John Greene: Sobering news for sports sponsorship dreamers
IRFU shortfall leaves Irish sport on ropes – and it could get worse, writes John Greene
It has been a sobering few days for Irish sport, a timely reminder that nothing is immune from the financial pressures of a greatly declined economy.
That the FAI has major debts to overcome is nothing new, but the news on Friday night coming out of the IRFU's agm in Dublin was a bolt from the blue.
The two partners at the Aviva Stadium have tough times ahead. The FAI owes €63m, and now we know that the IRFU's plan to raise €40m through the sale of five and 10-year tickets fell massively short of expectations, raising just €14m and leaving the Union with a shortfall of €26m that will now have to be bridged through a combination of cost cutting and borrowing in order to fund the game until the next mass ticket sale, which is a tranche of premium level tickets, in 2020.
The Union had targetted selling 3,700 five and 10-year tickets, but ultimately less than half were sold. Some of the massive shortfall can be made up because those that did not sell will now be available on a game by game basis, so the success of the national team under new coach Joe Schmidt will be criticial as sell-out crowds will be crucial to the financial wellbeing of the Union.
There was no attempt to sugar coat the situation on Friday night. Honorary Treasurer Tom Grace said he was "disappointed", while chief executive Philip Browne said: "I think everybody is surprised we didn't sell as many as we hoped. But that's the nature of the economy at the moment and we have to accept that."
Of course, the IRFU and FAI are by no means alone in finding times exceptionally tough, but their commitment to the redevelopment of Lansdowne Road has placed significantly greater pressures on them. And like any sporting organisation, their ability to earn money is very reliant on the success of their elite teams, which in recent years has given the IRFU the advantage over their stadium partners, particularly through the success of the provinces in the Heineken Cup and the Pro12 .
The FAI, though, can point to Euro 2012 qualification, and realistically its best hopes over the medium term of tackling its debt is through qualification for more tournaments and television revenue from UEFA, but the IRFU's struggles to sell long-term tickets is a reminder to the FAI of how difficult a market they will be entering when their 10-year tickets come up for resale. Remember, unlike the FAI, the IRFU had no difficulty in the past in this regard, raising €70m during its last ticket sale.
The IRFU, however, will be desperate that the current impasse over the future of the Heineken Cup – the English and French clubs are agitating for radical change which would ultimately see them take a greater slice of the financial pie – can be resolved because it is vital to its needs.
The two associations need to find somewhere in the order of €100m over the next six or seven years, a difficult task which may be made all the more so by the intention of the Minister for Health, James Reilly, to ban alcohol sponsorship in sport. The FAI and the IRFU would be the two associations most affected by such a ban – the IRFU, for instance, has admitted the impact on its revenue would be in the order of €9m.
Over recent months, those in favour of this ban have repeatedly said sport is overplaying the damage it will do, claiming other major sponsors will jump in to fill the void left by the removal of beverage companies from the sponsorship market. This, of course, is nonsense. As the IRFU and FAI accounts have shown this weekend, the money simply isn't out there. Indeed, the fact is that alcohol sponsorship doesn't even come close to filling the funding gap that already exists in Irish sport, so what's it going to be like when it's taken away?
Government funding is falling every year, so too are gate receipts and other traditional forms of earning money. Sporting organisations – big and small – need all the help and support they can get. The one consolation is that the Minister, and his Labour colleague Alex Whyte, do not enjoy the full support of their colleagues. There is significant opposition to the ban in the Fine Gael parliamentary party in particular, as evidenced at a meeting last week in which several TDs spoke against Reilly's proposal.
Things are bad enough, why make them worse?