England's success on the playing field masks an alarming financial crisis behind the scenes. The Rugby Football Union is grappling with a projected loss for its next financial year of £8.6m, a dramatic turnaround from original projected profit figures for the year of £7.1m after tax. But even worse, finance officials at Twickenham have conceded that the outlook is grim, with little likelihood of any real profit in the next four years, up to and past the 2007 World Cup.
Yet figures produced in the RFU's own strategic plan forecast a profit from seasons 2004-05 to 2007-08 of £71.2m. The revised projection represents an alarming downturn in English rugby's financial fortunes.
The news is a major blow to England, the only union which had hitherto been forecasting significant profits from the professional era. But it is also a stinging indictment of the entire professional code, that the northern hemisphere's most successful rugby country, which had managed to eliminate debts accrued through stadium rebuilding, is now contemplating serious losses.
It exposes the unhealthy reliance of national unions on major income streams from TV and sponsorship. Most pertinently, it begs the question, if England cannot make money because of the huge financial costs of professionalism, who can? Such thoughts will send a shudder through the other northern hemisphere rugby nations.
In a paper circulated widely just as Clive Woodward's squad were scaling the peak of world rugby this summer, it is reported that what is termed "the first cut'' of the budget for 2003-4 projects a loss of £8.6m. This is bound to have major consequences for the game throughout England.
The author of the report, 49-year-old Bristol chartered accountant Alan Young, who was chairman of the RFU's Finance and Funding Committee, died suddenly last month. But the report, which was one of Young's final contributions at Twickenham, where he was also a member of the RFU's Management Board and Council, will make disturbing reading for everyone in English rugby. It may lead to penetrating questions on the whole issue of how English rugby and its Twickenham HQ are run and funded.
The report states: "The first cut of the budget projecting a loss of £8.6m is very disappointing. The overall level of the loss, I believe, could be accepted if the future was brighter. In fact the projected profits for the next three years total only £9.2m and this gives little room for negative variances to remain overall in the black over this four-year period. The year after (2007-08), the next World Cup year, projects a loss of approximately £4.5m.''
England may now be forced to make what the report calls "significant cost cuts''. A figure of £2.9m is mentioned, meaning that major issues at RFU headquarters may well be imperilled.
In his report Young feels that to proceed with the South Stand redevelopment at this stage would be "high risk'', suggesting it should be deferred until 2007. Yet such a decision would already mean writing off costs of £1m.
The future of the England A set-up could be in doubt and Young warns that licensing costs of £63,000 could well be an area where cutbacks could be made, although he accepts that this could have an adverse effect on marketing and sales.
Young raises a series of highly contentious issues, and many make revealing reading. For example, a sum of £42,000 is budgeted for use of taxis by RFU staff; the stadium department has provision for £40,000 on staff uniforms; and website maintenance totals £87,500 in the commercial department. Is this justified or necessary, he asks?
He also questions the justification of £30,000 in redundancy costs in the chief executive's department. In all departments, he reports, there are quite substantial figures for travelling. These include motor vehicles, rail travel, flights and taxis. Interestingly enough, he adds, buses would appear to be blank throughout.
"It would appear that we are budgeting to pay staff bonuses in excess of £300,000 (excluding players and team management). I am unaware on what basis bonuses are paid. I find it quite incredible that we are budgeting for bonuses at this level when we are also budgeting a projected loss of in excess of £8.5m.''
Young also makes stinging reference to the costs of pension pay-outs, calling the current level of contributions "quite alarming''.
Like so many similar organisations, the RFU has been hit hard by the general downturn in the markets for advertising, television revenue and sponsorship. Young's report admits that the new Nike contract brings in substantially less than the previous one, generating guaranteed income of little more than £500,000 in the coming year, compared with £3m in 2002-3.
Twickenham's cut from the recently renegotiated Six Nations' Championship package with BBC Sport was also dramatically reduced, because the BBC was the only company left in the bidding at the end. Inevitably, the price took a dive.
Things are so bad that even a previously sacrosanct group within the RFU, the 55 Council members, will suffer cutbacks. Normally guests at every away game in the Six Nations' Championship, the members must choose next winter between a trip to Paris or Rome. The cost to the RFU of making both trips is too expensive. But as the report adds, "the saving of £50,000 is only a token amount''. Council members will still get a free trip to Marseille next month for the World Cup warm-up international against France.
Young also addresses the playing side of English rugby, an issue that will be of particular concern to Woodward. He says: "The budgeted cost of Rugby League players for the forthcoming season is £385,000. I assume we are not extending further with this scheme? Expenditure of the senior team needs to be controlled (by key Twickenham officials). This obviously applies to the management and coaches as well.''
He reveals that England Sevens budgeted £116,000 net of £200,000 sponsorship, but says that, in addition to the cost of the squad, there are costs for management of £170,000, and queries whether these are realistic.
Running England A costs £150,000 a year and Young recommends a thorough review with a view to possible substantial cost savings. He also adds pertinently: "I am concerned at the cost at the management of various teams including Under-21s and Under-19s is virtually as high as running the teams themselves. Costs savings must be available in this area.''
In summary, he proposes cost cuts in a whole raft of areas such as élite coaches and referees, élite support, fitness and sports medicine.
But this highly developed background has been at the core of what Woodward has attempted to achieve with England and will worry the England manager in the build-up to the World Cup.
Young is clearly mystified by certain financial outlays. "Committee referees - £72,000 of conferences. No analysis available,'' he writes, adding: "Overall, the expenditure in the committee rugby and operations department is vast.''
The final of 50 individual points raised in Young's report asks, chillingly, whether the RFU should consider making a cutback this year in the funding to the game. It seems inevitable.
Join our new commenting forum
Join thought-provoking conversations, follow other Independent readers and see their replies