Roughriders face biggest financial crisis in 110 years
President paints doom-and-gloom picture of Riders' financial future
Annual general meetings for the Saskatchewan Roughriders are generally about the past, but it's hard to ignore the future when you are getting the crap kicked out of you by a virus.
"Since the start of the COVID-19 pandemic, the club's financial model has drastically changed."
That's how Roughriders financial officer Kent Paul broke it virtually to shareholders Wednesday night.
"Since we are a gate-driven league and we are unable to play games, this has had a significant impact on the club's revenue," Paul said.
"In a worst-case scenario of a cancelled season, the club could experience a $30-million or 82 per cent decrease in revenues, offset by a projected $20-million decrease in expenses."
Even under the best-case scenario, the Riders and the CFL are not much better off.
Forty-three per cent of the Riders revenue in 2019 came from gate receipts, to the tune of $17.1 million.
Even with a home playoff game, the organization still recorded a $210,000 loss.
The 2019 financial year had unique challenges.
They included expenses incurred from planning for a 2020 Grey Cup game which now will not happen. Meanwhile, every team in the league had to shell out nearly $700,000 to keep the Montreal Alouettes afloat.
Those challenges are minor compared to what they face now.
COVID-19 played no part in the Riders 2019 financial statement, but it will for years to come.
"This is the biggest financial crisis the Saskatchewan Roughriders have faced in 110 years." said Riders' president Craig Reynolds.
"I say that with a deep appreciation of our history. I grew up during the telethon years. I was a big fan of the Saskatchewan Roughriders when we had lots of financial challenges, but never in our history have we had essentially a complete loss of revenue."
Saskatchewan is dealing better with the pandemic as a province than most of Canada.
We are nearly through four phases of the five-phase reopening plan.
Phase 5 is the "consideration' of lifting some long-term restrictions such as mass gatherings, which is now what we call ticket holders to major sporting events.
According to the Saskatchewan government's website, the date for Phase 5 is still "TBD."
Saskatchewan's chief medical health officer has suggested June 2021 as a reasonable time to start.
Regardless of financial planning, that is a long time to operate without your main source of revenue.
Best-case scenario, the CFL plays a shortened season beginning in September, but with no fans in the stands.
"There are creative ways to try and generate revenue, sponsorship wise, merchandise wise, but I will just say it's economically challenging to play without fans." said Reynolds.
"When you play games in front of fans you have the associated revenue but you also have the associated costs. When you play games without fans you have television revenue but you also have substantial costs without the gate receipts."
The Riders, on average, rake in $1.5 million dollars for every home game played. Right now, there are no home games on the schedule.
Beg, borrow and steal may be the CFL's marketing campaign going forward.
"The club's cash and investments reserves are projected to be depleted by late fall as we continue to cover operating costs while also refunding season ticket monies," Paul said.
Even before anyone ever even heard of COVID-19, the Riders were noticing a trend.
Gate receipts were in slight decline, as were merchandise sales.
"Over the last several years, the graph on merchandise sales were a declining one," said Reynolds.
"Merchandise is a direct correlation of the economy."
Right now the organization is floating in excess inventory and has already shut down two stores in the province.
But the virus is a much nastier opponent. The Roughriders' president calls it a multi-year problem.
COVID-19 may be eradicated down the road, but the world will be dealing with repercussions for years to come.
If the Roughriders felt fans with declining disposable income were the biggest problem, how will they feel about post COVID fans who may not wish to sit shoulder-to-shoulder with strangers for a very long time?.