LAST UPDATE | 25 Jan
A REVIEW INTO RTÉ’s Toy Show the Musical has found that the amount of commercial sponsorship the show received was overstated by €75,000, even though the actual amount of money that came in through sponsors was clearly recorded.
The money was transferred from funds that were raised from selling advertising space to the show’s sponsorship revenue in RTÉ’s financial management system.
Chair of the RTÉ Board Siún Ní Raghallaigh today said that this financial manoeuvre was “totally inappropriate”.
Ní Raghallaigh, who has a background in accountancy, said that she “wasn’t there at the time so I’m reading it like you, I am reading it and trying to understand it, and it will never happen again,” she told RTÉ Radio today.
In a statement this evening, she said the RTÉ Board is happy to attend the Public Accounts Committee and the Oireachtas Committee on Media to discuss the findings of the report.
“We have formally notified both Committees to that effect,” she said.
“The Report published earlier today confirmed a significant lapse in oversight of Toy Show The Musical. The Board acknowledges this and has since taken the necessary steps to ensure there is no repeat of these failures.
“We would welcome an opportunity to discuss this in more detail with the Committees in order to provide the assurance needed that governance structures have been appropriately reformed and strengthened.”
The probe has also found that the approval of the RTÉ board for Toy Show the Musical was “neither sought nor provided for, though it was required for the project to go ahead.
Taoiseach Leo Varadkar said today he believes the report reflects that proper accounting or corporate governance procedures were not followed during the approval and appraisal processes of the musical.
The Grant Thornton fact-finding review, published today, looked into the reasons why Toy Show the Musical made a €2.2 million loss for the broadcaster.
The musical opened at the Convention Centre in December 2022 and ran until the end of the month.
Ní Raghallaigh said that the report published today “confirms a lapse in oversight of the project”.
She acknowledged that there were “serious deficiencies” at a board meeting last July about the musical, and that it is clear that the information about how the project was developing was withheld from the board.
Ní Raghallaigh said that the Board should have “interrogated” the Executive on the project’s progress, as it was unaware of “significant” contracts that were committed to in the development of the show.
She said the report shows that the board was not accurately informed on the amount of sponsorship money behind the project, or on the costs related to it.
The Grant Thornton review was commissioned by RTÉ’s Audit and Risk Committee (ARC) to assess the broadcaster’s own risk assessment and approval processes in relation to the musical, at Executive, Board, and ARC level.
The review features anonymous interviews with people within the broadcaster who were involved in decision making at each of these levels.
The investigator did find that RTÉ identified some risk associated with Toy Show the Musical (TSTM) before it committed millions to the project.
These identified risks included: musicals are “notoriously difficult”, there are already lots of pantomime style shows at Christmas, RTÉ doesn’t have expertise in events, the broadcaster only had a small events team, significant upfront funding was required, there was a financial risk, and a negative experience for showgoers could damage the Toy Show brand.
The investigator said that two directors within RTÉ said that the fact that they did not receive documentation in advance of meetings with the musical team, and that the musical was presented as a project that was already agreed upon in meetings.
The report concludes that these factors meant there was little interrogation of individuals leading the project.
It further states that not all directors were requested to be at meetings where TSTM was discussed.
The investigator said that key meetings that were suggested to Grant Thornton as events where “implicit approval” was given for TSTM by the RTÉ board were not full meetings, as not all board members were present.
The report found no evidence that that approval of TSTM was ever given or recorded.
The investigator found that there was a “diversity of opinion” amongst RTÉ directors on whether approval was ever again – they noted that the former Director General Dee Forbes was the only one they did not interact with.
The report found that inaccurate projections for income and expenditure were given at meetings with key decision-makers within RTÉ.
It notes that at an Executive Board meeting on 1 March 2022 a presentation was given which projected that with 44 shows, TSTM would break even with a ticket sale rate of 8%.
