Last month when Doug Arnot landed a job with the London Olympics, some suggested his tenure as USARFU chief executive couldn't have been so bad after all.
To the contrary, the union's tax returns confirm that the years 2003-05 decimated the balance sheet, a primary test of competency for any CEO. The notion is either financially illiterate or nakedly revisionist; both compromise unsentimental understanding of present circumstances.
At the start of 2003, Arnot's first full year, USARFU's balance of funds (i.e., assets minus liabilities) was $329,000, right in line with
the 5-year average, with cash and accounts receivable easily exceeding short-term obligations. At the end of 2005, his last full year, the balance had dwindled to $45,000, a compound average decline of 48% per annum.
By fall of that year, the 10-year, $10 million BSkyB pact expired and the union could pay its bills only after selling the USA 7s tournament -- a stunning, ignoble conclusion to the union's preeminent initiative during Arnot's era -- combined with the early receipt of the International Rugby Board's landmark development grants.
At the end of 2004, the balance totaled -$175,000, the first negative figure in at least 7 years. At the end of 2006, when Arnot left midyear, liabilities again exceeded assets.
A non-profit's assets typically exceed its liabilities, or else it cannot long survive. So, Arnot mismanaged the balance sheet and the board of directors failed to arrest the decline.
On a profit-and-loss basis, Arnot made six-figure losses in 2003 and 2004, largely due to the 7s as well as as fundraising failures that belied the 'sponsorship sales expertise' touted at the time of his hiring by then-board president Neal Brendel. Again the sale of the 7s and windfall IRB monies, as well as a major dues hike, lifted 2005 into the black.
For non-profits, P/L results are somewhat less indicative of organizational health than private enterprise, since the objective is to spend money on programs that further key objectives or serve constituents. For example, many unions show losses in World Cup years.
That said, revenue growth is vital to expanding services. Arnot's compound average over 2003-05 was 50% less than the compound average from 1998-2007 (2007 being the last year tax records are available).
An event security expert, Arnot subsequently caught on with Chicago's bid to host the 2016 Summer Games. Considered the front runner, it finished a disastrous fourth. Access management is something the Games has to have, however, so he's off to London. As the Chicago Tribune pointed out, the Games has created any number of 'nomads' who specialize in managing cost centers.
Back in Boulder, even before Arnot's departure the union's day-to-day operations were already being run by IRB personnel, including Alan Solomons as director of rugby and Steve Griffiths as chief operating officer. Morgan Buckley advised a transition team led by Bob Latham, Brendel's successor, and director Frank Merrill.
In winter 2006 the board adopted a Buckley-authored strategic plan that focused USARFU on Dublin's top priority: becoming a World Cup quarterfinalist. That summer the directors voted to unseat themselves in favor of a smaller group with corporate and international pedigrees and supposed fundraising prowess but little experience in American rugby. The union cannot now pay for its test-centric program without monies from Dublin, which exercises tight control both through its leverage and first-hand experience with the union's business practice and accounting.
The USA 7s tournament has become American rugby's leading commercial property, surpassing the 15s team. With a decade-long campaign for 7s admission to the Olympic Games successfully concluded, leading to expected growth in the event's value, USARFU's upside is tied to the value of a pact struck at a moment of weakness.
The dues move became one the larger revenue producers of the past decade but disproportionately hit high schools and colleges. The emergence of semi-independent bodies which menace the union's traditional organization and revenue structure stems from the hike.
To the contrary, the union's tax returns confirm that the years 2003-05 decimated the balance sheet, a primary test of competency for any CEO. The notion is either financially illiterate or nakedly revisionist; both compromise unsentimental understanding of present circumstances.
At the start of 2003, Arnot's first full year, USARFU's balance of funds (i.e., assets minus liabilities) was $329,000, right in line with
By fall of that year, the 10-year, $10 million BSkyB pact expired and the union could pay its bills only after selling the USA 7s tournament -- a stunning, ignoble conclusion to the union's preeminent initiative during Arnot's era -- combined with the early receipt of the International Rugby Board's landmark development grants.
At the end of 2004, the balance totaled -$175,000, the first negative figure in at least 7 years. At the end of 2006, when Arnot left midyear, liabilities again exceeded assets.
