USA Rugby files for bankruptcy

[Dave Cahill]

USA RUGBY FILES CHAPTER 11; AGREES TO SUPPORT FOR CONTINUATION OF REORGANIZATION


USA Rugby Board of Directors and Congress vote to file Chapter 11 bankruptcy after exploring all options to tackle ongoing challenges and sustain the financial impact of suspended income due to COVID-19.

Existing financial challenges have been accelerated by the impact of the COVID-19 pandemic on rugby activities

World Rugby to supply financial support package to navigate through filing and continue governance reorganization process with key metrics and controls.

USA Rugby will retain operations through Chapter 11 whereby the Board, Governance Restructuring Group and Congress will collaboratively continue the reorganization on an expedited timeline with input from World Rugby.

The Men’s and Women’s Senior National Teams will continue to compete as normal when rugby returns after the COVID-19 pandemic


Reduced staffing structure will continue to operate functions and services of the National Office.
LAFAYETTE, CO – Following detailed consultation with legal advisors, the USA Rugby Board of Directors and Congress voted to officially file Chapter 11 bankruptcy as a result of compounded and insurmountable financial constraints.

The current suspension of sanctioned rugby activities caused by the ongoing COVID-19 pandemic has accelerated the existing financial challenges facing the Union, and a reorganization process will now be progressed with input from World Rugby.

The USA Rugby Board and Congress agree that filing for Chapter 11 bankruptcy supported by a robust action plan, is the optimal strategy in these exceptional circumstances. It is the best platform to swiftly and efficiently address challenges and deliver a foundation for future stability. The opportunity for Chapter 11 bankruptcy was presented to USA Rugby Congress over the weekend, where an overwhelming vote in favor officially ratified the filing.

The filing is reinforced by a financial support package approved by the World Rugby Executive Committee (EXCO), where measures will enable USA Rugby to revitalize from a governance and financial perspective; including key milestones, metrics and controls. Additionally, this measure will protect and support the men’s and women’s sevens and fifteens programs as they continue to compete on the world stage.

Significant cost reductions and a financial support package from World Rugby will allow the Board, Congress and Governance Restructuring Group to continue under Union operation and control. Throughout this process, USA Rugby will retain procedure of the reorganization over a 30-day period where World Rugby and other creditors will need to review and endorse final court-approved restructuring plans; allowing USA Rugby to emerge from Chapter 11.

“This is the most challenging period this organization has faced and all resolves were never taken lightly in coming to this determination,” noted USA Rugby Chair, Barbara O’Brien, “While the current climate is of course much larger than rugby, we remain focused with stakeholders and supporters in the continued effort toward a balanced rugby community where the game can truly grow.”

In response to the COVID-19 pandemic, USA Rugby suspended sanctioned competition and rugby activities for a 30-day period on March 13 and indefinitely on March 20, 2020. Given the irrefutable need for precaution as instructed by federal health officials, the hiatus of activities and promotion of social distancing was in the best interest of USA Rugby members and those around them.

While inherently important, the suspension of competition understandably resulted in significant loss of revenue from spring and summer membership dues, sponsorship drawbacks and additional revenue sources. USA Rugby was aware of the negative financial implications, however held with the essential suspension and instantly worked on potential solutions to mitigate the impact of lost revenue.

Given the ongoing financial challenges following a 2019 budgetary overspend, the unplanned loss of income advanced an insurmountable cashflow deficit and immediate action needed to be taken in order to sustain operations within USA Rugby and the rugby community.

The USA Rugby Board immediately engaged Congress to elect a small collection of members across each level of play to join leadership in an emergency evaluation and develop best case resolve for the wellbeing of the game. Chapter 11 bankruptcy resulted as the most ideal scenario where the full body of Congress then voted to ratify the filing on Sunday evening.
Through the Chapter 11 filing, significant staff and budget reductions were required at the National Office. The USA Rugby Headquarters will continue to operate on a condensed staffing model through the remainder of the restructure.

Further information on the accelerated reorganization, along with pertinent updates pertaining to the effects of COVID-19 will be regularly communicated on the USA Rugby website and social media channels.

[paddyor]

Been on the cards for a while apparently. COVID 19 the straw that broke the camels back. The RIM association really destroyed their finances.

[ronk]

More than a straw...

[Dave Cahill]

More than a straw...

Not really, not when combined with the mass of other straws already on the USA Rugby Camel's back. RIM (Rugby International Marketing) was set up to generate income for USA Rugby, income they budgeted for. Most of this income never materialised and USA Rugby ended up having to cover it's costs through bailouts from World Rugby.

More here on RIM

RIM also organised the Rugby World Cup sevens in San Francisco in 2018 and despite a multi-million dollar loan from World Rugby, 100k attendance over the tournament and high ratings on television still managed to lose money, mainly because RIM hadn't realised how expensive it would be to host all the squads in the Bay area

Then there was PRORugby and UWS (United World Sports). Both were licenced by USA Rugby to run professional rugby events/competitions. The former was America's first professional league, the latter the USA 7s tournament. Both were taken back under control by USA Rugby in advance of the contractual end date.

More here on the USA 7's lawsuit

Both PRORugby and UWS are now suing USA Rugby and World Rugby, and World Rugby's involvement whilst helping out USA Rugby in the short term could have long term reprecussions. In the USA sports governing bodies must, under federal law, be entirely autonomous.

WR bailing out USA Rugby after RIM, taking control of the USA leg of the World Sevens via USA Rugby cancelling it's contract with UWS and now bailing out USA Rugby again could show that the accusations in the lawsuits that claim that USA Rugby isn't autonomous and is in fact being run by WR do have merit and could lead to both criminal and civil findings against USA Rugby and WR

[dropkick]

I bet a lot of clubs are feeling the heat now. Not only are they losing money but their businessmen benefactors could be also feeling the heat. I read that they make €350k per home game 9n average. There are 54 more games to run plus playoffs.


It's a bad time to be a player out of contract too. I suspect player wages will take a hit for a few years. Good timing for anyone who just signed a contract.