THE SCOTSMAN REPORTS
New SRU chief executive Gordon McKie is upbeat about the task facing him. He accepts that rugby is the core business but warned that the union was not immune to financial consequences if it keeps losing money.
Picture: Ian Rutherford
'SRU is the worst-run business I've ever seen'

DAVID FERGUSON


THE Scottish Rugby Union's new chief yesterday ranked the governing body as the worst business operation he had ever come across in over a decade of turning around failing firms in this country and abroad. But Gordon McKie, who took over as chief executive of the SRU in August, added that he believed it would be the easiest to fix and was "very excited and upbeat" about the future of the game in Scotland.

McKie was speaking at a media briefing alongside Allan Munro, the new Scottish Rugby Board chairman, and Andy Irvine, the SRU president, called to update the public on the meetings conducted around the country by the new management in the last few weeks and an employee conference on Thursday. The trio took the opportunity to provide the kind of detail the old general committee failed to reveal, but which was behind their reasons for taking the drastic action in January of removing the executive chairman David Mackay and forcing a leadership meltdown which threw Scottish rugby into chaos. McKie's predecessor Phil Anderton, below, resigned shortly after Mackay's ousting.


McKie has a track record of taking charge of firms heading towards bankruptcy and trying to save or make them profitable again, from David Murray's electronics business to the large engineering firm Semple Cochrane. But when asked to compare how the SRU ranks alongside these, and the latter firm mentioned eventually went to the wall, he said none were as poorly run as the Murrayfield operation.

"There are a lot of common issues," said McKie. "It starts with people, competency of management and you can tick that box. Systems? Extremely poor. I've seen other [failing] business with much better systems than this one. Processes? Extremely poor. For a simple business this is very, very poor. I've worked with businesses much more complicated than this one, so if you want me to rank this with others I've helped turn around this is probably the worst because this is such a basic business. But, it's probably the easiest one to fix because it doesn't have a long manufacturing cycle. Yet, it is surprising for it to be in such a state."

McKie took the wraps off a series of financial blunders and poor operating practices within the SRU in recent years which provides for the first time clear evidence of why Scottish rugby has run up a £23million debt which is costing £1.5m per year in interest, and has handicapped Scottish teams.

The insurance paid for damage to the players' tunnel at Murrayfield was spent in other areas, he revealed, leaving an unsafe floor with holes which threatened injury to players as they prepared to take part in Test matches. He recently authorised full repair, costing just over £20,000. Sponsorship money brought into the SRU was taken away from the initiatives which attracted it and spent elsewhere; a spend of £300,000 on TV advertising for the forthcoming autumn Test series was recommended by a senior SRU official without any evidence that it would lead to increased revenue or ticket sales - it has been scrapped by McKie - and new sponsorships of the professional teams are still awaiting payment because no-one was invoiced.

Furthermore, tickets were handed out to employees last season with no reporting of where the tickets went and what income was generated; unrealistic budgets were set with no obvious link to the funding required for that area; leading sponsors were ignored for several years; there was no evidence of tendering procedures in some departments despite nearly £2m being spent annually on travel and accommodation alone; and five different firms of solicitors were recently being used, with 16 people within Murrayfield contacting solicitors for advice on various issues.

"Guess what we found last week?" said McKie. "A bank account with £9,000 in it. We just found it. It is said to be the Glasgow District Thistles bank account - I haven't discovered yet what that was for.

"It might not seem like a lot of money against the overdraft we have, but it's the principle here of an account sitting with money in it that no-one knows about. But I can assure you that if that money was brought in for the purpose of the Thistles youth squad it will now be used for that."

McKie and Munro insisted that requests for information on who was responsible for such practice or decisions were met with a wide-ranging culture of blame, where they were continually pointed in the direction of others. It all added up to an administration beset by a lack of accountability and quality management McKie stated. The question now, however, is whether the new leaders can match their enthusiasm and honesty with genuine results, and make a significant difference to the game on and off the field.

McKie admitted: "I can't say when the business will become profitable, but I don't believe it can get any worse. I do feel that with proper attention to sponsors and clients the combination of that and reduced costs will make the rugby better. One or two sponsors may still leave us, because they've had nothing out of the relationship for the last two or three years, but I believe we'll be able to get others through more focused marketing, my contacts and the union becoming more credible to make up the shortfall.

"Beating the All Blacks is not simple, but this business is and that's why I am very upbeat. A high percentage of the revenue is fixed and a high percentage of the costs are fixed, and its playing attributes can be improved by common sense and better management. The last few weeks have been very hard but I'm very, very upbeat and optimistic about the future."

He added: "Rugby is our core business; it's what we do. But we must accept that we are not immune to financial consequences if we keep losing money. There will be no home of Scottish rugby if we continue to lose £10million every two years - it will be turned into houses or whatever the Bank of Scotland decide to do with it. We are giving rugby more emphasis because this has effectively been a marketing organisation in recent years, and not a very good one, but we have to remind people that this is a plc."

When pushed on how we have heard many claims of ruthlessness before, from regimes he is now critical of, McKie was quick to emphasise that while he is keen to radically improve communication between club rugby and the SRU, and within union departments, the new leadership was more intent on action than words to turn around Scottish rugby.

"I had an approach from a person in here inside the last 24 hours, who told me this is a rugby environment not a business. I had to say to that person 'I disagree with you - if you don't change there is no future'. For years and years I think we've been fed that propaganda, or misstatement. But business and rugby have to go hand-in-hand."

It is quite clear that the train which these three men have taken control of is building up steam as it runs through each facet of the SRU, and the warning that genuine improvement in financial health would not come without casualties was not a false one.

This article was posted on 15-Oct-2005, 08:57 by Hugh Barrow.