Ulster Rugby Annual Report 2016-17

HONORARY TREASURER’S REPORT ACTUAL PERFORMANCE AGAINST BUDGET 32 2016/17 was the second year of the three year business plan. The budget at the beginning of 2016/17 had been approved by the IRFU Ulster Branch Committee at a deficit of £1.2m due to plateauing income and rapidly 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 £900k better than budget, resulting in a much smaller deficit of £295k before tax. This £900k improvement was produced by increased funding from the IRFU of £450k, savings and underspends in the professional playing and management budgets of £250k, and the write back of provisions for player costs of £200k. INCOME & EXPENDITURE Total revenues increased by £0.4m to £9.8m. The majority of this increase was due to increased grant income of £365k to £1.96m, of which grants from the IRFU increased by £409k to £1.58m while other grants reduced by £44k to £372k. The IRFU grants include funding for salary costs of rugby development officers, professional team management costs and an Academy grant. This increased funding from the IRFU is welcomed by Ulster Branch. Sponsorship remained stable at just over £2.5m while professional match income increased modestly by £70k to £3.3m. Stability of sponsorship and match income are very positive for Ulster rugby particularly when we see falling crowds at many of the other grounds in the Pro 12. The number of season ticket sales remained around 10,500. This provides 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 and even increases the demand for tickets. Professional game income has been in a plateau for the last couple of years and this is forecast to remain the case for the foreseeable future. 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. It is imperative that we investigate ways to increase hospitality spaces at Kingspan. Total expenditure increased by over £0.7m to 10.1m. The largest expenditure item was professional rugby expenses of £4.8m, an increase of over £650k.

I have pleasure in presenting the annual accounts of the IRFU Ulster Branch for the financial year 2016/17.

Professional rugby expenses include player costs, team management costs and medical costs. Despite the increase on the previous year this was well below budget and Bryn Cunningham is to be commended for controlling the inflation in the professional team. Other development expenses, which include rugby development officer costs and expenditure in relation to the Sport NI grants for Performance Focus amounted to £1.5m. This was in line with other development expenditure in 2015/16. Administrative expenses amounted to £1.4m for the year, an increase of £45k. Administrative expenses include staff costs for the administration of the domestic game, finance, HR, IT, as well as sales, marketing and communications staff. Other significant expenditure lines include heat and light, telephone costs, legal costs and IT maintenance. Professional game match expenses increased by £58k to just over £1.0m for the year. The cost of home match expenses reduced by £30k due to efficiency savings and stewarding savings. Unfortunately, this was more than offset by the £80k increases in away match costs, much of which was due to the cost of flights to Italy and France as a direct result of the impact of the Brexit vote on exchange rates.. BALANCE SHEET The deficit for this year reduced net assets to under £1.2m. Ulster Branch remains only one of two Provinces with net assets on its balance sheet. Cash remains important for the Branch. Once again cash balances remained over £1.5m for most of the year. Recent negotiations with sponsors has highlighted that Ulster continues to offer an attractive commercial proposition for local and regional businesses to support. 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.. OUTLOOK The Professional Game continues to make up over 85% of the Branch’s income. As such, the financial success of the Branch is more or less directly related to the success of the team on the pitch through gate receipts and sponsorship. Despite a mixed season on the pitch, season tickets for 2017/18 appear to be holding up well at this early stage and at similar levels to this time last year, particularly for areas of scarcity in the seated stands. Terrace tickets traditionally sell later in the cycle towards the end of the summer. During the year considerable time was devoted to identifying additional sources of income and cost efficiencies by the senior management team and their

IRFU ULSTER BRANCH ANNUAL REPORT & STATEMENT OF ACCOUNTS 2016/17

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