Rugby's financial woes to worsen next year

In order to get provincial unions back to surplus NZ Rugby will increase funding for each by 30%.

New Zealand Rugby has posted a loss of $463,000 and is budgeting for it to worsen this year as it increases funding to financially-challenged provincial rugby.

The loss for the year to December 31 comes after a profit of $373,000 a year earlier.

Income rose 11% to $133.7 million, while costs increased 12% to $134.3 million. Cash reserves fell slightly to $59.1 million from $62.6 million a year earlier.

The loss was less than the central union budgeted for, chief executive Steve Tew says, and the organisation had invested a record amount for the Rugby World Cup year, driven by its desire to win back-to-back titles.

It also increased funding for the men's and women's sevens teams in the lead-up to this year's Olympic Games in Rio de Janeiro where sevens makes its debut as an event.

The organisation makes less in a World Cup year with fewer tests played, Mr Tew says. Test match revenue fell $12 million from 2014, which added to an undisclosed financial loss from the 2015 Wellington Sevens.

However, Mr Tew says the cash reserves meant its overall financial position remained strong.

NZ Rugby returned to profitability in 2013, after posting annual losses since 2008. It has focused on ways to make the game more profitable, including the sale of Super franchises, as provincial unions face the squeeze from dwindling attendance and, in some cases, poorly managed finances.

The 14 Mitre 10 Cup unions had a combined deficit of $1.3 million in 2015, despite 10 unions being in the black. That's the first deficit for the combined unions since 2011, and a fall from a $1.2 million surplus in 2014.

NZ Rugby says last year was challenging for many unions, with commercial and trust funding revenue becoming harder to source and gate takings under pressure.

In order to get the unions back to surplus, NZ Rugby will increase funding by at least 30% for each union between now and 2020, at a cost of about $9 million per year.

Some of the investment will be targeted towards encouraging women and teenagers to play the sport.

"This is a significant increase in funding which aims to support the great work of provincial unions in increasing participation by players and across communities, and strengthen the foundations of the game throughout the country," Mr Tew says.

"Importantly, the funding will help put unions on a firmer financial footing to better deal with the challenges and opportunities ahead."

As some of these funds are derived from future income, NZ Rugby predicts a significant loss for 2016, but says projections show it returning to a more favourable financial position in the next five years.

"Over that five-year period, we want to have an overall breakeven result," says chief financial officer Jannine Mountford. "We're pre-spending money to give to our provincial unions."

(BusinessDesk)

 

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