New Zealand Rugby Union unveils record loss
New Zealand Rugby Union unveils record loss
DUNCAN JOHNSTONE AND MICHAEL FOX
April 22, 2010 - 2:51PM
The New Zealand Rugby Union announced a record loss of $NZ15.9m at its annual meeting in Wellington – blaming a lack of revenue off the All Blacks, the global recession and investments in hosting next year's World Cup.
NZRU chief executive Steve Tew said the 2009 result was disappointing for the game, coming after a modest profit of $366,000 the previous year.
"Of the loss, $9.5 million is on our operating budget, mainly from a shortfall in income on All Blacks test matches at home and abroad, reduced interest income and increased expenditure on medical support and players due to a higher than normal number of injuries incurred," Tew explained.
"In relation to RWC 2011, we have accounted for our one-third share of the operating losses incurred by Rugby New Zealand 2011 Limited which have increased, as expected, as the tournament nears, and some unrealised foreign exchange losses that will be recovered in future periods based on the specific arrangements we have in place."
Tew warned the result meant there would have to be further belt-tightening this year.
"While we are fortunate that our financial position is very strong, the game cannot continue to spend more than it earns and this result, on top of some worrying provincial union results, sends a very clear message. Consequently, we have made revenue growth and cost management a priority for 2010."
The NZRU was harsh on itself by way of the scoreboard system it uses on performance. It scored just 68 out of 100.
The NZRU scored just 10 out of 20 for having effective structures and only 11 out of 20 for its community rugby work.
The All Blacks' performances were rated 17.5 out of 25 and the general competitions 19.5 out of 25.
The NZRU scored itself perfect fives for its global presence and "World Cup inspirational work".
The NZRU believed financial concerns had been allayed to an extent by new deals struck between the union and its partners.
This included an agreement to extend the Tri-Nations competition by inviting Argentina to participate from 2012.
The addition of Argentina had allowed them to renegotiate a broadcasting agreement which saw a 27 percent increase in projected revenues from US$322m to US$437m.
The agreement was reached with Supersport in Africa, Fox Sports in Australia and Sky in New Zealand.
This did not include the ITM Cup which had been sold to Sky separately.
Additional agreements for France, North America and Asia were still being negotiated and are expected to add further revenue.
A new Collective Employment Agreement signed with the Player's Association had provided certainty around the costs and structure of professional rugby for the next three years.
Tew called the moves a "pretty solid result in trying times".
NZRU chairman Jock Hobbs said: "While there is some pain in all of these processes, we believe the certainty created by these decisions will provide the strength for the game as it looks to capitalise on the opportunities ahead, notably the hosting of the Rugby World Cup."
Hobbs said the financial problems meant they had to make tough decisions including axing the men's provincial B competition and the Maori rugby programme.Investment in the game included core grants to provincial unions of $8.3m and further distributions to provincial unions and franchises of an additional $8.1m in tagged funding, resulting in a total distribution of $16.4m.
The NZRU announced its key priorities for 2010 as:
1. Implementing the Community Rugby Plan.
2. Ensuring the All Blacks are a winning team.
3. Driving revenue generation, cost management and sustainability throughout the game.
4. Implementing the 2011 RWC legacy programme to cement the benefits of hosting Rugby World Cup.
5. Delivering outstanding competitions for fans, players and commercial partners.
6. Building stronger relationships with our partners and stakeholders.
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