England’s Rugby Football Union (RFU) has outlined a restructuring of operations for the Twickenham Experience Ltd (TEL) venture at its home stadium after posting a £30.9m (€34.9m/$39.6m) loss for 2017-18.
TEL is a joint venture between the RFU, which owns 60%, and food and support services supplier the Compass Group, which owns 40%. TEL was established to provide catering and hospitality services at Twickenham, with the RFU having granted the venture exclusive hospitality rights at the stadium for a period of 40 years from May 2000.
In its annual report, the RFU stated that during the year, the Union and Compass Group entered into new Shareholders’ and Share Transfer Agreements, terminating the existing funding arrangements outlined in last year’s accounts.
Under the new agreements, Compass Group’s contribution to the development of the new East Stand, which opened on November 3, is now in the form of an increase in the value of its investment in TEL rather than a loan to the RFU.
This was activated by Compass Group selling its 40% share in TEL to the RFU for £46.5m and immediately repurchasing it for £78.5m. The previous loan of £3m from Compass to the RFU was also settled as part of this transaction.
The transaction generated a gain after associated costs of £31.6m, as recorded in the profit-and-loss reserve of the RFU’s accounts.
As expected, the RFU’s revenues were lower than 2016-17, with the figure of £107.7m representing a £12.5m fall on the previous year. The RFU said this was driven largely by the impact on ticket and broadcasting revenues of fewer home matches at Twickenham.
As a result, profit before rugby investment reduced 11 per cent year on year to £83.3m. However, combined with the exceptional cash gain of £31.6m from the restructure of the RFU’s holding in TEL, this enabled rugby investment of £107.7m – an increase of eight per cent year on year.
The East Stand extension was the first significant redevelopment of Twickenham since the South Stand was completed in 2008, providing more than 11,000 square metres of hospitality and debenture space for 6,800 premium ticket-holders. High demand for the debenture packages – which range from £8,250 to £16,500 per person and are the only way to guarantee a ticket for all England home rugby games – saw the facility effectively pre-financed in 2016 before construction started.
RFU chairman Andy Cosslett said: “During the last few years, the RFU has enjoyed exceptional revenue growth and we have been able to significantly increase the amount of investment going back into the game, while maintaining the sound position of the Union.
“The situation though is changing – market conditions have been getting tougher and it is clear we can no longer rely on the predictable uplifts in revenues we have seen in recent times. 2018-19 will be a pivotal year as we take action to reset our financial base.”