Inside Gloucester Rugby: A Self-Sustaining Business and 2015 World Cup Host

- Leadership - Feb 10, 2015

There are all too many examples of sports clubs enduring severe financial stress amid building enormous piles of debt.

English football in particular is awash with well-recognised teams going into administration thanks to irresponsible management and outrageous expenditure on players and salaries. Fans of Southampton, Crystal Palace and Portsmouth have endured the uncertainty of administration, with the latter’s set of supporters having to go through the pain twice in as many years.

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In the world of rugby too, although on a much smaller scale to football, many English clubs (League and Union) are ran alongside accumulation of significant amounts of debt as they fight to attract the finest internationals and hit the maximum salary cap. 

Gloucester Rugby is one of a handful of English Premiership clubs to run as a self-sustaining business.

The English Premiership rugby union side has been competitive in the highest tier of domestic rugby for many years and competes strongly in Europe, winning the European Challenge Cup in 2006 and Anglo-Welsh Cup in 2011 while remaining on a steady financial footing. 

Sustainable business

Founded in 1873, the club has posted four years of profit in a row despite recent upsurges in expenditure. Chief Executive Stephen Vaughan joined Gloucester in 2012, determined to preserve the sustainable nature of the business and indeed accelerate growth.

“First of all I am delighted because we are a successful self-sustaining club and run as a solid business,” he said. “We had a big increase in costs last year from bringing in top players like James Hook, Richard Hibbard, John Afoa, Tom Palmer and Greig Laidlaw, and we also put in a totally new coaching set up.

“Clearly our costs have gone up dramatically so to be able to bring in the revenue streams and manage the business sensibly off the field to ensure that we’re in no danger as a club, and in fact thriving, is really important to us and gives us great confidence for the future.”

Profits have in fact risen by 68 percent year-on-year to £512,000, strengthened by a burgeoning hospitality and conferencing scene at home ground Kingsholm, which the club has ownership of.

Vaughan also brought in 11 new influential sponsors, while improved ticketing systems, access to the ground and cashless payment systems and loyalty cards have improved supporter experience.

All of this resulted in Gloucester Rugby reaching £12 million in revenues last year which offset the increased spend, made all the more notable given that core ticket revenues flat-lined following a ninth-place finish last season.

Vaughan added: “The key is to show that self-sustainable clubs can win things and Northampton last year showed it, and I was delighted for them. That gives clubs like us great confidence and the opportunity to say if they can do it why can’t we.”

Success on and off the pitch – the virtuous circle

For a sports club to be self-sustaining, success on the pitch is vital in driving what the Gloucester CEO calls a virtuous circle.

“Even by improving slightly you are standing still,” he said. “If you want to guarantee a successful team you have to move at a fair pace. It doesn’t matter how big your core support is, you can’t sustain poor finishes year after year and expect them to stick with you.

“The same can be said for sponsors - we must be successful on the field to be commercially successful, which then means we can invest in the team and keep the circle running. We have the infrastructure and our own stadium with some amazing supporters and the minimum we have to ensure we do is compete financially with the other top clubs with regards to the playing department to allow us to compete on the pitch.”

Kingsholm was also an important venue in the 2014 Premiership Rugby Sevens Series, a competition which Gloucester went on to win without losing a single match, the second year in a row they have lifted the title, and later this year the ground plays host to the most prestigious tournament in the sport.

Rugby World Cup 2015

The eyes of the rugby world will descend on England and Wales in the autumn as the third largest sporting event in the world comes to Britain.

“It is brilliant,” Vaughan said.  “We are one of only two rugby clubs to host games and I am absolutely delighted, it is a real fillip for everyone here.”

Gloucester’s 16,500 capacity ground has been chosen to host four group stage matches, which all sold out immediately, and will represent a late season boost for local trades relying on tourism.

“It will be fantastic for the area at large,” Vaughan continued. “Hoteliers, bar owners, any business has the chance to engage in new customers. We already have a strong tourist base and what we want to do is show off the whole area at the time of the World Cup.”

Kingsholm’s success was a result of a joint bid between Gloucester Rugby and the city at large, completing a tender document which showed off the facilities, security, access, location, transportation and many other important facets on offer.

In turn the club will benefit in a number of ways from making upgrades in preparation for the World Cup, which Vaughan hopes will also spur a legacy of enthusiasm in playing rugby in the area, especially with youngsters.

“We will be improving infrastructure and certain facilities with the help of the World Cup Organisers,” he said. “We have dedicated people meeting weekly with them and we are not daunted – we are very confident that Kingsholm will be capable of putting on a great show.”

So far more than 50 projects of all sizes have either been completed or are ongoing, with upgrades such as new rugby posts, a re-sized pitch, temporary buildings for drug testing and Wi-Fi installation upgrades among the upgrades required.

Business as usual

Despite the doubtless excitement, Vaughan refuses to get carried away, and insists that it is business as usual in a bid not to take the eye off the ball in everyday operations.

“We will be able to generate some World Cup specific revenues over the six weeks of the tournament but either side life will be the same,” he said.

“We haven’t put in a huge amount of targeting financially for this and I am very much of the opinion that you shouldn’t stop what you are doing normally for a tournament that is here for six weeks – we can’t take our eye off the ball in other areas.”

By remaining focussed on the bigger picture, which for Gloucester Rugby stretches far beyond the staging of this year’s World Cup, Vaughan hopes the club will run sustainably long into the future and turn in yet more consecutive years of solid profit.

“I have to make it the DNA of the club,” the CEO concluded. 

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