In a meeting with a combination of senior figures on 29 March of the same year it was projected that with 54 shows, and a 70% ticket sale rate the show would break even.
The report found that at no point in time were there more than 35 shows on sale to the public.
It notes that on 30 January last year there was a meeting of the ARC in which a report provided to the committee – which assesses risk – stated that there was event sponsorship for the musical of €120,000.
It contained a two-page schedule titled ‘Estimated Income and Expenditure 31 December 2022′, which showed sponsorship of €120,000.
The following month, a report was presented to the RTÉ Board which stated event sponsorship of the same amount, but the last two-pages which contained the schedule for estimated income and expenditure were not provided.
In July of last year, RTÉ amended the sponsorship income figure to €45,000 – a reduction of €75,000.
The report breaks down the actual sponsorship received by RTÉ, which only included three sponsors providing €15,000 each.
A journal in the books and records kept by RTÉ was posted to event sponsorship for TSTM on 11 January last year for €75,000, which said that the funds would be available from December 2022.
There is no invoice to a third party to support this stated sponsorship income of €75,000.
The report found that this money was transferred into the show’s sponsorship budget, but the money was never provided by an outside sponsor.
The investigator found that this financial move “was known or would have been known”. They further state that it would have been known that this transfer of revenue into the sponsorship budget for the show “would not have significantly improved the reported loss” that the musical made.
While the report found that the posting of this sponsorship made no difference to RTÉ’s overall balance books, it did mean that the musical’s sponsorship revenue was overstated by €75,000, and the spot revenue was understated by the same amount.
Spot Revenue is revenue that is earned from companies for the provision by RTÉ of television/radio advertising.
The investigator separately identified that there may be additional costs totalling €69,628 elsewhere in RTÉ’s financial management system related to the musical.
These costs, which may be allocated elsewhere in RTÉ’s accounts, should have been recorded in the income and expenditure figures for TSTM.
The report found that the financial projections for the musical assumed a sell out of the venue.
One anonymised person who attended a key Executive board meeting related to the musical told the Grant Thornton investigator that it is not “unusual nowadays for entertainment events to sell out, sometimes in minutes if the demand is there”.
They added that for a new musical based on the Toy Show being the “best known family brand in the country”, launched by the “Toy Man” on the Late Late (in an apparent reference to Ryan Tubridy), they fully expected “a really strong reaction to the tickets going on sale”.
This person, who sat on the Executive Board meeting, said that they were very disappointed that the reaction to the tickets going on sale was only 3,000 out of 108,000 being sold.
They said that despite a strong advertising push “on all RTÉ channels”, only a further 2,000 tickets were sold the following week.
They said it was at this point that they expressed their “concerns” to another senior figure who the report refers to as person three.
Person three told the investigator that at that stage, the week after the tickets went live, the broadcaster was “locked in”.
“The costs were largely committed. We were up and running. I think it wouldn’t have been tenable to have pulled it”.
Other interviews with RTÉ decision makers in the report show that there was a belief that more tickets would be sold closer to the event later in the year.
The report found that the actual 35 shows that tickets were sold for represented a significant reduction from the 55 shows that had been scheduled for, and this presented a substantial risk that the musical would not break even.
Speaking to reporters at a press conference in Dublin today, Taoiseach Leo Varadkar said while he supported new business ventures, he believes the report reflects that the correct accounting and governance procedures were not followed during the production.
He said the board were not properly informed on the event and which led them to not being in a position to make judged decisions on the production.
Varadkar said he believes the board could have done more probing into the event.
“I think think, quite frankly, the board could have asked more questions. The board could’ve been more inquisitive about what happened,” Varadkar said.
He added that media minister Catherine Martin will read and reflect on the report and hinted that this could lead to more questions being posed to RTÉ management.
Varadkar said that he is “very certain” that the relevant Oireachtas committees will want to ask more questions on the matter.
Includes reporting by Muiris O’Cearbhaill
To embed this post, copy the code below on your site
have your say