Rugby Australia crisis after 2019 financial deficit of $9.4 million

Australian Wallabies rugby CEO Raelene Castle. Photo / Brett Phibbs.

Rugby Australia has announced a preliminary $9.4 million loss for 2019.

The struggling code on Monday confirmed its legal settlement with Israel Folau was one of the main reasons the governing body suffered a financial black eye last year, putting the game in a fragile position heading into the uncertainty of 2020.

The game is so bent out of shape it was unable to announce its final financial results for 2019 at Monday's Annual General Meeting — still waiting on the completion of an independent financial audit of its books.

However, the game on Monday announced immediate, drastic action with Rugby Australia chief executive Raelene Castle reportedly taking a 50 per cent pay cut as part of sweeping wage cuts across the 15-a-side code.

Rugby Australia's executive team will also take 30 per cent pay cuts — a measure that will be re-assessed every month.

Rugby Australia has also announced emergency survival grants have been extended to all four Super Rugby franchises, but the package will reportedly only guarantee the four teams' survival for a further three months.

Rugby Australia (RA) has been left staring into the abyss by the latest financial reporting with the game now desperately searching for a way to stay afloat during the Super Rugby season shutdown and related coronavirus restrictions across every level of the game.

Rugby Australia is also stumbling towards a devastating broadcast rights reduction after the game was forced to abandon TV rights negotiations because of the coronavirus shutdown and Foxtel's reported decision to walk away from the game entirely.

The game's Monday revelation that operating costs blew out by $6.6 million in 2019 — largely as a result of the legal battle with Folau — leaves the game in an imperilled position.

The Daily Telegraph's Jamie Pandaram on Monday posted on Twitter that the game is in an "alarming" situation where it is yet to fully assess wide-ranging impact coronavirus will have on the game's financial position.

"RA has reported a $9.4 million deficit for 2019, but could not issue annual report because a final audit is still pending. Chairman Paul McLean says "harder decision to come" as cost-cutting takes place," Pandaram posted.

McLean admits the game will have to make sweeping cuts and initiate dramatic cost-cutting measures "for the sport to remain financially viable in the short term".

"These are unprecedented and extremely uncertain times for our world, not only our sport with the global pandemic of COVID-19," McLean said.

"To put it simply, there is no way of knowing what damage this crisis will have on our game, or for how long it will continue to impact us.

"It has forced us to make some extremely difficult decisions, and there will be even harder decisions to come as we continue to navigate the implications of the virus on the game's finances.

"It was important for us today to review the year and reflect on our learnings from 2019, however the uncertainty that we are facing regarding our immediate future naturally led the discussion at the meeting."

RA also confirmed the appointment of three new board members — Peter Wiggs, Brett Godfrey and Wallabies great Daniel Herbert.

It comes after Castle was on Sunday slammed by the Rugby Union Players' Association (RUPA) over claims the code has refused to open its books to players during player pay cut negotiations.

The sensitive issues of potential large player wage cuts and staff layoffs were among the big issues discussed at the RA AGM on Monday.