A non-profit's assets typically exceed its liabilities, or else it cannot long survive. So, Arnot mismanaged the balance sheet and the board of directors failed to arrest the decline.
On a profit-and-loss basis, Arnot made six-figure losses in 2003 and 2004, largely due to the 7s as well as as fundraising failures that belied the 'sponsorship sales expertise' touted at the time of his hiring by then-board president Neal Brendel. Again the sale of the 7s and windfall IRB monies, as well as a major dues hike, lifted 2005 into the black.
For non-profits, P/L results are somewhat less indicative of organizational health than private enterprise, since the objective is to spend money on programs that further key objectives or serve constituents. For example, many unions show losses in World Cup years.
That said, revenue growth is vital to expanding services. Arnot's compound average over 2003-05 was 50% less than the compound average from 1998-2007 (2007 being the last year tax records are available).
An event security expert, Arnot subsequently caught on with Chicago's bid to host the 2016 Summer Games. Considered the front runner, it finished a disastrous fourth. Access management is something the Games has to have, however, so he's off to London. As the Chicago Tribune pointed out, the Games has created any number of 'nomads' who specialize in managing cost centers.
Back in Boulder, even before Arnot's departure the union's day-to-day operations were already being run by IRB personnel, including Alan Solomons as director of rugby and Steve Griffiths as chief operating officer. Morgan Buckley advised a transition team led by Bob Latham, Brendel's successor, and director Frank Merrill.
In winter 2006 the board adopted a Buckley-authored strategic plan that focused USARFU on Dublin's top priority: becoming a World Cup quarterfinalist. That summer the directors voted to unseat themselves in favor of a smaller group with corporate and international pedigrees and supposed fundraising prowess but little experience in American rugby. The union cannot now pay for its test-centric program without monies from Dublin, which exercises tight control both through its leverage and first-hand experience with the union's business practice and accounting.
The USA 7s tournament has become American rugby's leading commercial property, surpassing the 15s team. With a decade-long campaign for 7s admission to the Olympic Games successfully concluded, leading to expected growth in the event's value, USARFU's upside is tied to the value of a pact struck at a moment of weakness.
The dues move became one the larger revenue producers of the past decade but disproportionately hit high schools and colleges. The emergence of semi-independent bodies which menace the union's traditional organization and revenue structure stems from the hike.
Well said. Arnot had three million worth of National Team sponsorship coming in 03-04-05 and he cut the Eagles budget in 04, because he couldn't raise money. This is when Tom Billups resigned rather than be part of the Arnot lie to the Board and the Eagles players.
The old Board allowed Arnot to lie to them at every meeting. His best lie was telling the Board that he was bringing in millions in sponsorships, when all he was doing was adding up the gross income from the LA Sevens, an event was on a net basis was losing high six figures per year.
Its no surprise that the old Board is the same do nothing Congress we got to know during the Arnot years.
We were all so excited to have this new Board of movers and shakers, now after three years it is clear we still don't have it right. At the rate USAR is going, the Arnot years will look good in comparison to what this Board and CEO have produced.
The one constant has been the old Board new Congress. They have been consistently shite.
Posted by: USAR History for all to see | 30 November 2009 at 11:04
Kurt, we knew this all along.
Billups called it as it was happening and Latham, Merrill, and Co. let it all happen.
Facts are the facts.
Posted by: MARFU Shark | 30 November 2009 at 12:01
More reason that colleges should break away from USA Rugby administration and manage their own fate. USA Rugby has been failing for more than a decade. The Fox deal was a once in a life time deal because the game turned professional and Fox wanted to corner the television rights worldwide and it was too risky to not have USA as part of it because of the potential. After that it was the IRB grants that kept the union from going under. Without these two things that were not even earned, the union would have folded years ago. And it probably should have for the good of rugby in the USA.
Posted by: Rugby + USA = F A I L | 30 November 2009 at 12:06
This is important information for all of the CIPP paying members to understand.
There is no spin to this information.
This isn't about personalities, it is about the job Latham, Merrill et al have done while in control of things. Arnot is long gone after failing miserably. The true facts are that his failings were being covered over by Bob and Frank.
Those two should be immediately called out by CIPP paying members to resign.
