After narrowly avoiding financial collapse in 2018, USA Rugby is working to stabilize itself with the help of its global authority, World Rugby.
“The organization had the flu, we now just have a bit of a cold and we’re working through it,” said Paul Santinelli, a longtime club rugby enthusiast and general partner of North Bridge Venture Partners who joined the board during the crisis.
The national governing body for rugby, one of the fastest-growing team sports in the U.S. according to the Sports Fitness & Industry Association, says it’s close to having a full board of directors again. It could make interim CEO Ross Young its official top executive within two months, giving it a fully populated front office for the first time in a year.
The financial picture is still cloudy, however, after what has been a tumultuous couple of years. In spring of 2018, it became evident that Rugby International Marketing, a for-profit commercial arm set up in 2014 by USA Rugby and outside investors such as CSM Sport & Entertainment, was facing bankruptcy. It lost $6.3 million in 2016 and 2017, largely due to the high costs of its streaming site, The Rugby Channel, and a poorly performing events business.
Because RIM also owned the rights to the Rugby World Cup Sevens tournament last July in San Francisco, the streaming site’s woes threatened the event itself. The RIM losses were so severe it damaged USA Rugby too, even though the external partners provided the capital.
By far the largest rugby contest ever held on American soil, the Sevens tournament had its own problems — for instance, the original bid underestimated the cost of housing players in the expensive Bay Area market.
USA Rugby board of directors
In spring 2018, four members of the USA Rugby board resigned in a matter of weeks, including Chairman Will Chang, as the nonprofit’s for-profit marketing arm faced financial collapse. The board has lacked full representation since then. In January, the USA Rugby Congress granted four members full board status after a period of transitional status. If the newest transitional member, Mike McKenna, is approved for full status in early March, the board will be complete again for the first time in a year.
■ Chair: Barbara O’Brien
■ Vice Chair: Paul Santinelli
■ Julie Lau
■ Jim Brown
■ Mike McKenna*
■ Jeremiah Johnson, USA Rugby Congress rep
■ Agustín Pichot, World Rugby rep
■ Phaidra Knight, athlete
■ Todd Clever, athlete
* Pending approval
Eager to avoid a catastrophe in America, which has long been considered a sleeping giant for the sport, World Rugby stepped in. The international federation loaned USA Rugby the cash to operate the World Cup and backstop losses. World Rugby then installed its vice chairman, retired Argentinian star Agustín Pichot, on the board.
“I think a lot of people thought, ‘Oh, my God, World Rugby is infiltrating USA Rugby,’ but the fact is, World Rugby is an investor in our sport, here to help us run our game, and with that they would like representation,” Santinelli said. Pichot will leave the board when the loan is serviced.
RIM sold the Rugby Channel to FloSports in May for an undisclosed price, and Rugby International Marketing has been restructured as USA Rugby Partners, a wholly owned subsidiary.
There is still more to be done before USA Rugby is on firm financial footing. Before the unwinding of RIM and the World Rugby bailout, USA Rugby posted a $4.4 million loss on $14 million in revenue in 2017, and its budget in 2018 began to count on royalties from RIM that won’t come. Also, a breach-of-contract lawsuit is pending from Doug Schoninger, the entrepreneur behind the defunct PRO Rugby league. He says he spent $6 million of his own money to launch the league, but that it failed after USA Rugby violated an exclusive sanctioning agreement.
However, the nonprofit has made numerous structural changes to its national office based on a report in the wake of the RIM collapse from consulting firm SRi, which executives believe put the organization on the right path.
In August, former U.S. Soccer CFO Eric Gleason joined USA Rugby in the same role. Santinelli said interim CEO Young has pleased the transitional board and will likely be made permanent CEO once the board spots are settled.
During the turmoil, four board members resigned or were forced out, including former Chairman Will Chang. CEO Dan Payne left and was replaced by Young.
All this corporate and financial drama has played out as the national rugby teams have had some of their best results (see related story). Rugby fans in the U.S. and globally are accustomed to executive-level drama, and winning solves a lot of problems. “They were on the cliff of complete and utter financial disaster,” said Pat Clifton, an associate editor at Tarrytown, N.Y.-based website Rugby Today. “People have forgotten all about that because they’re winning now.”
