TWICKENHAM, where Financial Director meets Rugby Football Union (RFU) chief financial officer Stephen Brown, seems to rise dramatically out of the side streets, while somehow simultaneously sitting unobtrusively among the surrounding houses and gardens until it stirs into life on match day.
There is an air of expectation as staff prepare for what is to come over the next few weeks: the 2015 Rugby World Cup. The scene will be much the same at 12 other stadia across the country. This festival of sport will be celebrated at Twickenham, Wembley and the Olympic Stadium in London, while Brighton, Manchester, Cardiff, Leicester, Leeds, Exeter, Gloucester, Milton Keynes and Newcastle will also play host.
“This’ll be good,” Brown says almost offhand as he meets Financial Director outside the home of English rugby, soon to host to the World Cup, which Brown is in charge of delivering as managing director of England 2015.
Although not a publicly listed company, the RFU holds itself to those standards, publishing annual reports that outline its performance and what it’s managed to deliver to its stakeholders – the country’s rugby clubs, both professional and amateur.
“At the end of the day, we’re still a business – and we’re not a plc but we aspire to operate at plc standards and we report publicly,” says Brown. “We have the same outline and framework as a corporate organisation. What’s slightly different is we wouldn’t make it into the FTSE 250, but we are probably in the top ten in terms of brand and profile.”
Where it differs from typical corporates is that the cyclical nature of revenue, with the England team its principal product. In practice, it means the RFU draws the lion’s share of its revenue from England matches during the three ‘good’ years, building up a reserve position for the fourth – World Cup – year.
“The ultimate objective is very simple. To maintain investment in the game and invest all our profits in the game on a smooth basis,” explains Brown. “It’d be easy for us, with our volatile profile, to go from feast to famine, but that would not be good for the game, particularly for the grassroots, which is ultimately where we put our money.”
2015-present Managing director, England 2015
2011-present CFO RFU
2001-2011 various roles including UK FD, Abbott
1998-2001 Business support manager and group head of finance, British Energy
Over the next five years, the RFU plans to invest around £350m into rugby, with 40% going to grassroots and the balance to the professional game. And, given that World Cup years depress the organisation’s revenue, it’s something of a boon that England is hosting the tournament this year. As such, both professional and grassroots rugby in England can expect more support – financially as well as from the public in attendance and participation following what we all hope is a successful tournament.
“It’s a game-changer,” says Brown matter-of-factly. “We’re a £170m turnover business on a normal, smooth profile, which in sport is pretty big, and we’re probably the number-two sport next to football. We have a good asset base, we own the stadium, and we have diversified revenues. What the World Cup brings to us is about £250m-plus of extra turnover.”
However, it’s not as straightforward as that, Brown is keen to note. In practice, the RFU only receives ticket revenues during the tournament, while it has to spend in order to ensure it has the requisite facilities available across its 13 venues.
Sales of food, drink, merchandise and other such things are not captured, and a guarantee of about £80m is paid by host nations to World Rugby as part of the licencing of the event. It means that although hosting a World Cup is better than participating in one held elsewhere, the gross impact isn’t quite as rosy as it initially might appear.
“We’re hosting 48 matches across 13 venues for 20 teams across the country and what’s slightly odd is that we’re the RFU and England 2015 is a wholly owned subsidiary,” Brown explains. “[England 2015] is hiring Twickenham back from us, and that’s where the model is slightly odd. So the rights holder is World Rugby and we’ve paid a guarantee to have those rights and in doing so we put on the games.”
Then there’s the more fundamental preparations all host nations have to make. Some £76m was invested in modernising Twickenham itself, which has the added benefit of helping facilitate the RFU’s diversified revenue streams.
“As you see it, it looks very smart and modern, but some of the stadium is pretty old now – 35 years,” Brown explains. “Up until 2012/13, it was 90% male toilets which reflected the audience we had back in the day, but we’ve had to improve that situation.”