Posted by: George Benson | 30 November 2009 at 12:38
Even though they haven't published their accounts, shame on USAr for this, what we know is the last two years have been in the red, in spite of millions in free money from the IRB.
Even Doug Arnot didn't waste millions in IRB funds.
Posted by: still losing money | 30 November 2009 at 15:42
I am doing a new USA podcast with Djuro Sen and the guys from heavensgame, the site is www.ruggamatrixusa.com
please give a listen. i know i am going to get blasted for promoting it, and you are all correct for blasting the promoting, but i don't really know where to tell anyone that there is a show.
Posted by: bruce mclane | 30 November 2009 at 17:18
great bruce. glad you're back on the air somewhere.
Posted by: college | 30 November 2009 at 17:35
Your girlfriend Brian Lowe is going to have a fit!
Posted by: Lowe Down (Syndrome) | 30 November 2009 at 18:16
Bruce, first episode can be to address this factual post on gainline.
Dip into your vast USARFU rolex and ask Latham and Merrill to be your first guests. Ask them to answer some real questions.
This will assure you get some listeners. Anything short of this and I doubt I will bother.
Congrats, now roll up your sleeves and start asking questions.
Posted by: Bruce is back, but will he ask ?? | 30 November 2009 at 19:22
Djuro and I do not shy away from topics. We addressed in the first show the fact that a proposed board member (Bob Phillips) former CEO of multi billion dollar company Unilever, and the lead man financing the Dartmouth Rugby playing facility and clubhouse was rejected as a new board member. (He was put up by Jon Prusmack, the owner of USA 7's, rugbymag, and rugbymag.com)
The best predictor of future behavior is past behavior and this is a man who cares deeply about school rugby and a bottom up approach and obviously he is a man who puts his money where his mouth is and he uses his influence to get others to put their money to work as well.
To think that a man like this was rejected after helping accomplish what he did in helping finance a major rugby project and to think he was rejected even after being put forth by Jon Prusmack, who is close to being one of the most generous men the game in the USA has ever known is downright baffling to me.
When I saw Jon Prusmack last week at the NYAC and then met with Bob Phillips (at Jon's request) I thought I was in a bad movie. I couldn't believe Bob Phillips was not put up for congress approval for a board seat with Peter Seccia (and even if they wanted to keep Bill Middleton, there was a board member willing to step down which would have allowed this)
I am not certain, but apparently that board member is still willing to step down if a replacement is found and I think Bob Phillips is the ideal replacement. He is 70 years old and just wants to do good things for the game. Like Peter Seccia, he is extremely professional and corporate and like Peter Seccia, he comes with no political baggage in the USA Rugby scene, just a willingness to help the game progress.
Posted by: bruce mclane | 30 November 2009 at 23:45
Did anyone read the press release regarding USA Rugby's new shirt sponsor ?
Read all about it ! Chairman Roberts surfaces, comparisons between Loch Ness monster and Roberts made.
What is the dollar amount of the sponsorship ?
Posted by: MBA II | 01 December 2009 at 06:45
Bruce,
You are such an attention seeker.
Was that you I saw gate-crashing the White House last week?
Jack
Posted by: Jack Sparrow | 01 December 2009 at 06:58
The new sponsorship of the Eagles 7s team is from Emirates Airline, which is the title sponsor of Dubai event and three other IRB World Series events, and announced days before the tournament begins that it is the Official Airline of the USA Rugby National Sevens teams that will wear the Emirates logo on their shirts.
Just a couple days ago it was announced that USA 7s LLC, which runs the USA 7s tournament, stepped in to provide the team jerseys for the coming tournaments.
My guess is that this sponsorship is a last minute move by Emirates Airline to keep the image of the sponsorship profile of their event as high as possible. A competing event sponsoring a team at your event looks pretty bush league, and they got to take advantage of getting their name out there for a cheap price - jerseys and some free airline tickets. I think the following is a key quote from the new sponsor:
"Following the weekend's action we will certainly be looking at developing this partnership with USA Rugby further."
Of course Robers jumped on it with the following quote, lovenote, whatever:
"Emirates is more than an airline, they represent a lifestyle of optimism, discovery and passion. A lifestyle all USA Rugby players, members and fans share and aspire to. Emirates is passionate about rugby and will bring fresh impetus to the game's development in the U.S."
