Ulster Rugby - Annual Report 2017-18

HONORARY TREASURER’S REPORT 2017/18 I have pleasure in presenting the annual accounts of the IRFU Ulster Branch for the

financial year 2017/178. ACTUAL PERFORMANCE AGAINST BUDGET

However, hospitality at Kingspan Stadium continues to be popular with all twenty corporate boxes for next season sold. Waiting lists continue to operate for the premium seats in the Corporate Stand. Corporate stand income remained stable at just under £1.0m. We will continue to investigate ways to increase hospitality spaces at Kingspan. This is under consideration by the Development Committee. Total expenditure increased by over £0.1m to 10.2m. The largest expenditure item was professional rugby expenses of £5.1m, an increase of £300k. Professional rugby expenses include player costs, team management costs and medical costs. Despite the increase on the previous year this was a difficult year with key players unavailable for long parts of the season and Bryn Cunningham is to be commended for effectively managing the budget in the professional team. Other development expenses, which include rugby development officer costs and Academy development costs amounted to £1.6m. This was in line with other development expenditure in 2016/17. Almost £1m was invested in the domestic rugby with almost half of this due to Rugby Development Officers. Administrative expenses amounted to £1.4m for the year, stable year on year. Administrative expenses include costs of running the domestic game, finance, HR, IT, sales, marketing and communications as well as electricity, phones and computer maintenance. Other significant expenditure lines include heat and light, telephone costs, legal costs and IT maintenance. Professional game match expenses increased by £89k to just over £1.1m for the year. The cost of home match expenses increased by £42k due to two more home matches. Away match costs also increased by £47k, much of which was due to the cost of the South African trip. Only half of this additional travel expenditure in South Africa was covered by the PRO14 League. Originally the League was due to cover all South African travel costs but this did not materialise. BALANCE SHEET Net assets remained at £1.2m at the end of this year. Ulster Branch remains only one of two Provinces with net assets on its balance sheet. Cash remains important for the Branch. Cash balances ended the year at £0.7m. This is a reduction of £0.9m from this time last year and is the result of slower season ticket sales up to the end of April for 2018/19. Ulster Branch repaid its outstanding debt to the IRFU at the end of 2015/16 for the loan on the corporate stand. This leaves the Branch as the only Province with no loan creditors on its balance sheet.

2017/18 was the third year of the three year business plan. The budget at the beginning of 2017/18 had been approved by the IRFU Ulster Branch Committee at a deficit of £250k due to plateauing income and increasing costs, particularly in the professional game, in a bid to reduce the competitive gap with the top English and French clubs. The intention was always to reduce the expenditure if additional income could not be sourced. I am pleased to report that the actual financial performance was £254k better than budget, resulting in a small surplus before tax. This improvement on budget was produced by increased funding from the two South African teams’ inclusion for the first time in the PRO14 league. This increased funding amounted to £450k plus an additional £70k from the league to cover travel and accommodation in South Africa. This additional income was largely offset by costs of bringing in a replacement outhalf for five months to January and additional travel costs over and above the travel money from the league. Commercial income for the year was almost £200k ahead of budget in very difficult circumstances. Most other areas of finance were close to budget. INCOME & EXPENDITURE Total revenues increased by £0.4m to £10.2m. Grants increased by £159k in total to £2.1m. IRFU grants increased by £217k with the main increases in the professional team and management grant. This increased funding from the IRFU is welcomed by Ulster Branch and included the additional South African funding. However, other grants (mainly from Sport NI) reduced during the year. Sponsorship increased by over £100k to almost £2.7m while professional match income remained stable at £3.3m. Sponsorship and match income provide a large proportion of the Branch’s revenues. We have seen average attendances fall by 1,500 to 14,200 but we benefitted from two additional home games in 2017/18 compared to the previous year. The number of season ticket sold reduced by over 600 to 9,800. Season ticket sales provide the Branch with a high degree of security of income. High season ticket sales limit the supply of tickets for individual matches and it is this scarcity which in turn maintains the demand for tickets. This is also impacted by performances on the pitch. Professional game income has been in a plateau for the last couple of years and this is forecast to fall back during the 2018/19 season due to inconsistency of performances on the pitch as a consequence of off- field issues and coaching changes. It is hoped that the improved performances at the end of the season will see supporters wanting to return in 2018/19.

IRFU ULSTER BRANCH ANNUAL REPORT 2017/18

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