A company restructuring process, increased sponsorships and a new broadcast rights deal all contributed to a significant increase in profit for rugby in 2011, the South African Rugby Union (Saru) said on Tuesday.
Saru reported a pre-tax profit of R24-million last year, after an operating loss before taxation of R5.4-million in 2010. This happened during a World Cup year, which traditionally increased costs and depressed the earning capacity of international rugby bodies.
“It was a year of severe cost-cutting, during which we restructured the operational side of Saru to be more streamlined and efficient,” Saru chief executive Jurie Roux said.
“We converted 16 different divisions into seven new departments, more effectively aligned to deliver on our mission to provide outstanding strategic leadership for the business of rugby.
“That we were able to do it while containing costs was doubly pleasing.”
Total operating expenditure had increased by 12%, largely due to a 76% increase in broadcasting rights allocations to provinces. The increase in operating expenditure, however, excluding broadcasting rights allocations to provinces, was contained to only 2%, well below the prevailing inflation rate.
Group revenue grew to R597-million (from R505-million in 2010), due mainly to a significant increase in revenue at the start of a new five-year broadcast rights deal. Sponsorship income had also grown by 11%.
The jump in pre-tax profit of nearly R30-million was in line with Saru’s expectations, according to chief financial officer Basil Haddad.
“We had forecast a reasonable profit for 2011 and the eventual outcome was ahead of our expectations,” he said.
“Given that the new broadcasting agreements and a number of new sponsorship agreements, which commenced in 2011, are essentially fixed until 2015, and that operating cost containment continues to be an operational priority, it is likely that a reasonable profit will be achieved in 2012.”
Saru’s full financial statements would be presented at its annual general meeting in Cape Town on March 30. — Sapa