Rugby union bounces back from the brink

The Otago Rugby Football Union expects to make a small profit this year after bouncing back from the brink of liquidation.

Despite its financial troubles, the union's ITM Cup team is in the competition's final this Friday, facing Counties Manukau at Pukekohe.

After losing $862,000 in 2011, the ORFU's debts neared $2.3 million in February.

As part of a rescue package reached in March, at least $1 million worth of debt was written off by the Dunedin City Council and the New Zealand Rugby Union.

The board was replaced, and the NZRU also entered into an additional sponsorship deal with Bank of New Zealand, the union's biggest creditor, which was owed $1.2m.

General manager Richard Kinley, who has been with the union since August, told NBR ONLINE it is expecting a small surplus this year.

"I think it will be less than $50,000."

However, that is a major turnaround from last year's loss, and the $5.9 million deficit it posted in 2009.

"The way the union is tracking, and the results we are having, it may help bring more stability in terms of sponsorship next year," Mr Kinley says.

ORFU director Andrew Rooney says the union has embarked on a major restructuring effort, which included slashing the number of staff from about 25 to nine.

The union was also able to repay its small creditors the $690,000 they were owed, he says.

"We fundraised about $520,000. The net effect of that is we have no debt."

The union has had to change the way it attracts sponsors by being realistic about what it can offer them, he says.

"We have been actually signing new sponsors and going back to the original sponsors and saying, 'this is all we can afford to offer you, do you still want to be part of us?'

"And most of them say they do.

"Some of our major sponsors have come on board in a big way. Speights and Silver Fern Farms have been outstanding in the support they've given us."

A large part of this year's financial success has also come from cutting the budget for players to about $850,000 from about $1.5 million two years ago, Mr Rooney says. 

"If you look at the team now there are a lot of well-known local players, but threequarters of our team would be unknown to the rest of the country."

However, as this year's winning results show, a club does not need to spend a huge amount of money to achieve success on the field, he says.

callison@nbr.co.nz