THE HERALD LEADS

SRU’s £4m kit contract torn up
KEVIN FERRIE, Chief Rugby Writer July 14 2009
The Scottish Rugby Union were rocked yesterday when their biggest commercial deal was apparently cancelled with immediate effect after the collapse of the European arm of the sportswear company, Canterbury.

The four-year contract to kit out all Scotland's national teams was believed to be worth close to £4m.

The extent to which the SRU were taken by surprise was demonstrated when they had to cancel, at short notice, today's scheduled press call on Troon beach at which the Evans brothers, Max and Thom, were to have modelled new outfits.


A statement posted on the website of the administrator, KPMG, stated: "All sponsorship contracts in Canterbury Europe Limited have been terminated as a result of the administration, and the affected clubs will rank as unsecured creditors in relation to any amounts they were owed for the remainder of the contract."

The SRU are not, of course, a club but no-one at Murrayfield was making anything of that nuance as they themselves scrabbled for information.

"Scottish Rugby is concerned to hear of the reports regarding Canterbury Europe," admitted Dominic McKay, the SRU's director of communications and public affairs. "We are making immediate contact with the administrator KPMG to clarify the position. It would be inappropriate to make any further comment at this time."

However, the full scale of the impact, just weeks after member clubs were being told at the organisation's annual meeting how effectively they are riding the current financial storm, is demonstrated by the claims made when the deal with Canterbury was announced in May of last year.

At that time the SRU's official statement read: "The ground-breaking arrangement is the largest deal Scottish Rugby has secured and extends an eight year relationship."

It is thought the innovative element involved part of their income coming from a share of jersey sales. That impression was reinforced by the recent extension of the Murrayfield shop by the official retailer, Greaves Sports, more than doubling its size at a cost of hundreds of thousands of pounds.

The Scotland shirt is among Canterbury's best sellers, which may offer some hope that the parent company in New Zealand - it is still in business but, according to the administrators, is "looking for a potential acquirer or new investor" - may want to maintain the Scotland deal.

While Canterbury made its name in rugby, it appears to have got into trouble in its bid to diversify, after admitting to having been "hit by tough trading and an unsuccessful' move into other sports".

That included supplying Portsmouth FC, so it may not be the first company to have come unstuck in its eagerness to get involved with Premier League football in England.

In the longer term, it is also likely that rival suppliers would be keen to acquire the Scotland brand, but the timing of it becoming available is far from ideal. With the new season set to start next month, that is particularly the case for Glasgow Warriors, one of the SRU-owned teams which, unlike Edinburgh, uses Canterbury kit.

While this is a serious blow for the SRU, the overall impact is not as serious as it might have been four or five years ago, as McKay is able to claim: "Scottish Rugby has a well-established, balanced and varied portfolio of sponsors who support, through their investment, the continued growth in rugby across Scotland."

Naturally as outsiders seek to assess the extent of those difficulties there will be links to the collapse of Setanta UK, another business with cause to regret its rush to become associated with Premier League football in England.

What happens with television coverage of the Scottish professional teams remains the subject of negotiation. While it is still not clear how much exposure Scotland's professional teams will get next year, the money involved in that arrangement is relatively small by comparison with the Canterbury deal.

This article was posted on 14-Jul-2009, 06:49 by Hugh Barrow.