NEW YORK, NY – For the second time in 15 months, USA Rugby is careening towards financial ruin and the unedifying spectacle of once more going cap in hand to its global master, World Rugby, for yet another humiliating bailout.
It was only last year that World Rugby agreed a $4.4 million line of credit, which allowed the American national governing body to survive the disasters of the Melville/Chang era. These were the strategic failures that were Rugby International Marketing (RIM) and The Rugby Channel, the catastrophic losses generated by the Sevens World Cup in San Francisco and the ill-advised guarantees USA Rugby are still paying ($34k quarterly for the next 5 years) to Tier 1 countries South Africa and Wales for last year’s B list “test match” in Washington, DC. Part of the price exacted was the installation of Argentinian and World Rugby #2 Gus Pichot on a USA Rugby board that had been broadly repopulated following the crisis, and which, we were assured, now possessed all the appropriate competencies.
Apparently not, as now, this new Board and USA Rugby’s new Executive-level leadership have stumbled into another fiscal disaster, a projected $1.2 million shortfall for 3rd quarter 2019. This consists of two main issues, the first an $825,000 overspend in the leaderless High Performance Department (predominantly the Mens 15’s program to the tune of a staggering $780k), and secondly, significant and unexpected legal fees, of around $400,000. These have arisen from a dispute on D&O coverage from USA Rugby’s insurance company with regard to the two high-profile lawsuits USA Rugby is defending against United World Sports/Vegas 7’s and Shoninger/PRO Rugby. In both cases, USA Rugby still expects to prevail in the matter of law.
To compound this fiscal mismanagement, and possibly to pay for it, there has been a potentially legally suspect program of partial or non-payment of membership dues back to the constituent members whose money it actually is, in short, misappropriation of funds. This is causing real pain at the grassroots level and has the usually placid American rugby community and its Congress representatives indignant with over $800,000 still owed for this year.
Set against a decline in actual membership and a more precipitous failure to attract any meaningful sponsorship income, USA Rugby’s Boulder-based executives, and by extension the Board, are under severe pressure, again, having failed to provide the appropriate internal financial oversight of its operations.
In response to requests from Congress, USA Rugby are scrambling to announce a plan to repay the constituent member organizations their own money by the end of the year, and have also undertaken a staff restructuring due to the overspend. This is understood to be the firing of Mens 15’s GM Dave Hodges and not tendering Team Manager Chris Hansen a new contract. Comptroller Jerry Girkin is also said to be out. Another who may be justifiably nervous is CFO/COO Eric Gleason, on whose watch this colossal failure of oversight has occurred. Some on Congress are also keen to understand exactly who authorized this misappropriation of membership funds and came up with the plan of partial and restructured payments. Once again, this would seem to fall under the purview of CFO/COO Gleason and his point man with membership, the VP of Operations Kurt Weaver.
Despite it all, there are positive things in American rugby. There’s great excitement around the third year of the privately owned Major League Rugby kicking off in February, the Olympic medal potential of both the Men’s and Women’s 7’s programs, and a vibrant college game.
But the fiscal and management failures of the national governing body in back-to-back years constitutes another black eye for the sport, imperils its growth, and destroys trust in the organization. To be clear, before USA Rugby can invest a single dollar in this country, over $750,000 will have to be repaid to World Rugby on an annual basis.
At what point does it make sense to close up shop and start again? Perhaps its time to clean the Augean stables once and for all.