Scottish rugby is basking in the reflected glow from Glasgow upsetting the odds to win the United Rugby Championship (URC), but dark clouds still hang over the game at club and international level due to the financial black hole that Scottish rugby finds itself.
Rising costs, diminishing returns on the field for the national team, increased competition for domestic sides in the URC and in Europe, plus the slow pay back for the cash grab from private equity paints a bleak picture for whoever replaces outgoing CEO Mark Dodson.
The SRU posted losses of £10.5 million in the 2022/23 season, a campaign which included three sell-out Six Nations and four Autumn internationals, plus the bonus of a third-placed finish in the Six Nations.
Twelve months on the state of the governing body’s accounts are expected to be even worse after Gregor Townsend’s men failed to progress beyond the World Cup group stages for a second consecutive tournament and slumped back to fourth in the Six Nations table, while there were only five home internationals at Murrayfield.
The man many hold accountable has already decided to vacate his post – 12 months before his contract was due to expire in 2025.
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Dodson has been quick to point to his commercial successes during a 12-and-a-half-year stint in charge of the organisation, despite the SRU’s revenue remaining behind that of the English, Irish and Welsh Rugby Unions.
A five-year deal for Scottish Gas to become title sponsor of Murrayfield is worth a reported eight-figure sum and “the single largest commercial deal the Union has ever signed” in Dodson’s own words.
During his tenure there have also been some notable on-field triumphs. Not since 1896 has the Calcutta Cup remained in Scottish hands for four consecutive years and Glasgow’s URC victory last month was easily the biggest achievement in the club game for over a decade.
However, the post-mortem of Dodson’s time in charge will likely conclude that the costs – not least his enormous personal salary that stood at £676,000 last year – were a cross too much to bear for an organisation not flush with cash.
While players and coaches at the nation’s two professional club teams can only look upon Dodson’s wage packet with envy, soaring costs in an attempt to keep Glasgow, Edinburgh and national team competitive have played a large role in the SRU’s sticky financial position.
Of the £7.3 million of what the SRU termed “strategic investment” in 2022/23, £4.8m went into the professional teams with the other £2.5m invested into much-needed infrastructure for women’s and girl’s rugby across the country.
Such a “strategy” was even recognised by Dodson as “unsustainable in the long-term” and “requires the group to examine the market over a more extended period gauging what the sport needs over a 10-year horizon to stay relevant and competitive.”
Yet, until Glasgow’s success this season, the SRU had been rewarded with precious little for such a 'live for today, worry about tomorrow later' attitude.
Prior to a stunning win over the Bulls in Pretoria, Glasgow’s Pro-12 win in 2015 had been the sole Scottish success in the past decade.
Despite some memorable moments to savour in recent years, the national team last won a tournament when the Six Nations was still a five-team show back in 1999.
At club level, success for both the Warriors and Edinburgh has also been fleeting up against the might of Irish, English and French opposition, with the introduction of South African sides to the URC only making the path to glory even harder.
The picture is even more bleak for the future based on the performances of the under-20 international side – another area where Dodson has held his hands up for personal failings.
Scotland’s youngsters lost all five games in the Under-20 Six Nations this year and mustered only one bonus point in the process. While they could win the World Rugby U20 Trophy, it is the second-tier world competition, and Scotland are the sole Six Nations representative having been relegated from the world championships in 2019.
“Everyone acknowledges that our performances at this level over the last few years have not been acceptable,” Dobson said in his statement in the SRU’s most recent annual report.
“Programme cuts through Covid made our restart to a competitive tournament environment more difficult for the young players. I take responsibility for that as I put the overall protection of the business above the need for a sustained focus on the U20s.”
The overriding concern is that the SRU are quickly burning through the tranche of £52m provided by private equity group CVC in recent years for little reward.
In return for their investment, CVC took a 28% stake in the URC and nearly 15% in the Six Nations, which will eat into the SRU’s revenue streams for decades to come.
Dodson was at the forefront of negotiations with CVC, as rugby’s decision-makers in the northern hemisphere sold out stakes to cover over the impact of Covid, holding out hope private equity could help grow the game and revenues elsewhere.
Any such evidence is yet to be seen and where the growth now comes from to cover costs from a smaller share of the pie is hard to see.
The SRU’s ticket Income has grown 50% since 2019, and now accounts for 35% of the overall turnover at £23.7m.
However, that has almost exclusively come from increases in ticket prices – a route that cannot relentlessly continue if fans are to keep on pouring through the turnstiles.
Moreover, the supporters are paying top dollar for a stadium in increasing need of development.
Read more from our Fixing Scottish rugby series:
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Planned Scottish Rugby cuts are just the first austerity step
Scotland’s largest stadium at a capacity of 67,000, Murrayfield has not had a major uplift since a £50m renovation in 1994.
“It’s also clear we need to take a view on the development of the Murrayfield estate, an iconic facility which generates memories,” said chair of Scottish Rugby Limited John McGuigan.
“It’s clear that our plans will be founded on upgrading the existing structure to allow for a better fan experience and to create opportunities to host events that will generate funding to be reinvested in Scottish rugby.”
With just £20 million cash lying in the bank, any major stadium development will require the SRU to take on more debt at a time when lending has become extremely expensive.
Questions will be raised over why the CVC money was not ring-fenced for a Murrayfield upgrade and to pump money into growing the women’s and grassroots games to provide a solid future for the game.
Instead, the SRU have fallen into an age-old trap of sporting mismanagement - chasing the dream and instead ending up in debt.
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