Rugby Park fix-it plan achievable
We all know Rugby Park has got financial problems - these have been well publicised over the past few months. But what about solutions - are there any?
We firmly believe there are.
Rugby Southland doesn't own Rugby Park, ownership sits with a separate trust - the Southland Outdoor Stadium Trust. But Rugby Southland and Rugby Park used to be managed jointly - the Outdoor Stadium Trust contracted Rugby Southland to manage Rugby Park for them, and paid Rugby Southland a fee for doing that; of around $100,000 each year.
Rugby Southland had some high-profile financial problems of their own three years ago - and at the community trust we were among their loudest critics, being very unhappy with both the competence and the integrity of Rugby Southland's leadership.
But with refreshed governance and management, Rugby Southland today is in much better shape - which is perhaps contrary to the impression given recently.
Rugby Southland is not insolvent - it is operating within its means, and so trading profitably. For the most recent financial year Rugby Southland recorded a profit of $90,000; and it's forecasting continued profitability into the future. This is a distinct turnaround from 2010, when it recorded a loss of $500,000 for that year.
The issues with Rugby Park today are a legacy of Rugby Southland's previous way of operating - which seemed to be spend whatever it takes, and worry about the consequences later. The debts that are saddled on Rugby Park - in the name of the Southland Outdoor Stadium Trust - actually arose because Rugby Southland needed cash back in the 2007-2009 period. And so that money was borrowed for Rugby Southland's purposes, but secured against Rugby Park Stadium.
When those loans were advanced, it was on the basis that Rugby Southland and the Southland Outdoor Stadium Trust ultimately would renegotiate their agreement for the ownership, management and usage of Rugby Park. And the discussions that have been happening in recent times are simply that process now playing out.
In trying to identify a way forward for the future ownership and management of Rugby Park, the focus has been on ensuring that if the Invercargill City Council were to take ownership (and that's still an if at this stage), it doesn't have to take on any of the existing debt on Rugby Park; and also being satisfied that Rugby Southland can be a long- term viable tenant of Rugby Park.
And with goodwill from all parties we believe both those objectives are achievable - where there's a will there's a way.
The suggested steps to a shared outcome are:
CTOS writes off $200,000 of the $750,000 loan it is owed by the Southland Outdoor Stadium Trust. This is a real cost to the trust, and means we will have $200,000 less to grant to other community projects this year.
Rugby Southland over time repays the remaining $550,000 debt - CTOS presently gives a grant of $160,000 a year in support of rugby, but from 2020 that will reduce to $105,000, so still one of our largest annual grants. The $55,000 reduction will be used to offset the $550,000 debt over a 10-year term.
The ILT provides a grant of $125,000 to repay the debts owed to Pacific Dawn Finance, and the Southland Amateur Sports Trust.
The Southland Outdoor Stadium Trust passes ownership of Rugby Park to the Invercargill City Council, for zero purchase price and with no debt.
The ICC leases Rugby Park to Rugby Southland for its use, with the rental for its use being a revenue-sharing agreement between ICC and Rugby Southland around gate sales, corporate box revenue and signage sales. This isn't a full commercial rental, but provides ICC with a level of income to help offset some of the operating costs of Rugby Park. The facility will also be available for rental to other users.
The Southland Outdoor Stadium Trust is dissolved.
Many rugby grounds around New Zealand are owned by local councils, so the city council taking ownership of Rugby Park is not at all at odds with what happens elsewhere. It is estimated that the cost of operating Rugby Park will be in the range of $250,000-$300,000 a year, which includes provision for the long-term maintenance of the facility.
Trying to fix something that's broken requires contributions from, and the goodwill of, a number of parties - the proposed solution is undoubtedly one that not everybody will be completely happy with, simply because in a situation like this there is no one answer that can satisfy all parties; but it is a solution that secures the future of this community facility, and the future for Rugby Southland, at what we believe is a reasonable and shared cost.
Tracy Hicks is chairman of the Community Trust of Southland.
The Southland Times