USA Rugby: A Declaration for Chang(e) 7

Authors note: I have made a number of assertions and assessments in this document. To the best of my knowledge all of them are well grounded.  Many of these assessments are made based on personal conversations with numerous USAR Board members, USAR Congress members, and global rugby executives.  I have personally reviewed many financial documents of the organization. 

American Rugby’s greatest accomplishments are approaching the century mark; most occurring in the amateur era (pre-1995), including Olympic Gold in 1920 and 1924, the founding of USARFU in 1975, and the Women’s World Cup victory in 1991.

Despite the great efforts of many, the Union finds itself wallowing in continued mediocrity; on the field, off the field, and in the boardroom.  Nearly 25 years into the professional era, we continue to generate optimism only through eternal faith in our vast resources and potential, which we never seem to realize.

Prior to their nominations, each USA Rugby At-Large Board member possessed little-to-no connection to rugby.  In rugby terms, all are amateurs. None are sports executives to any degree (investors maybe, but certainly not sports executives toiling in the battles of sponsorship acquisition or running a successful/sustainable/winning organization),  nor have they shown commercial acumen to successfully grow and monetize Rugby in the United States.

In the attempt to move USA Rugby into the professional era, the USAR Board made a bold move creating RIM and self-admittedly did little-to-no due diligence regarding requirements for such a ‘for profit’ entity. The off shoot of RIM – the oft-maligned The Rugby Channel – has gone through three different content models and visions in the past two years. The recent 40% increase in subscription fees will not fend off inevitable failure.

RIM was formed, and The Rugby Channel followed.  Recent financial results show the extent of the disaster. In In 2016 The Rugby Channel’s expenses exceeded revenues by a factor of 10.

  • The USAR Board and RIM Board have usurped financial accountability from the USAR CEO, but not the fiscal responsibility.  The RIM CEO’s current compensation exceeds the USAR CEO by >$150,000, a clear indicator of the USAR Board’s priority for RIM.
  • USAR has been mismanaged in the past decade to the point where the non-profit status could be jeopardized including significant tax fines and penalties if audited.
  • USAR and RIM financials will show mounting and increased cumulative losses in the millions of dollars.  These losses are currently underwritten by the kind investment of those entities overseas (England Rugby, Global sports entertainment group CSM, etc..) who ‘wanted to dip a toe in the American market’ with an investment in RIM.
  •  The 10-year licensing agreement ‘negotiated’ by RIM with USAR allows continued poor financial results at RIM to hamstring the success of USAR in fulfilling its mission. If RIM continues in any form, these figures must be renegotiated in favor of USAR.  The question of who was negotiating on behalf of USA Rugby when this agreement was signed has gone unanswered for several years.
  • USAR was awarded the RWC 2018 Sevens tournament.  There was no bid process for the ultimate location; San Francisco (one of the most expensive venues in the country to host such an event) was unilaterally chosen despite USAR’s Board getting numerous requests from various entities to host the tournament.  The USAR Chair’s financial interest in ATT Park is noted. Current estimates advise that a sellout of the event does not guarantee profitability.
  • Global sponsors avoid USAR.  Literally, and figuratively.

Those ‘in the know’ can only recognize the void of leadership and vision demonstrated by the likes of the current Chairs of USAR and RIM, and the level of desperation with which they operate.

  • The current business standards and practices at USAR and RIM are far below those of top tier rugby nations, which have well thought out and vetted strategic plans, timelines, and metrics to gauge performance.
  • The RIM CEO and USAR CEO have no direct responsibility for the others’ success, and no unified leadership to ensure that both do succeed.
  • The USAR CEO is completely hamstrung to effect financial change in his organization.  He would not challenge this assessment.
  • The financial mismanagement is closely defended by the last vestiges of those who have been attendant for so long and are now complicit in it.

Actions must be taken to dissolve RIM and completely recreate USAR:   There must be ONE person whom is ultimately responsible for the success/failure of the organization. That is the USAR CEO. He does not have that responsibility now. 

USA Rugby has operated as amateur entity in a professional world for too long.    

  • RIM has failed to produce a commercial platform (in relation to its primary shareholder, USAR), has no vetted business plan, and has chosen a ‘damn the torpedoes’ stance continuing its Rugby Channel efforts.
  • The composition of the USAR Congress and its responsibility creates significant challenges.  There are members of Congress voting on very important matters (i.e., ratifying RIM and the PRO Rugby sanctioning agreement several years ago) who literally have no knowledge of the subject matter they were asked to vote on, and frankly many who do not have the time or willingness to care.  All very committed, well-intentioned people – but for the most part hobbyists being asked to perform like professionals.
  • The USAR bylaws require an annual operations plan, budget, and annual business plan – none of which exist in any meaningful capacity.
  • Despite assertions by both Chairmen, the idea that RIM and SUM (Soccer United Marketing) are analogous at any level is absurd.  This myth must be debunked.  SUM is a ‘for profit’ supporting a ‘for profit’ League (i.e., MLS).  RIM is a ‘for profit’ supporting a ‘not for profit’ (i.e., USAR).  The disparity between the two entities is enormous.  It is nothing short of arrogant to say otherwise.
  • Give the ‘investors’ back whatever can be salvaged to avoid total embarrassment.

