Hertford Highlander

Big loss for NZRFU


Written by Gwyn Pratley (Hertford Highlander)

Posted in :All Blacks, In the news, Super Rugby on 21 Apr 2011 at 08:52
Tagged with : , , , , ,

Skysport.co.nz reports that Financial bailouts of cash-strapped provinces and hosting the World Cup are attributed for the New Zealand Rugby Union’s $9.4 million loss last year.

The deficit was announced at the NZRU annual general meeting in Wellington on Thursday.

NZRU chief executive Steve Tew said a large chunk of the expenditure was loans given to provinces, such as Southland and Counties Manukau, who needed rescuing. They also helped prop up the Highlanders and Chiefs this year.

But the result was expected and met budget for the year.

“Obviously, we would prefer to at least be achieving break-even, but in the current context the 2010 result was satisfactory in that we came in under our operating budget while at the same time provided additional financial support to Provincial Unions,” he said.

Of the $9.4 million loss, approximately $6.4 million is accounting for the NZRU’s investment in hosting World Cup and $3 million for the budgeted operating deficit.

“The $3 million in operating deficit is largely accounted for by the increased funding to Provincial Unions of around $2 million and additional support for our Super Rugby franchises.”

Under the new collective agreement confirmed at the end of 2009, the NZRU has assumed responsibility for ITM Cup player salaries greater than $60,000, transferring around $1 million in cost from Provinces to the NZRU.

In another new initiative, the NZRU made payments totalling $1 million to Provincial Unions for All Blacks selected in the initial Tri Nations squad.

In addition, the NZRU provided financial assistance to Provincial Unions and Franchises.

“Just as we did last year, we have stated today the importance of our Franchises and Provincial Unions living within their means.”

The 2010 loss is a $6.5 million improvement on the $15.9 loss posted in 2009.

Mr Tew said the global financial crisis, the recession and high New
Zealand dollar have continued to impact on the NZRU’s revenues and interest income.

“On the positive side, commercial income increased by $4.8 million when exchange rate movements are excluded, which was significant given the economic climate.”

In relation to RWC 2011, the NZRU has accounted for its share of the operating costs incurred by Rugby New Zealand 2011 Limited which continue to increase as expected as the tournament nears. These amounted to $6.1 million (one third of Rugby New Zealand 2011 Ltd’s operating loss of $18.2 million).

The NZRU expected profits from the World Cup to balance the books next year.

“We will see last year’s deficit reversed in the 2011 year as the NZRU is able to recognise the gains made on our hedging arrangements that were put in place to cover our commitments to the IRB for hosting the Tournament,” said Mr Tew.

The NZRU continues to maintain healthy cash reserves of $35.9 million.



4 Comments

  • They should be able to make that up during the RWC?

  • Comment 1, posted at 21.04.11 09:05:57 by Pokkel Reply
    Friend of SharksworldCompetition Winner Author
    Assistant coach
     
  • This financial crises has far reaching implications, and I bet the earthquake didn’t really help!

    Good luck over there, hope you guys can make it up later this year.

  • Comment 2, posted at 21.04.11 09:18:29 by Richard Ferguson Reply
    Friend of SharksworldCompetition Winner Administrator
    Richard FergusonCoach
     
  • I’m no accountant, but if the financial loss is 6.5mil better than the previous year then maybe hosting the RWC helped out rather than caused a problem :wink:

  • Comment 3, posted at 21.04.11 09:37:14 by KSA Shark © Reply

    KSA Shark ©Head Coach
     
  • @KSA Shark © (Comment 3) :

    A loss, albeit smaller, is still a loss

    ie. you are not making money and somebody is funding the whole thing..

  • Comment 4, posted at 21.04.11 11:07:05 by Richard Ferguson Reply
    Friend of SharksworldCompetition Winner Administrator
    Richard FergusonCoach
     

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