1 TO / À: FROM / DE: CC: Provincial Union Members Board of Rugby Canada Staff of Rugby Canada DATE: Tuesday, March 1 st 2011 SUBJECT/OBJECT: Proposed Rugby Canada Dues Proposal 2011 thru 2016 To Provincial Union Members; Each year the cost of delivering our rugby programs across Canada continues to increase. These increases are not restricted to the National level. Rugby Canada is fully aware that increases are occurring at the Provincial, Regional and in particular at the club level, where the majority of our rugby programs are delivered for the rugby players in Canada. These past four (4) years our Board of Directors have seen the organization continue to grow and develop both in terms of the number of regional and national programs that are being delivered and in terms of the level to which these programs are being funded. Our members have played a very instrumental part in the growth and development of our National Union both in terms of funding support and in assisting with the delivery of National Programming at the Provincial level. Since the conclusion of the 2009 Annual General Meeting, Rugby Canada, through our Finance Committee (lead by Pat Aldous and Jay Johnston) embarked on a full and detailed review with both our CFO (Mike Duffy) and our auditors (BDO Dunwoody Ottawa). The review focused initially on the issue of insurance surplus generated over the past four (4) years, the amount generated and where this money was spent within the Union. The results of this review identified that the insurance surplus was spent delivering national team programs, primarily the National Senior Men s team and in 2010, the National Senior Women s team. The result of the review have been presented and discussed with the Provincial Union Members. Rugby Canada accepts full responsibility for the insurance surplus and full responsibility for how this surplus has been spent during the four (4) year period balancing our finances and delivering our programs. A summary of the National Insurance Surplus is presented in the chart below.
2 The second part of the review focused on the move forward position of the National Union, both in terms of how to transparently address the insurance surplus potential and in terms of delivering a higher level of financial management / financial planning. All surplus monies were spent on programming and in particular our teams attending international competitions. Since October of 2010, Rugby Canada has been discussing with our Provincial Partners the issue of insurance surplus and the implementation of a more strategic financial plan for the National Union. Better planning in terms of budgeting and a multiyear financial model for Provincial funding support would allow all partners (local / regional / provincial and national) the ability to operate more effectively and efficiently. In summary, it would enable all levels of rugby to further develop a professional approach to the administration and financial management of the game. Over the last four (4) years Rugby Canada has continued to improve our funding support from the IRB, Sport Canada and our Commercial Department. Funding from the IRB has increased over this period, however net proceeds have remained neutral due to the significant decline in the value of the Pound Sterling in comparison to the Canadian Dollar (please refer to Appendix A attached). Our commercial revenue continues to increase and the proceeds from our commercial department (fundraising / merchandising / events / sponsorship and television) look to remain positive in the year (s) to come. Note 1: As revenues continue to increase, so does the cost of delivering our programs, putting considerable pressure on the Union to continue to increase revenues. Note 2: Although Rugby Canada receives strong funding support for targeted programs from the IRB, Sport Canada and now Own the Podium (OTP), the monies in most cases represent less than 100% of the overall funding required to deliver the programs these funding bodies are directing their financial resources too. As Rugby Canada continues to be successful in receiving funding, the funding still requires an additional investment by Rugby Canada that is not necessarily available in our general financial model; The remainder of this memo will outline and define the proposed dues increases for the 2011 thru 2016 period in support of our national team programs. The Board of Rugby Canada believe our financial
