Bankruptcy for USA Rugby will see reorganization of Sport

Bankruptcy for USA Rugby will see reorganization of Sport
USA players sing the national anthem before the Japan 2019 Rugby World Cup Pool C match between the United States and Tonga at the Hanazono Rugby Stadium in Higashiosaka on October 13, 2019. (Photo by Filippo MONTEFORTE / AFP) (Photo by FILIPPO MONTEFORTE/AFP via Getty Images)

The USA Rugby Board of Directors and Congress voted to officially file Chapter 11 bankruptcy, as a result of compounded and insurmountable financial constraints on March 30.

This drastic action was believed to be forced onto the national organization by several factors. The latest being the Coronavirus pandemic. As the majority of World Rugby members had done, USA Rugby chose to act quickly to halt all rugby competition in line with health and government protocols.

In the weeks prior to the publicly stated media release attached, the suspension of sport was an instrument in helping to decide on a radical reorganization of the game in the United States.

Bankruptcy for USA Rugby will see reorganization of Sport

Ongoing COVID-19 pandemic reaction accelerated the existing financial challenges facing the Union, and a reorganization process will now be progressed with input from World Rugby. That will be in monetary terms but, more so, in guidance from the legal obligations of Chapter 11 in the American court system.

A generous support package was approved by the World Rugby executive committee (EXCO), where measures will enable USA Rugby (USAR) to revitalize from a governance and financial perspective; including key milestones, metrics, and controls.

Unfortunately, USAR staff has had to be culled. This resulted in job losses and a halt on any proposed conference programs, USAR regional development and in costs associated with all activities; apart from the national XVs and sevens groups. If and when those teams are free to once again play, funding will be allocated to cover their [agreed] activities.

That timeline may be unknown yet the will for the reorganization of USA Rugby is a goal that all stakeholders will play a part in.

Bankruptcy last resort for developing Rugby Nation

A case filed under chapter 11 of the United States Bankruptcy Code is frequently referred to as a ‘reorganization’ bankruptcy. It sounds like a drastic measure yet for the developing rugby nation, it could drive the way to become a more robust one.

‘Developing’ is used here in terms of growth over the last decade. Always spoken of as situated one tier lower than where it might wish to be, yet even with the high numbers of participation comes a diverse organization that has many many different faces.

Some might say, too diverse and distinct that in the past, they have not always been aligned. The indication is that congress delegates have in the past, been hostile towards an aligned organization – something that large, multi-regional associations understand. So it is a shame now that with financial troubles, it all now must be dealt with.

dealt with in a view to improving USA Rugby as a whole; from the board room to the grassroots.

Even while the largest marketplace is thirsting for sports [prior to, and post-Coronavirus] it has to organized properly. So like with any business, filing for Chapter 11 will involve an audit of the books. If that evolves into more governance and operational revisions than existing faults and measures can be applied. World Rugby can assist with funding but, USA Rugby will want to check and balance every stage of the operation.

By doing that, bankruptcy can be a short term fix. And not leave a nasty taste in the mouth of investors or, in future participants. With over 125,000 players registered with USA Rugby [as of 2016]. Over 2,500 rugby clubs exist around the country, including those that are part of college rugby.

Light can be found in USAR hour of Darkness

As well as USA Rugby filing for Chapter 11, other news from the North American scene involves a franchise of the Major League Rugby competition.

Colorado may justify the decision made during the Covid-19 enforced suspension of the season, as a precaution. Not wishing to risk any financial pressures that may be more ‘fatal’ than just canceling one season. The MLR may have to react by rearranging the season schedule; if and when the 2020 season could begin.

Losing one team may be an unpleasant stage for the league. It had wanted expansion to be a proactive position within USA Rugby – and it has been. Just an unfortunate state of affairs that like so many sports, the events transpired to unfairly put a stop to the game.

In the future though, there are plenty of opportunities. Where the Raptors will now focus internally on Glendale, then USA Rugby must too promote as much internally as it does externally. That is development, coaching and in sharing of resources; both theoretical and intellectual. The IP that exists now should be harnessed to the benefit of the organization.

And in one final opportunity, USA Rugby must put as much resources as possible into lobbying to host a World Rugby tournament. If that could be secured, then the interest and positive message would do an incredible amount to improve the public image. A union with so much potential yet, with so much to lose if the reorganization is not taken to heart.

 

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