As the Chairman said, we are here to enlighten the committee on the importance of the professional game to rugby in Ireland. For a complete understanding of the modern game, it is necessary to examine its history.
The IRFU was founded 128 years ago. Until 1995, rugby was an amateur sport in Ireland. However, since the inauguration of the Rugby World Cup in 1987, increasing pressure from commercial interests drove the game inexorably towards professionalism. In 1995 the International Rugby Board, the international federation for rugby union, recognised that if the sport did not move towards professionalism, commercial interests would take it over anyway. The International Rugby Board was backed into a corner in 1995 and declared the game open.
The IRFU had been a stout defender of the amateur game until 1995. However, it had little choice but to accept the change to an open or professional game once the international board declared it. To have done otherwise would have consigned Irish rugby to an international backwater as it simply would not have been possible for amateur teams to compete with professional ones. This is demonstrated by the fact that we would not have a six-nations championship in which, for once, we have a serious chance of beating France, if we still operated on an amateur basis. We are not taking France by surprise because it believes we have a strong national team.
An uncompetitive international rugby team would have had disastrous consequences for the finances of Irish rugby. In 1995 the revenue from international rugby amounted to approximately 79% of our income. To have jeopardised this revenue stream by becoming uncompetitive would have had a direct knock-on effect in terms of the development of the game at grass-roots level because we fund schools and clubs by direct subvention and also by indirect subvention through our rugby development programmes. In effect, international rugby subsidises our activities, right down to school and under age levels.
At the stroke of a pen in August 1995 we moved from having an amateur game to a having a professional one. Most national government bodies in sport are professional by nature and the IRFU is no exception. Professional rugby was introduced gradually with part-time professionals in 1996. In 1997 we had five full-time professionals per squad and the rest were part-time professionals. By 1999 we had four squads and 25 full-time players in the traditional provincial structure which had served rugby heretofore.
We took the view that we should hold all the contracts. The professional game is financed entirely in Ireland by the IRFU through television income, sponsorship and gate receipts. This structure has allowed us to control the development of the professional game for the benefit of the national team and, ultimately, the benefit of the game. What is good for the national team is ultimately good for the game given that our revenue is generated by the former.
An alternative model is used in England, France and Wales, which involves basing professional rugby in the club system and bringing in private finance. That may work well in large markets but in a small market like that in Ireland, with its small playing population, we felt that it was more appropriate for us to control the situation much in the same way as in the southern hemisphere, particularly in Australia and New Zealand.
In 1999 we had poor results in the Rugby World Cup. We anticipated getting through to a quarter final but we did not. We were beaten by Argentina. That demonstrated that we had not really embraced professionalism to the extent that we should have done, particularly in respect of support personnel. One cannot just pay players to do what they did when they were amateurs. One has to put all the support structures in place to allow them to reach their full potential.
Since 1999, each professional squad has had the benefit of additional support personnel in the form of coaches, fitness advisers, weight supervisors, full-time physiotherapists, full-time video analysts and full-time administrative support. Furthermore, we invested heavily in a centralised fitness unit, which monitors and evaluates the fitness and physical well-being of all 122 contracted players so they are in the best possible physical condition to play in the critical matches each season. There are a number of such matches at international level. We believe the professional game that we have in Ireland exists to support the national team and the critical matches are those played by the national team.
The other key initiative we took since 1999 was to invest heavily in retaining our key players and bringing key players back home from the UK and France. This has paid off because Irish professional teams have won the European Cup once, reached the finals on two more occasions and the semi-final on another occasion. We have never missed out on getting at least one professional team to the quarter finals since the tournament's inception. That tournament is a benchmark for professional rugby at the club level.
The results of the international team have been part of an upward trend since 1999. Success at professional squad level is mirrored by the success of our national team. We have invested heavily and reaped some rewards. There are many costs involved, which I might discuss later. It is important to remember that the key reason we made the investment was to ensure the competitiveness of the international team because this is how revenue is generated. We are not involved in professional rugby for the sake of it. It is not like amateur sport; it is completely different. There has to be a good reason, objective and strategy behind one's involvement. Professional sport brings responsibilities and costs, but it also brings rewards. Our current playing base consists of 13,000 adults with a further 20,000 kids playing in schools and another 16,500 playing in youth clubs. Our professional playing base is 122 players, of whom 89 learned their rugby in Ireland. There is a message in that for us.
