Otago rugby union bailout approved
The Otago Rugby Football Union has survived its brush with extinction, after Dunedin City Council decided to forgive repayment of the $400,000 it is owed by the union - the final element in an intricate rescue package for the 131-year-old rugby union.
Three weeks ago the ORFU announced it would go into liquidation, as it was faced with $2.35 million in debts and a forecast $750,000 loss for this year.
The DCC is the ORFU's second biggest creditor after the Bank of New Zealand. After a long and reportedly stormy closed meeting the council has finally voted to throw the ORFU a lifeline and not demand the almost $400,000 it is owed.
Dunedin Mayor Dave Cull said the DCC needed to minimise ongoing costs to ratepayers. Saving the ORFU was "neither here nor there'', but the council and many ratepayers were owed considerable sums by the union, he said.
Council-owned company DVML, which manages the Forsyth Barr Stadium, faced losing $4 million revenue per annum if professional rugby was not secured for the venue, Cull said.
Ratepayers were at "huge risk'' if a deal had not been reached, he said.
Council had approached the NZRU with the aim of securing a deal which attempted to put rugby on a secure footing rather than simply bail out the ORFU, he added.
Council approved the deal 8-5, with two absences.
Councillors were briefed on the details and legal implications of the deal this afternoon, before hearing a presentations from Jeremy Curragh, who has been appointed by the NZRU as change manager at the ORFU, and DVML.
They then asked a series of questions, before beginning debate on the package at 7.30pm.
In return for its forbearance, Dunedin has a feast of top line rugby on the way.
Three All Black tests will be played at the new Forsyth Barr Stadium, and the Highlanders Super Rugby franchise will sign a long-term agreement to play at the stadium.
The DCC owes millions for the construction of the Forsyth Barr Stadium, and there is considerable ratepayer disquiet at the interest costs on that debt. Several questions remain about the final cost of the project, and in February the DCC called in independent auditors to try and discover what the final cost is.
With corporate boxes, season tickets and sponsorships sold on the basis that Otago ITM Cup games would be played at the stadium, a collapse of the ORFU - and the ensuing likelihood the province not not field a team in this year's ITM Cup -would have had serious fiscal ramifications for the stadium.
ORFU Wayne Graham told TV3's Campbell Live programme tonight that he had thought a deal was "clean cut'' and had hoped the DCC would have accepted it within half an hour.
"I wish it was over, it's been a long afternoon,'' he said at 7pm with the councillors still considering the proposal.
"It was such a good deal I thought it was obvious that it would be agreed.''
Graham said the NZRU had made "major concessions'' to ensure the ORFU's survival.
The ORFU's major creditor is the Bank of New Zealand. It is believed the New Zealand Rugby Union has done a deal with the bank - already a major supporter of Super Rugby - that the money Otago owes will be absorbed by the NZRU and considered additional sponsorship.
NZRU chief executive Steve Tew said the sport's national body had to be careful not to set a precedent as other provinces were also struggling. The NZRU board had made an "on balance'' decision to back Otago, he said.
"(But) they need to have accountability in the things that they do down there, because they haven't been good.''
KEY PARTS OF THE RESCUE PACKAGE
- NZRU to loan $500,000, subject to conditions including the resignation of the ORFU board.
- All Blacks Tests in Dunedin in 2013 and in 2014 and year's Investec Rugby Championship Test against South Africa.
- NZRPA, NZRU and ORFU to work to reduce the 2012 player contracting spend by $290,000 from the original budget. NZRU to approve all player contracts.
- DCC and DVML have agreed to forgive debt of $480,000.
- NZRU agrees to a North v South match in June. DVML receives all revenue and covers all costs. NZRPA to ensure players are keen and available to play with no extra fees charged.
- DVML secures a three-year venue hire agreement with ORFU for the ITM Cup team.
- DVML agrees to manage the commercial and sponsorship rights of ORFU.
- Local businesses are being prioritised in a debt repayment plan.
- NZRU will enter into an additional sponsorship commitment with Bank of New Zealand.
- NZRU observer to be at all board meetings.