Hobbs: NZRU won't go bust

Forecasted World Cup loss blows out

NZRU and RNZ 2011 chairman Jock Hobbs.

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New Zealand rugby isn't about to go broke, but chairman Jock Hobbs admits it will have to write a substantial cheque after hosting the Rugby World Cup.

The Sunday Star-Times last week revealed the forecast loss associated with hosting the tournament had blown out from $30 million to $40m. The NZRU has agreed to pay one third of any loss.

The amount is uncapped (one of the issues rugby is concerned about).

In recent weeks there have been several behind-the-scenes meetings about the tournament budget and what rugby may have to pay.

Hobbs, who is chairman of the NZRU and the government and rugby-owned company set up to run the tournament (RNZ 2011), confirmed the budget was being revised.

But he moved to assuage any fears the tournament no longer stacked up financially. "I have not been startled or shocked by anything I have seen [from the latest budget figures]. We see the deficit as an investment because of the benefits to New Zealand rugby. There are risks but when there are risks there are also rewards."

Rugby's liability is about $10m. That doesn't include the $10m the NZRU invested in Rugby New Zealand 2011 Ltd and the $10m contribution it made to the upgrade of Eden Park.

The NZRU has $55m in cash reserves so there is no question about reneging on its deal to pick up a third of any loss.

But it had hoped to use this money to buffer against the recession, which is hitting the game hard.

When asked if the NZRU could afford to dip into its pocket again, Hobbs said: "We certainly don't wish to do so. We are working every hard to manage all the risks and to reduce them as far as possible without compromising the delivery of an outstanding tournament this country will be proud of."

The issue is also politically charged. The government will go to the polls shortly after the cup.

The minister in charge of the event has moved decisively in recent weeks after he became concerned about the growing financial burden on the taxpayer. Murray McCully replaced two members of the board with a couple of financial experts.

Hobbs is still chairman of the company running the cup, RNZ 2011.

He conceded the hosting agreement RNZ 2011 brokered with tournament owner, the International Rugby Board, "was a demanding document".

"But we knew that when we took this challenge on and took it into account. It's hard for a small country like New Zealand to host this tournament. But all our research tells us we can do it."

- © Fairfax NZ News