First sight of the new kit is yet another off the shelf Adidas jersey with a logo on it. Lots of advance planning on this sponsorship.
Basically we went to the tournament looking like vagabonds and the title sponsor of the event through us some jerseys and since they are also an airline said let's be the official airline of USA Rugby for 7s. Is this how low we have fallen in world rugby?
Posted by: USA Hobos | 01 December 2009 at 07:22
I'm not sure who's on the Board matters. Clearly who is on Congress is insignificant.
Let's remember that Roberts has kept Board members who support him, as apposed to Board members who get anything done.
Middleton is a great example. He has never played, coached, reffed or administrated any form of rugby in the US. He has not offered one sponsorship partner, nor has he even made an introduction. He is a foreign businessman living in NY with little rep of success. His made claim to fame and main reason for being on the USAR Board chaired by Roberts is he's a Kiwi and All Black fan.
If Phillips would tell Roberts where he's wrong and call bullshit on this whole mess, well that's one thing, but if he would only attempt to work from within, we will still be having this conversation a year from now. Keep in mind Roberts isn't passive in this. He is keeping people off the Board which would challenge him. The game is being played. Working within the Board and not taking a stand means Roberts wins. Another year of wasting IRB grants with a vision-less commonwealth approach.
We need to remember not one Board or Congress member has stood on two feet and said this is all bullshit, not one. It seemed for awhile that giving props to the best of the Board and Congress members made sense, but not any longer. Each member is part of this sham which is ripping off HS and college kids for high priced salaries for individuals who have underperformed over a period of years.
Until one of these Board or Congress members has the courage to take a stand, they are all the same. A bunch of lightweights just happy to be called somebody. When their final legacy is read, the joke will be on them.
Posted by: it doesn't matter Bruce | 01 December 2009 at 09:08
If my contact in the UAE is correct, the sevens team is scheduled to be panhandling outside of some very high end retailers before the tournament, including the Prada location as yet another exciting sponsorship deal by USA Rugby's Chairman Kevin Roberts.
Roberts expected to comment; "I too love Prada and never wear anything else".
Team members competing in this first stop in the Series provided Prada coin pursue (at wholesale cost) for their per diem.
Posted by: Global Marketeer | 01 December 2009 at 09:14
NM was in Dubai a few weeks ago pushing for this deal - it is no last minute job
Posted by: Paul | 01 December 2009 at 09:26
All I am saying is that Phillips has made rain and delivered the goods at the Dartmouth program pretty significantly.
Phillips didn't get to where he is by being a coward. He is 70 years old and has no political rugby baggage. He wants to do something positive for the game and he was put up by Jon Prusmack who runs USA 7's, rugby mag, rugbymag.com, and the same guy who rescued the all-american tour financially. To me this could be a significant step forward in the process of building something.
I think Seccia is an outstanding addition to the board.
I think pressing for Phillips makes the board even stronger and from there hopefully others are encouraged to be part of it and grow the game.
Phillips was a rugby player in the USA and has a solid understanding of the landscape here.
Just because Seccia and Phillips are corporate doesn't mean they are not strong, I think it is quite the opposite. They present the image that we need to generate significant sponsorship and financial support.
They have made rain, they know how to make rain, and they want to be rainmakers for rugby and to me that is a good thing.
Posted by: Bruce McLane | 01 December 2009 at 09:41
So Nigel was in Dubai a few weeks ago working on this sponsorship deal? That is funny because the team was desperate enough to have the 7s LLC get kits for the team. Now this last minute announcement a couple days before kick-off and the jerseys are a generic off the shelf Adidas kit. Get real. The cost to fly to Dubai and put Nigel up for a few days would have paid for the kits for the team for the 7s series. Because that is all he got from this deal. Aside from some free airfare maybe, but the sponsor is an AIRLINE!
Posted by: Let's see some proof on this sponsorship deal | 01 December 2009 at 10:06
board at work again.
would someone tell me what this commonwealth model i hear talk of is...you know the one not working here. Seems to me that the commonwealth didn't do it this way or they would have been as unsuccessful as us. Now if you mean the foriegners running our unions way you may have a point.
