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Clock Ticking On USA Rugby's Future

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Clock Ticking On USA Rugby's Future

USA Rugby is the national governing body of the sport in the United States ... but for how long?

The clock is ticking loudly and quickly for USA Rugby.

According to documents and statements acquired by Goff Rugby Report, it appears that USA Rugby is in a seven-figure hole that the organization cannot climb out of. With rugby halted across the globe, a halt on sponsorship dollars, and also no new CIPP dues coming in (youth and high school programs that start in March and April don't pay their dues until the players are committed), regular injections of income are not coming in.

The organization would normally expect dues, sponsorship, and donation income of about $2.4 million (that's an estimate). USA Rugby has been able to cut costs by reducing staff in the national office and also cutting staff in High Performance, and not holding national championships this spring could save as much as a quarter of a million dollars. But the organization already owes over $1 million in debts and accounts payable.

The upshot is this: USA Rugby has a negative cash flow of over $3 million. Normally they would go to World Rugby for a bailout, but the coronavirus shutdown has hurt World Rugby as well, and the governing body has also been busy sending money to other stressed unions that are losing money. According to a document acquired by GRR, World Rugby has said a cash influx is not possible.

That's the crisis of finances; here's the crisis of time:

USA Rugby's D&O insurance, which protects the Board and the executives from being sued personally or being personally liable for USA Rugby obligations, runs out at the end of the month. It can be extended, but only to cover actions through March 31. Any new D&O insurance will be more expensive (because United World Sports is still suing USA Rugby and the suit is going to arbitration), and will not cover bankruptcy after March 31.

So the upshot is this: USA Rugby owes over $3 million, and has no expectation of any income and no expectation of any bailout from World Rugby. 

This financial shortfall was known about, or should have been known about, by the USA Rugby executives a year ago, and at that time they could have tried to restructure that debt and get some relief in terms of dollars and of time. They did not, and now they are out of time.

It appears that USA Rugby must file for Chapter 11 bankruptcy in the next seven days or it, perhaps, ceases to have any ability to operate. Board and congress members have been hard at work looking for a way forward, with many working all day every day on this problem. It does seem clear that some drastic changes need to be made right now.