BY Fraser Tennant
As a result of “insurmountable financial constraints” in the wake of the COVID-19 crisis, the board of directors of USA Rugby – the national governing body for the sport of rugby union in the US – has voted to file for Chapter 11 bankruptcy.
The board, along with the USA Rugby Congress, stated that the current suspension of sanctioned rugby activities caused by the ongoing COVID-19 pandemic had accelerated existing financial challenges facing the organisation, including a 2019 budgetary overspend.
In the main, the suspension of competition resulted in a significant loss of revenue from spring and summer membership dues, sponsorship drawbacks and additional revenue sources. To mitigate the impact of lost revenue, USA Rugby worked on potential solutions, including bankruptcy and restructuring.
The Chapter 11 filing is reinforced by a financial support package approved by the World Rugby Executive Committee (EXCO) which will enable USA Rugby to restructure on an expedited timeline. Both the USA Rugby Board and Congress agree that the filing supported by a robust action plan is the optimal strategy to swiftly and efficiently address challenges and deliver a foundation for future stability.
Additionally, USA Rugby has confirmed that these measures are intended to protect and support the men’s and women’s sevens and fifteens programmes as they continue to compete on the world stage.
“This is the most challenging period this organisation has faced, and all resolves were never taken lightly in coming to this determination,” said Barbara O’Brien, chair of USA Rugby. “While the current climate is of course much larger than rugby, we remain focused with stakeholders and supporters in the continued effort toward a balanced rugby community where the game can truly grow.”
Although the Chapter 11 filing has required significant staff and budget reductions, USA Rugby’s headquarters will continue to operate on a condensed staffing model through the remainder of the restructuring process.
Going forward, World Rugby and other creditors will review and endorse final court-approved restructuring plans, allowing USA Rugby to emerge from Chapter 11.