The commonwealth has had 100 plus years to get their house in order and for the most part have. But the commonwealth has two different models. In England and France(not part of the commonwealth) the clubs contract he players and the national side has to talk to the clubs to hget the players. in the rest of the commonwealth the national players are centraly contracted and have much easier access to the players.
If we are talking about at the lower levels well thats different. IN england, i think, the RFU supports the grass roots rugby with coaches etc as well as hosting ens of season tournements at HQ. The same applys to the other commonwealth countries. So it seems the commonwealth model does work, all we need is another 100 years of amateur rugby.
Which seems a similar route to that taken in the varsity model we want to promote. Was there much if any reason for college scholarships for sports before there was pro sports to aspire too?
Dont blam the tools just the "tools" using them.
Hate away
Posted by: curious on-looker | 01 December 2009 at 10:21
Curious -
The piece of the puzzle you are missing is that in commonwealth countries the community game has clubs with facilities, coaches, revenue streams, etc. Our clubs have nothing really. The play at local parks, their revenue is dues from members, the coaches are volunteers and the standard is poor. Alternatively, the colleges have facilities, have coaches (not rugby specific, but strength and conditioning, trainers, etc), fans in waiting in a student body and a marketing angle because everyone in the USA understands college sports and rivalries. Add the fact that every major sporting organization in the USA understands HS and college sports structure (i.e. IOC, USOC, FIFA, etc), and that you get massive administration experience in Athletic Directors and staff. Get it?
Posted by: Curious George | 01 December 2009 at 10:39
...and also consider in commonwealth nations the national team brings home the bacon by selling out massive stadiums, merchandise, broadcast rights, sponsorship deals, etc and grows the community game because every little boy wants to be an All Black or represent England. The number of rugby players in England exploded after they won the 2003 WC. Here the Eagles generate no money and motivate nobody to play rugby. The college games of the week were on ESPNU and drew good sized crowds. National team had one game on ESPN2 and it was played in front of a couple thousand people. Unless we play Ireland or other big ex-pat country, the crowds are comparable to what the college games of the week drew.
Posted by: Curious George | 01 December 2009 at 11:12
The commonwealth label fits the USAR administration in the following context, a commonwealth plan works great in the commonwealth. The administrations mistake is they think it works in the USA.
What US rugby needs is a plan created for America. For the US sports market. A plan based on our strengths and weaknesses.
Bruce, I agree with the poster who said the board doesn't matter. Roberts is USAr. I say quit paying dues and make him somebody else's daddy.
Posted by: Commonwealth Plan | 01 December 2009 at 11:42
OK think i get it but if we use the varsity model where does the scholarship money come from? The way I undestand most of the bis universities their football and basketball program fund all the other scholarship programs they have to provide because of amoung other things Title 9. so rugby would just be another drain on this money?
maybe this new coaches group leads the way 30,000 student paying $50 each that 1.5 million. How many college rugby programs are there? That not much money each!
I dont have an answer but what ever the answer we need IRB money to make it work.
even if USAR cared about the colleges they wouldn't be giving much back since they would have to share the money equally if it was just the CIPP money we are talking about. Again need IRB money.
Here's an idea...use IRB money to fund say 20 scholarships each year for say $20k each. Pays for school and most of room and board for out of state students.
USAR meets with th etop 10 colleges (nay number here) and tells them they'll pay for 4 scholarships to the first 5 schools that meet creteria for coaching and player development. These players then are made available for national camps etc. Not such a big deal if they have to take a limited schedule someone else is paying. The next year 5 different schools with 20 more players. Now the IRB has to step up because year 3 we need 1.5 million but now there's a program in place and they see the rewards with higher caliber athletes and rugby players because schools paid for.
Just ann idea I've been kicking about.
Thoughts? Whining? Bitches?
Posted by: curious on-looker | 01 December 2009 at 12:31
You could start with the national championship being funded by the CIPP dollars that all the colleges pay into and the sponsorship dollar generated by college rugby (national guard). The top 16 teams in D1 and D2 then could use the 20 to 30 grand they are spending per year to participate in the nationals towards scholarships. This is simply giving back the revenue college rugby generates to the people that generate the revenue. At the current moment is all going to the national teams, which generate very little revenue. Unless the 1500 people at the cricket ground in Florida were paying $1500 per ticket.
Posted by: Suggestion | 01 December 2009 at 15:31