IRFU chief executive Philip Browne has warned that the union and the provinces will have to “drastically” cut their budget if its revenue streams remain cut off.
His comments, which are published in the IRFU’s annual report today, come on the back of the news that contract negotiations with players will not begin until there is a clearer picture of the financial landscape.
The union are now footing the bill for all player salaries because Leinster, Munster, Connacht and Ulster are no longer in a position to pay their share, a move that leaves the IRFU with a bad debt provision of just over €16m.
"It would be very important to note that this represents a movement on a provision and should not be interpreted as a forgiveness of any part or all of this debt," IRFU Honorary Treasurer Tom Grace said.
"The Union is working on an appropriate financial package to assist the four Branches in getting through these difficult times."
The extent of the damage wreaked by Covid-19 on the IRFU coffers has been laid bare by the union’s annual accounts which were published today.
Grace, who will stand down this year after 13 years in the position, said the described the situation as “extraordinary” as he revealed a deficit of €35.7m for the 15-month accounting period to July 31.
Income dropped from €87.5m to €79.2m, while expenditure increased from €84.2m to just under €115m which was due to three extra months of payroll costs as the union shifted their reporting date back this year.
The Irish game relies on crowds at internationals to finance the game and supporters have been banned from stadiums since March.
Browne said the current model is unsustainable unless fans are allowed back into stadiums.
“Whilst the provinces and the IRFU are currently solvent, that ultimately is a time limited situation and unless there is a return to some level of normality within the next 12 months, with matches being played in front of some reasonable level of paying spectators, the IRFU and the Provinces will have to drastically cut their budgets to ensure costs are covered by the lower revenues,” he said.
"It is no surprise that Irish Rugby has experienced one of its worst financial years ever. Covid-19 will continue to challenge us all until a vaccine is available and we are very grateful to the government, our sponsors and our patrons for continuing to stand with us at a time where we are unable to fill the Aviva Stadium with our fantastic fans.”
The union has also written to all players to inform them that contract negotiations are on hold.
The move is a major risk, with internationals Tadhg Furlong, Iain Henderson, Johnny Sexton, Peter O’Mahony and Keith Earls all due to be out of contract in June.
All non-playing IRFU staff took a 20 per cent reduction in salary in June, while the players agreed a 10 per cent cut until December 31 and a further 10 per cent deferral in July. That is up for review in December.
“The Union has always prided itself on being able to adapt to changing financial circumstances and whilst the scale of the challenge facing us is enormous, I am confident that we can meet it but there will be pain across all aspects of the game,” Grace said.
“It is essential that we emerge from this crisis in a strong, competitive position and the Union will continue to work toward that end.”