3 program must be stabilized and a financial planning program established. This can be achieved if the Member Unions support this proposal. The result of this process will be to fix dues for a three (3) year period. This is possible because: 1, Supporting this proposal will allow Rugby Canada to plan financially and more specifically in terms of program support, for the next three (3) years without having to cut current programming levels; 2. There is anticipation of continued growth in the number of registrants, particularly at the minor and junior age groups, which will provide the annual increases to account for increased and improved programming; 3. Sport Canada Funding increases are anticipated as a result of our inclusion in the Olympic Games; 4. Increase support by Own the Podium (OTP) for our National Women s program. A program that has received little support outside of Rugby World Cup years; 5. Internal Funding (Commercial Department) improvements and advancements are anticipated: a. Fundraising (improved fundraising initiatives and structure); b. Merchandising (sales of Rugby Canada merchandise has increased steadily on an annual basis and now accounts for over 200K in turnover and 75K in profit); c. International Events (Rugby Canada will be allocated 3 June Home Games annually for the next four year block which will increase our potential for improved event generated revenues); d. Sponsorship (opportunities are expected to improve slightly due to inclusion in the Olympic games and increased television coverage of rugby TSN will become the Rugby World Cup host broadcaster beginning in 2012); 6. Predicting currency fluxuation is a challenge for professionals. 7. Rugby Canada would begin to arrange (beginning in 2013) a semi annual meeting in November / December of the current year (Q4) to discuss issues and confirm the dues for the next year, therefore eliminating the issue poor timing in terms of dues confirmation and the inherent problem of poor planning and budgeting as a result; 8. The Board s commitment to establish the Young Canada Fund that will continue to provide annual and long terms financial support to our National Age Grade and Academy programs. MOVING FORWARD 2011 thru 2016 Leading into the 2010 Annual General Meeting, Rugby Canada has proposed two (2) levels of funding requests to our members. The first area that the Board of Rugby Canada wanted to address was the funding of our National Teams attending Rugby World Cups and now, the Olympic Games. This includes funding support to our MEN S 15s and 7s Programs / WOMEN S 15s and 7s Programs and our NATIONAL U20 / ACADEMY PROGRAM. The second area of area of funding request is in relation to Rugby Canada s ability to provide additional funding to our National Age Grade programs and in particular the National U20 Men s Team and Academy Program. The primary area that Rugby Canada is asking the Provinces to support in terms of funding is to the newly proposed RUGBY WORLD CUP / OLYMPIC PREPARATION FUND. At the 2009 Rugby Canada Annual General Meeting Rugby Canada presented a proposal for the support of our National Senior Women s Program and their preparation for the 2010 Women s Rugby World Cup. The essence of the proposal presented by Rugby Canada was to ask the provinces to support the financial costs of preparation alongside Rugby Canada and to further enhance the program s ability to achieve success at the upcoming Rugby World Cup.
4 NOTE: Similar presentations were made to the Provincial Unions for the 2006 Women s Rugby World Cup and 2007 Men s Rugby World Cup Preparations. Support at various levels was provided for all three World Cup Campaigns. During the course of the presentation and subsequent discussion period, Provincial feedback to the Board of Rugby Canada that the continual one off presentation for funding support for World Cup Preparation was illogical in terms of timing and ineffective in terms of planning and strategy. The Provinces noted that there would be consideration given to the 2010 Women s World Cup Campaign but that the Board of Rugby Canada should prepare a more sustainable strategy to be presented to the Provinces that would eliminate the late in the game financial requests for support. These requests have left both the Provincial members with dues increases that were not able to be effectively planned from one year to the next. The Board of Rugby Canada at the October 2010 Board meeting discussed in detail the issue of funding for our National Team Programs and in particular, prepared a proposal that addressed the concerns of our member unions for longer term strategy, while also aligning financial support for our programs attending World Cups / World Championships and Olympic Games. The Board of Rugby Canada and our Provincial Union Members both agree that the success of our teams at these major international competitions is important to both the domestic success of rugby in Canada and to the overall financial success of rugby via support from the IRB / Sport Canada / Sponsors & Supporters / Canadian Rugby Foundation / and now Own the Podium (OTP). Should Rugby Canada fall below 16 th in the World or fail to qualify for a World Cup / World Championship or Olympic Games, funding at all levels would be reduced or eliminated. The Board also felt that our players from across Canada deserve to be provided with the best possible preparation and resources as they too are being asked to give up time away from school, jobs and family in order to represent the sport and Canada on the international stage. The following proposal is being presented for consideration by the Provincial Union Members in an attempt to create a long term, sustainable