It is interesting to compare the Irish situation to that of other countries. Australia, the current world champion, has an adult playing base of almost 46,000 players and fields three professional teams. England has an adult playing base of 174,000 players and fields 14 professional teams. South Africa has an adult playing base of 145,000 and fields 14 professional teams. New Zealand has 43,500 adult players and fields five professional teams. France has 93,500 players and fields 16 professional teams, which will soon be reduced to 14. Scotland fields three professional teams from an adult playing base of 10,500 and Wales fields nine teams from an adult playing base of 16,500 players.
A critical issue for us is playing base and the resources we apply to professional rugby. Of our 13,000 players, 31% are based in Ulster, 25% are based in Munster, 37% are based in Leinster and 7% are based in Connacht. In 1995, 79% of our income was earned from international rugby matches, but by 1999 the game had become more open and professional and commercial income rose significantly as a result. International and European Cup competitions generated 98% of our income that year. For 2003, we have managed to redress the matter and international and cross-border matches now account for 83% of our income. We are hugely dependent on the ability of our professional teams to compete and perform at the highest level because if they do not we jeopardise the key part of our income stream. Expenditure on the professional game was only 4.5% of our income in 1995, but by 1999 it was 45%. This year, 60% of our income will be spent on professional rugby. Grass roots expenditure on clubs and schools was 25% of our income in 1995, 34% in 1999 and this year it will be 29%. The use of percentages disguises the fact that in 1995 spending on grass roots rugby was of the order of £2.5 million whereas this year we are spending €10.5 million.
Consideration of the current international rugby environment is important because it is necessary to understand the context of ones operations when dealing with professional sport. Our market has nothing to do with Ireland, it has to do with what happens in the UK, Wales, France, South Africa, New Zealand and elsewhere. The economic downturn of the past 18 months has put significant pressure on commercial sporting revenues as have concerted efforts by broadcasters world-wide to drive down the value of sports broadcasting rights. ITV renegotiated its deal to televise the soccer matches of the English Nationwide League with the result that many clubs face financial ruin. There is no prospect of a change in this environment in the short to medium term. Most rugby unions face serious financial constraints against a background of static income and the increasing cost of the professional game. Most of the world's major rugby unions are rationalising. The Welsh union is reducing its number of professional teams from nine to four or five and the six nations are examining the cessation of A international matches. SANZAR countries can no longer afford to participate in all under age competitions. We no longer field a sevens team or a student team and there are other areas in which we must look at retrenchment.
The degree of professionalism in European Cup competition increases all the time and our ability to compete is vital which means greater investment in our professional squads will be required. That is mirrored at international level. The resources we apply to our international team represent a fraction of the resources applied to the English, French, Australian, New Zealand and South African rugby teams, but we manage to punch above our weight. International rugby politics is driven by commercial imperatives and Ireland must continue to bring value to international competitions in terms of competitive teams if we are to protect our income streams. We must continue to retain our key players in Ireland as far as possible in a context of increasing costs in the professional game and of the absolute need to increase our investment in the grass roots game. We must ensure that our player development systems are sufficiently well funded to meet the demand for professional players to staff our squads. We cannot currently develop enough players to meet the demands of four squads. We need to invest in facilities with Government assistance which is why the national stadium is critical to the financial well-being of rugby as well as soccer. We cannot realise international rugby's income generating potential through the facilities at Landsdowne Road. International rugby matches are undoubtedly the financial engine for our sport.
We must do more to invest in facilities for our professional squads to play in and Government assistance is vital. We can only look with envy at the staggering level of training and stadium facilities provided by the state and municipalities in France. We have to make do with what we have while investing what we can. Our professional squads must have proper training facilities. Compared to our international counterparts, we are very poorly resourced. It is vital that we continue to invest in top-class support personnel as this has made the difference between our performances before and after 1999. We must continue to be at the leading edge in coaching and sports science in terms of which there is a role for Government.
Irish rugby has benefited enormously from professionalism. Our income has increased significantly with positive effects on the investment we are in a position to make in domestic grass roots rugby. Public interest in the game is at an all-time high, driven by the success of the national team and underpinned by the success of the professional squads in the four provinces. The many misgivings about the introduction of professionalism in 1995 were misplaced as the change has served Irish rugby very well. The challenge for us, as a national governing body, is to preserve the status and ranking of our national and professional teams without neglecting our duties and obligations to the clubs and schools which are the sport's foundation.