Bar and catering facilities have been improved, while some “pretty hefty” technical work has taken place, such as the installation of back-up generators in case of a power failure as well as plenty of cosmetic work to improve the stadium’s look and feel.
It means that in addition to conferencing and hospitality – the RFU’s largest source of revenue until this year, over and above matches, although that is set to be overtaken by broadcasting – Twickenham will be able to resume hosting gigs, something that was suspended during the refurbishment.
Not only did Brown have to contend with putting those arrangements in place, he also faces the prospect of winding down the England 2015 entity following the tournament, much as LOCOG’s Neil Wood did following the London 2012 Olympic Games.
“That’s my job over the next six to eight months,” Brown acknowledges. “The World Cup will be finished; we’ll be winding down the company. England 2015 will have about 500 people – at the moment we have about 200, as well as 6,000 volunteers. Then it’ll drop to about 30 after the tournament, then six by the end of calendar year. Then we consolidate that part of the business, pay what’s due to World Rugby, retain the rest within the group, consolidate all of that, and close the books by the end of June.”
At that point, Brown – who has held the top role at England 2015 since March, when he took over from previous incumbent Debbie Jevans, who left the post for personal reasons – will return to his CFO duties at the RFU. Over the past few months, Brown has delegated his CFO duties and focused his energies on the delivery of the World Cup.
“I seem to be the guy who gets to do this every now and again,” Brown says wryly. “In fact, just as I left my last company, I was acting managing director of the UK affiliate as well as FD and shortly after I joined I was acting CEO of the RFU as well, so I’m used to it.
“What became clear from those experiences is you can’t do both. It’s not good for your wellbeing, it’s not a healthy situation, and you don’t see your family at all. I’m not sure I could be effective at both jobs, not to the level you should be. For me, it was quite clear when this opportunity came along that I had to take a step back from the CFO role and put myself wholeheartedly into being MD of England 2015.”
Despite that, Brown has retained the responsibility of CFO, but he’s pleased to say the body has developed a “great” finance team with a “great number two” who has been able to “step into the breach fairly seamlessly”.
Once completed, however, he will return to the CFO role he has held since 2011, when he came into what was a rather politically charged situation after England’s disappointing showing at the World Cup in New Zealand, which saw the team, managed by 2003 World Cup hero Martin Johnson, crash out at the quarter-finals after a 12-19 loss to France.
“The fundamentals were sound,” Brown says of the scene that greeted him upon his arrival at the RFU. “It wasn’t quite as bad as it seemed on the surface. The biggest thing for me was to bring some of the great stuff I’d learned in the major corporate world and put it into play.”
But it did look bad on the surface. Martyn Thomas, the RFU’s chairman, had just become the latest victim of the civil war that had beset the governing body – which also claimed the scalp of former chief executive John Steele – in the wake of England’s calamitous World Cup campaign.
“The board changed at that time, and we brought in three new, properly independent non-execs for the first time. We became a more diversified board on all levels and looked at our governance structure and aspired to operate like a plc. In the background, I was able to bring things from a financial point of view such as standards of business planning, strategy and checks and balances appropriate for the scale of the organisation.”
To some extent the upheaval in 2011 prepared Brown for parachuting in as a replacement for Jevans. Brown will be able to resume his CFO duties in earnest from April next year, having spent “99%” of his focus on World Cup delivery and all the operational work that entails – something he has developed a taste for.
“I don’t think I’ll be a CFO in my next role,” he tells Financial Director. “I’ll be doing something different – like an MD or CEO. Being CFO and taking the finance route is a great way to become a leader of an organisation.
“For me, it’s a natural progression. I’ve had a go at it a couple of times before and I’ve got a taste for it. I like being in sport – it’s a good place to be and I’d recommend it to people if they’re looking for a place to be in a finance career. It’s different. It’s smaller than the corporate environment, but it’s got lots to offer.”