The current state of affairs in the management of the fastest growing sport in the most financially abundant nation in the world is not acceptable.  For American Rugby to achieve anything close to the potential all participants know is present (and the rest of the world envies) we must correct the poor decisions of the past.

Our limited recent successes on the field (Men’s 7s, Women’s WRWC), have only been made possible by the generosity of certain benefactors literally funding the teams. Any success on the field cannot be sustained without effective financial management, revenue management, etc. off the field.  Sustainable success is not possible if these donors don’t show up one day.

USAR CEO Payne was considered an optimistic replacement for his predecessor.   He freely admits his limited knowledge of/effect on RIM.  He knows he cannot succeed in this structure.

He should be held responsible by Congress to propose a new, overhauled structure for USA Rugby.  It should ensure the CEO is responsible 100% for the financial performance of the organization.   They should completely overhaul the Board of Directors and focus on members with a commercial vision of the game and how that vision can be implemented/executed in the United States – the fastest growing sport in the financial capital of the free world.  As our players and teams strive to be World Class and participate competitively in the professional era, so too must our leadership and Board.

Other articles I have written on this topic

 

7 comments

  1. Tony (sorry to potentially be piecemeal), but this comment really struck me…

    USAR has been mismanaged in the past decade to the point where the non-profit status could be jeopardized including significant tax fines and penalties if audited.

    When I was on the Board, the EC, and congress, the financials were audited each year by an outside firm. Are you implicitly stating that is not happening now or are you implicitly saying that the auditors are stating that?

    Thanks for clearing that up

    David

    What every signature needs – a rugby ball emoji 🏉.

    ________________________________

    • Dave,

      The finances of USAR are audited every year by an outside firm and clearly show the health of the organization is poor. Yet, if you read the board minutes, the Audit committee for several years somehow projected a surplus three years in a row…only to find out they were in the hole each of those years. Crazy, I know. Board is full of professionals who don’t transfer use of their professional skillsets to their hobby. If they did, I don’t think TR would be beating this drum.

  2. Having been through the jack Clark era and the early years of the post-Jack era, I have some ingrained thoughts about the financial viability of our sport in the US. I keep seeing this thought reinforced across all levels of this sport.

    So with that admitted jaundice eye, I ask what “proof” do you have that your thoughts would make a difference?

    I would challenge you to prove your theories here in the Puget sound. Our population base is the same as the Vancouver region yet our playing population and overall level is miles below. And as a result, so is our commercial viability.

    If we could rise to BC/vancouver/victoria island’s level, we would be the default home to the national team. We would also see a stadium like the many in Vancouver and Glendale, CO.

    So, I challenge you – put your thoughts into action here. Drive this area to greatness and sustainability. Doing that will surely help set the model to be used across all the US and prove undeniably that your proposed model is the way to go.

    David

    What every signature needs – a rugby ball emoji 🏉.

    ________________________________

  3. Let me start by saying that I am a coach for a collegiate club with both men’s and women’s teams, and not invested or involved in any way with our national franchise outside of being a supporter. From where I sit, I wonder why our national priority has been on international success versus development of the game at a grassroots level. Minnesota has a fairly robust high school rugby union, yet there are only two players between both of my teams that have had any exposure to rugby prior to joining. Once joined, we are completely dependent on either charging dues, individual fundraising, and variable (or absent in the cases of many clubs) collegiate support. I, as well as other coaches for our teams, are volunteers. USAR registration fees have gone up, and it is often difficult to convince players that we are competitive sports teams vs a student club/activity. I say this, because with the exception of very rich schools or very large schools (with the notable exception of Iowa Central Community College – which has 12-13 international players in a varsity program), there is virtually no support for collegiate or other developmental clubs – and no precedent to bring to our schools to garner that support. We even have to fund our own 200 level courses and coaches have to pay for the privilege to volunteer our time annually. I agree that we need to have international success as an eventual goal, but we can’t expect to be competitive if we ignore development of our players at a beginner’s level. If we support college, HS will become more robust. If we support HS, youth will become more popular. If we develop youth who have been throwing a rugby ball since they were children – we may have a shot at home-grown excellence vs pulling the best athletes from other sports and hoping they pick up the game. I feel like we are putting the cart before the horse – and that that has been completely off the radar of the USAR board.
    On a side note, I am going to the RWC in SF. I have reserved seats, and it is crazy how far away they will be from the field as it is a baseball stadium with the pitch in the outfield. The seats in the outfield are priced criminally high. I agree that the process of picking the venue is something we should look at in the coming months, as I suspect we may have some very disappointed fans after this is over.

    • I do want to clarify that I am not looking down or disparaging our national teams. They are truly wonderful athletes, and some incredibly talented rugby players. I just wonder how much better they could be have they started playing rugby at the same age as our opponents?

    • Greg,

      CIPP Fees are the only thing that fund community rugby from the National Office via grants to SROs. Currently, because of RIM, USAR does not see any revenues from events until RIM becomes a profitable enterprise, and it may never get there, especially with how much cash they’re hemorrhaging. They couldn’t sell water to a horse in the desert, otherwise the sponsorship revenues would have been high enough to pay the dividend already.

      We need to monetize the national side and the events in order to pay for community development. If we can’t, we can never bestow grants to actually develop rugby.

      • Thanks for your clarification and reply! I am looking forward to SF and cheering on USA Rugby, however it’s discouraging that my money won’t be going to our organization and further development!

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s