USA Rugby $$$ Crisis Follow-Up: Legal Jeopardy? Alternative Future?

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NEW YORK, NY – In response to last week’s exposure of gross financial mismanagement Steve_Lewis @LizardRugby, Rugby_Wrap_Up, Vegas7sand potential malfeasance in USA Rugby’s leadership, the embattled organization released a relatively hollow statement last week without the incriminating supporting figures. Instead, they have chosen to gloss over the most glaring issue facing them; the misappropriation of membership funds to pay for their accounting fiasco ($800,000+ High Performance overspend) and the ensuing legal jeopardy in which they have placed themselves.

EXPLANATION

As the national governing body, USA Rugby is supposed to collect membership dues from all USAR members, retain a portion owed to them and remit the remainder of the monies to the various constituent organizations, the local area Geographic Unions, the youth organizations, the college conferences, the referee societies, etc. As of last week, the figure owing to the grassroots American rugby community was over $800,000, and National office representatives have admitted this money had been incorrectly diverted to fund its cash-flow problems and pay for operational purposes.

USA Rugby Money Woes, Steve_Lewis, Rugby_Wrap_Up

PROBLEM

This is a legal no-no, a fiduciary breach of trust and law which could potentially be interpreted as co-mingling of funds, misappropriation of funds or even wire fraud, depending on which lawyers you’re talking to… and be assured, the lawyers have been talking. This pattern of partial and incomplete financial reporting has been confirmed by many, including former USA Rugby Congress member Heather Harley, who has documented her repeated and detailed requests to CEO Ross Young, CFO Eric Gleason and Audit & Risk Committee Board member Julie Lau. Harley also said, “USA Rugby Board members and executives have a duty and obligation to respond, and members should be outraged by this situation.”

PLAN

The corrective action plan crafted by the CEO Young and CFO/COO Gleason and approved by the Board, includes only vague reassurances about repaying all members by the end of the year, reportedly through additional monies provided by World Rugby. This will further increase USA Rugby’s debt to those who run the global game. In addition, this plan punishes only mid-level execs for their part in the HP overspend, but not the CFO or CEO, who were at the helm and ultimately responsible. New information has also come to light since that call that both disputes their version of the events that caused the oversight, and the timings offered by way of explanation.

NEXT

While the Board seems comfortable accepting the above version of events and proposed remedy, the ball moves now to Congress, which has been briefed and is holding its own meeting to render a verdict on this plan. Contrary to public belief, Congress has few enumerated powers, and can not hire or fire anyone at the National Office, it is the Board who is responsible for that, and for general financial oversight. Congress does have the ability, however, to influence the Board through its power to recall Board members, as last year when five Board members were forced out after the RIM debacle. We await Congress’ response.

REACTIONS

The other main player in this unfortunate drama is the rank and file USA Rugby member, whose default response to administrative follies has been a frustrated shrug and knowing eye roll. This has now been replaced by serious anger. At this weekend’s New York Sevens, I interacted with many concerned American rugby administrators, coaches, parents and senior players. Their responses were varied in degree, but overwhelmingly negative and ranging from frustrated to apoplectic.

Moving forward, there appears to be two schools of thought gaining traction: the “federated” and the “nuclear.”  The “federated” option calls for further independence, pulling member organizations out from under USA Rugby into a more autonomous, federated set-up where dues and data are collected regionally, and critically, not by USA Rugby… The “nuclear” option is for those who now consider USA Rugby a failed and toxic brand, and can be summed up as follows; blow it up, get out from under the debt and start again. This would envisage taking away the power of the purse, stripping down the National office, abandoning its six-figure+ administrative salaries (currently four employees are renumerated at this level), and focus on specific, limited responsibilities.

Do less and do it better, this should be the mantra. Either way, for USA Rugby, change is coming.

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About the Author ()

Hailing from Glasgow, Scotland, Steve is one of the top coaches in America, a 2-time USA Rugby Coach of the Year. He is also well-versed in all things rugby, having played for West of Scotland and Glasgow, as well as founding the elite Northeast Academy 7's program. He currently coaches the USA Rugby Collegiate All-American 7's, West Point Women and national championship winners Bulldog Rugby, as well as appearing regularly as a commentator in broadcasts and as a pundit/personality on Rugby Wrap Up.

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