The Brumbies could have been broke by the end of this year had the controversial sale of their Griffith training site been blocked by the ACT government, says chairman Sean Hammond.
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The Brumbies have equity of more than $9 million courtesy of the $11.375 million sale, but Hammond said the Super Rugby club must invest wisely and return to a sustainable operating profit after coming close to insolvency.
Despite their on-field success this year, by making the Super Rugby grand final and beating the British and Irish Lions, the Brumbies reported an operating loss, before depreciation and amortisation, of $141,085.
It was an improvement on a $346,198 loss last year, but Hammond said it was a disappointing result given the Brumbies had been projecting a profit.
In fact, Hammond conceded the Brumbies had potentially been saved by the rezoning and sale of the club's Griffith site, a project five years in the making.
Hammond said the Brumbies may have needed to borrow funds from the ARU had the sale been deferred, or could have become insolvent if the rezoning from commercial to residential land had been blocked.
''The reality is without the sale of the site at Griffith we wouldn't have been able to fund last year's loss,'' Hammond said. ''So we're fortunate that's happened. If the sale was not going to occur, we would have had serious financial issues … we would have been insolvent at the end of the year if the sale hadn't gone through, if the sale was never going to go through. If it was deferred, then we would have been able to come up with some short-term financing.''
The Brumbies are financially secure, having erased their debts and invested $5 million in the development of a new $16 million training facility at the University of Canberra, due for completion in March.
Long-term stability and cashing in on the team's on-field success this year is the next challenge.
The remaining $4 million from the profits of the Griffith sale will be invested into an independent trust, known as the Brumbies Rugby Provident Fund, for the future funding of ACT rugby.
On another positive note, Brumbies sponsorship was up more than $1 million this year and the university signed a one-year extension as the major naming rights sponsor on Tuesday.
But Hammond said returning to a consistent operating profit was essential for long-term sustainability and it would be the major challenge ahead for the next Brumbies chief executive officer.
challenge ahead of the next Brumbies chief executive officer.
The Brumbies have had up to 30 expressions for interest for the role vacated by Andrew Fagan, but will spread the net further by advertising the position this weekend. Expressions of interest will close January 10, with the Brumbies hoping to fill the position in February.
The financial losses in 2013 were mainly due to a drop in Brumbies crowds and corporate hospitality on match days. The loss could have been a lot more if not for the tour match against the British and Irish Lions.
Hosting a finals match at Canberra Stadium for the first time since 2004 was also supposed to be a big financial winner for the Brumbies, but a poor crowd of only 14,000 meant the club barely broke even.
While Hammond said the Brumbies were anticipating the team's success this year would flow on to increased memberships and crowds in 2014, he admitted the code faced many financial challenges.
Funding to clubs from the ARU's broadcasting deal has dropped about $1.5million a year in the past decade, with a new deal not due until 2016.
''We need the organisation to become profitable,'' Hammond said. ''Other than the [Queensland] Reds, all the other Australian rugby teams are reporting losses this year and the ARU's got some issues in 2015 going into a World Cup year where their revenue has dropped by about $40million.
''Our share of revenue from the broadcast agreement in 2004 was $5.2million, then it dropped to $4.8million, and next year we get $3.7million dollars … that's why the next broadcast agreement is so important.
''I was disappointed our core result [this year] was still a loss … the Brumbies need to grow to such a stage where we're sustainable and we're building reserves.
''[Corporate] hospitality and match day [crowds] are so important to the cash-flow and lifeblood of the organisation … it would be a priority for the new CEO to address those areas.''
In the Annual Report, Fagan writes: ''we need to establish a more sustainable business plan as soon as possible''.
Deloitte has been engaged to complete a 'state of play' analysis of the Brumbies, board and management to develop a strategic business plan in the first quarter of 2014.
In another points of interest in the Brumbies annual report, Wallabies hooker Steven Moore has replaced Joe Roff as the players' representative on the board. Carmel McGregor becomes the club's first female board member, while David Adamson is another addition.