financial support strategy that will enable our National Programs to remain competitive on the international stage and to prepare at a level reflective of those countries with whom they are competing. The combined long term financial support of our members / Rugby Canada / our Sponsors & Supporters / IRB / Canadian Rugby Foundation / Sport Canada and now Own the Podium (OTP) are crucial to our future success. NOTE: Funding from the IRB is allocated on four year (quadrennial cycles) as is OTP. Funding from Sport Canada is generally allocated on two year cycles and most sponsorship arrangements are aligned for periods of two years with some forming part of a four year cycle. Funding from Supporters and the Canadian Rugby Foundation is generally year to year based on need or affinity. CANADIAN RUGBY Rugby World Cup / Olympic Preparation Fund An Introduction The Provincial Union Members at the 2009 Rugby Canada AGM noted the need for a more structured and strategic plan for addressing the financial requirements of team preparation for World Cups / World Championships and Olympic Games. The following were key elements the Board of Directors took from the AGM meeting and subsequently have further discussed at the Rugby Canada Board Level: That the need to present beyond year to year in terms of financial planning for major competitions for our National Men s and Women s programs is a priority; That the need to provide adequate funding to allow enhanced preparation in the lead up to major competitions for our National Men s and Women s programs is a priority;
5 That the current funding model being provided by Rugby Canada through support from Sponsors & Supporters / Canadian Rugby Foundation / Sport Canada and now OTP is proving to fall short of what our National Teams require to prepare effectively to compete successfully Internationally; That an enhanced partnership with our Member Unions can help provide the enhanced levels of funding our teams require for preparation; That our Member Unions want to assist and like Rugby Canada, want to ensure that our / their players and the National Team s have the ability to be successful; That success will translate to better rugby support across the country, both in terms of provincial and national support as well as in terms of enhanced participation; That funding must be a partnership and with partnerships comes the need to be transparent and inclusive in the planning and allocation of funding support; That a six (6) year plan and funding strategy would provide: o The necessary enhancements for our National Team programs; o The ability of our Member Unions to plan well in advance of major competitions; o The ability of Rugby Canada to budget appropriately well in advance of major competitions; o A sustainable level of commitment by the members across Canada that is structured / strategic as well as transparent; o Increase potential for success leading up to major competitions for which they have qualified; STRUCTURE & GOVERNANCE The proposal by Rugby Canada would be to form a separate fund Rugby World Cup / Olympic Preparation Fund that would be governed in partnership between Rugby Canada and the Provincial Union Members. The fund would receive funding from the membership annually and allocation on a year to year basis for World Cups / World Championships and Olympic Games would be approved in the year prior to participation in the major competition. The exact terms of reference and membership of the governance committee have yet to be determined and would be set out in consultation and partnership with the Member Unions. FINANCIAL STRUCTURE Rugby Canada is proposing that the Provinces allocate the insurance savings that will be realised from the savings in the 2011 National Insurance Program / the savings achieved as a result of the termination of the Corner Insurance Assessment ($4.00 per member) and the savings associated with the monies set aside for the 2010 Women s Rugby World Cup (minor $0.96 / Junior $1.63 and Senior $2.80). Because the final savings within the National Insurance program was lower than initial estimates due to IRB mandating the participation in the IRB International Player Insurance Program, Rugby Canada are seeking the support of a top up in the total amount allocated as follows (Minor - $2.00 / Junior - $2.00 and Senior - $3.00). The top up amount will bring the total funding support in line with the financial period 2011 2016. The assessment to our members would occur on an annual basis which is to be allocated to the Rugby World Cup / Olympic Preparation Fund. The fund would be structured on a set annual assessment agreed to for a six (6) year period. Rugby Canada is proposing the initial implementation of a six (6) year plan to ensure that strategically, Rugby Canada can plan from the 2011 Men s Rugby World Cup in New Zealand to the 2015 Olympic Qualifiers (location yet to be confirmed) and 2016 Olympic Games in Rio. Future years would be discussed once a program has been developed and an adequate period of review and assessment has taken place.
