NZRU posts first operating profit in five years

The New Zealand Rugby Union has posted its first annual operating profit since 2008, beating its own target, helped by a five and a half year deal with global insurer AIG.

The NZRU made an operating profit of $3.2 million in the 12 months ended December 31, beating the break-even target flagged last year and turning around an operating loss of $3.1 million in 2011, it says in a statement.

"The new partnership with insurance company AIG has made a difference," chief executive Steve Tew says. "We have secured a major portion of our commercial revenues over the medium term through the relationships with principal partner Adidas, broadcast partner Sky and now AIG."

The national sports administrator has been looking at ways to make the game more profitable, as provincial unions face the squeeze from dwindling attendance and, in some cases, poorly managed finances. The most recent initiative has been the sale of Super franchises.

Mr Tew says the nine of the 15 provincial unions in the ITM Cup were in the black last year, with a combined surplus of $626,000 compared to a total deficit of $631,000 a year earlier.

"There has been a clear focus by the unions on living within their means. We are not out of the woods by any means and it remains a very challenging environment for any union to grow revenue from sponsorships and crowds."

The Otago Rugby Union almost hit the wall last year after running successive deficits for six years and was kept alive through rescue packages from the national body and the Dunedin City Council.

The NZRU will be running the ruler over provincial union funding this year and will also review its reserves policy once it has completed pay negotiations with players. Last year the administrator said it expected to have $45 million in cash reserves by the end of 2012.

As part of its strategy plan towards 2016, the rugby union wants the sport to be financially self-sustaining across all levels. To help achieve that, it plans to build a shared service model for back office functions and create real-time reporting and forecasting tools for all provincial member unions to use.

(BusinessDesk)