Stags drowning in debt

Not good after a Ranfurly year.
Might be a cunning strategic investment by the dollars behind the Force :P

Stags drowning in debt

03rd January 2011 07:16
Planet Rugby

Southland Rugby appears to be in desperate financial trouble after it was revealed that the union is effectively insolvent.

Despite holding the Ranfurly Shield for much of 2010 it has emerged that the Stags have dug themselves into a massive financial hole.

Reports in the New Zealand press claim Southland owe creditors NZ$700,000 (GB£ 349 000) and have no means of paying the money back. To make matters worse, a deficit of between $350,000 and $478,000 has been forecast for the 2010 financial year.

The NZRU have said they are keeping a "close watch" on the situation as up to three other Unions are potentially facing similar problems due to the difficult economic climate.

Southland have reportedly received $5.6 million from the Invercargill Licensing Trust and Community Trust of Southland over the last five years (this after a $1.3 million bailout in 2008).

Approximately half of the union's $4 million annual budget goes to players' salaries as unions are able to circumvent the salary cap of $1.35 million (or 36 per cent of a union's revenue) put in place last year as some players still hold old contracts.

The NZRU have advanced the struggling union $150,000 and more cash is reportedly on it;'s way from the Community Trust of Southland

NZRU chief executive Steve Tew said it was up to unions to run a tight financial ship.

"It's not rocket science. You have to earn more than you spend or you don't survive," he told the New Zealand Herald.

"At the end of last year, we made no secret that a significant number of unions are finding it very difficult to bank the income they require to sustain the business model they have put in place. Some are taking longer to adjust to the new environment, longer than they should have, but they will get there.

"There are two or three others who are on close watch by the NZRU and they will have to be very mindful of how they get through the next couple of months and how they set themselves up for the next ITM Cup."

A 'change manager' will be appointed and given three months to investigate the extent of the problem and find a solution but with many sponsors are more keen to put their money behind the world Cup rather than a domestic union, tough times appear to be on the horizon.

no doubt they will rely on a hand out from the NZRU after the world cup

where else are they going to get any moolah from?

I doubt there would be a lot of cabbage floating around down Southland way?