'The worst crisis we've seen': Riders forecasting 'multi-year' financial recovery from COVID-19 pandemic
After a season with no games played in the Canadian Football League, the Saskatchewan Roughriders are projecting a multi-year financial recovery from the losses caused by the COVID-19 pandemic.
“It’s been the worst crisis we’ve seen, but I think we’ve weathered it as best as you could expect,” Roughriders President and CEO Craig Reynolds said.
At the Riders’ Annual General Meeting (AGM) on Wednesday night, the team reported excess expenses over revenues for a loss of $7,455,705 in the 2020-21 fiscal year.
The team attributes these losses to the cancellation of the season and other pandemic related impacts, such as the closure of retail stores.
“It was challenging,” Riders’ Chief Financial Officer Kent Paul said. “We were projecting to see upwards of a $10 million loss. While it wasn’t that bad, the club endured the COVID-19 pandemic resulting in the cancellation of the 2020 season.”
The team expects its financial difficulties will extend beyond the 2020-21 fiscal year.
“The impact the COVID-19 cancellation of the 2020 season, and a shortened 2021 season, will have a multi-year impact on the club’s financials,” Paul said. “The club’s cash flows are going to be impacted worse in 2021 compared to 2020, and will take multiple years to recover.”
Reynolds said the team expects to be dealing with the financial struggles caused by the pandemic for the next three years.
“Our cash flows will be extremely challenged because of the rollover of money into 2021 and then we’re going to rollover further dollars into 2022,” Reynolds said.
At last year’s AGM, the Riders projected the club would have to dip into its financial stabilization fund by the fall of 2020. The team said it was able to get out of 2020 without having to touch its rainy day fund, but that will not last.
The Riders expect to begin using money from the fund to keep the day-to-day operations going through the start of the shortened 2021 season.
“We would have to dip into the stabilization fund when we start to incur significant expenses,” Reynolds said. “So obviously the flights and the cost of getting everybody here, the cost of meals, the cost of accommodation, those are all going to start here quite quickly, so we’ll be draining the existing cash balances fairly quick.”
The Government of Canada’s Emergency Wage Subsidy gave the club enough revenue to maintain operations, with a reduced work force and operating costs.
The team’s staff was cut back by approximately 30 per cent. Members of the organization also took “significant” pay cuts.
“Without those federal programs, the club’s revenue decreased 84 per cent from the prior year,” Paul said. “The club’s normal revenue streams were all but eliminated this past year.”
The team’s total operating revenues were $10.3 million in 2020-21, compared to $39.6 million the previous year. Of the revenues this year, $3.9 million came from government funding programs.
Operating expenses also dropped in 2020-21, decreasing from $39.7 million in 2019-20 to $18.7 million.
In 2019-20, gate receipts accounted for $17 million in revenue for the team. But with no fans in the stands at Mosaic Stadium in 2020, the club had to find different revenue streams.
In 2020-21, sponsorships and government funding brought in 72 per cent of the team’s revenue.
THE 2021 SEASON
The club is forecasting it will need to access the Stabilization Fund over the course of 2021 to cover the costs of the season, while continuing to manage cash flow challenges created by the pandemic.
The Riders stabilization fund currently has $7.8 million in it. Reynolds anticipates the team will begin to access that money around the start of training camp.
Due to the uncertainty surrounding fan capacity at games, Reynolds could not project how long the team’s rainy day fund would last into 2021.
“Obviously July 5 when [tickets] go on sale, we’ll get a good indication of demand, because that’s the other thing that we’re not certain around is the level of the demand that’s there coming out of COVID-19,” Reynolds said.
The hope is that the team could return to profitability by 2023 – following a revenue boost from hosting the Grey Cup in 2022.