheet and also help grow interest in rugby at a grassroots level.

Last October the ACT Brumbies engaged lawyers to initiate a dispute resolution process with RA in a bid to stop what the franchise described as a “total takeover” attempt.

A month later key states including the ACT and Queensland successfully moved to oust then RA chair Hamish McLennan because of his drive to centralise the commercial and high-performance model of Super Rugby.

Queensland Reds boss Brett Clark said at the time they’d “burn an effigy” of him at Ballymore before the QRU’s commercial assets were handed over to RA. Key Queensland rugby officials then led a coup to oust McLennan.

While the Brumbies said in a statement they initially were against centralising, they conceded to the model due partially to the “uncertainty around the future broadcast outlook”.

“Notwithstanding our early resistance to this shift, the ACT Brumbies board and executive have recently been working with RA to find a solution which is in the best interests of our staff, players, members, partners and key stakeholders,” a letter to members read. “This is at the heart of what we are all trying to achieve to secure a sustainable future at all levels of our game and we trust, as valued members of the ACT Brumbies, you join us in this endeavour.

“Despite every effort to independently secure our financial future, with genuine interest from private investors, time and uncertainty around the future broadcast outlook has been our biggest hurdle to achieving this at this point in time.”

This week the governing body confirmed it was in talks with its broadcaster Nine as the Wallabies line up against Wales in an international Test at Melbourne’s AAMI Park on Saturday night.

The new deal risks coming in lower than the current $29m-a-year deal, with the collapse of the Rebels reducing Australia’s Super Rugby teams to four.

Industry sources have claimed there was tension over the involvement of RA director Alexi Baker, a former Nine executive, in any broadcast talks.

RA chief executive Phil Waugh was likely to lead discussions with Nine, with the help of the board, including Baker.