6 NOTE: You will note that in the first year, the total assessment to the member would not meet the requirement as set forth in the proposed allocation to the programs (Senior Men s World Cup / U20 World Championships). The program would in fact, from a cash flow perspective, catch up in 2012 as there is currently only one major competition in that year. Rugby Canada would cash flow this in the initial start up of the Fund. There will be more discussion on this during our review. The following Summary represents funding allocations by Program and Competition:
7 BENEFITS OF SUPPORT The following enhancements would be targeted as part of the team funding from the Rugby World Cup / Olympic Preparation Fund : 1. Funding for additional fixtures (games / tours or tournaments) in the window leading up to the major competition; 2. Funding for additional camps / team assembly in the lead up to the major competition; 3. Funding for enhanced assembly periods prior to the major competition (early arrival); 4. Funding for enhanced team support (additional coaches / medical and support staff); 5. Funding for continued development of our elite player base in the lead up to the major competition; The second area of area of funding request is in relation to Rugby Canada s ability to provide additional funding to our National Age Grade programs and in particular the National U20 Men s Team and Academy Program. During the last five (5) years, Rugby Canada has been participating in the IRB World Junior Championships. The following are our results over this five (5) year Period: Note: During this time, Rugby Canada had a number of successes and close loses. However, the result with the greatest indication of our decline at this level was losing to Uruguay at the 2010 Junior World Trophy to put Canada 18 th in the World at this age grade. During the 2008 event, the budget for the U20 program was $350,000.00. The budget for the program has now be reduced to $150,000.00 per annum. The success of our National Senior Program is directly related to the quality of our National and Provincial Age Grade Programs. Over the last five (5) years, Canadian rugby has not kept pace with our international counterparts. Using our National U20 Men s program as a litmus test of the future potential of our National Senior Men s Program offers significant issues on the horizon. It was only 10 years ago our National U19 program were ranked 6 th in the world and were responsible for not only a significant proportion of our National Senior Men s (15s and 7s) team, but a successful and highly respected National Men s program. The Board of Rugby Canada believe a renewed focus on our National Age Grade programs and in particular our National U20 Men s team and Academy program is imperative. The following summary outlines the proposed dues increase of MINOR - $3.00 / JUNIOR - $3.00 and SENIOR - $2.00 per annum LOCKED in for a period of three (3) years (2011 2013).
8 From the Desk of Graham J. Brown Rugby Canada has prepared the following summary to show where membership dues were spent in 2010 and the proposal for the spending of the increased dues assessment in 2011 thru to 2013.
9 CONCLUSION The following chart summarizes the above proposal showing both the allocation of provincial funding and the net financial impact to the membership: For Canada to remain competitive on the International Stage, it is imperative that our players and our programs are given the ability to prepare at a professional level, within a reasonable time frame, leading up to major international competitions. Sport Canada (approximately $1.3 million per annum) and IRB funding (approximately 2.1 million per annum) is tied to performance on the field. For Sport Canada, it is imperative that our Canadian Men and Women remain in the top 16 in the world for 15s and in terms of Own the Podium, top 8 in the world. A strong age grade system developed at the Provincial and Regional level and a strong national program is key to achieving these results long term. The Board of Rugby Canada support fully, the directive of the Member Unions to propose and implement a more planned and strategic program to address the funding issues of our National Programs at major International Competitions. The Board of Rugby Canada also believes that the proposed plan would offer our players and national team programs, the platform to be successful in the lead up and their participation in, International Competitions (World Cups / World Championships and Olympic Games). The proposal locks the membership dues for a period of three (3) years and provides the cost certainty and fiscal planning that has been requested on the part of the Provinces. The support of the Member Unions of this long term, planned and strategic investment is crucial and it is the Board of Rugby Canada s hope that this proposal will be supported so that programming and support to our national teams will not be impacted. Sincerely, Graham Brown BHK MHK
10 APPENDIX A Currency Exchange Rates 2006 2010 Representing the currency depreciation of the POUND STERLING to the CDN DOLLAR