Provincial rugby finances 'teetering' - report
MARIA SLADE AND LANE NICHOLS
The perilous state of some provincial rugby unions' finances threatens the future of the national game, an independent auditor's report warns.
Most of the 14 ITM Cup unions are "teetering", it says, and one bad year could tip several over the financial edge.
New Zealand Rugby Union chief executive Steve Tew says struggling unions are on notice to live within their means. "Rugby is not insulated from the reality of the economic environment we live in."
Issuing its State of the Unions report yesterday, accountancy firm Deloitte said the collective revenues of the ITM Cup unions had dropped nearly 20 per cent in the past five years, putting the game's future under threat.
Only eight had more assets than liabilities at present, with Auckland, Wellington and Canterbury in the strongest positions.
"The low equity position of the remaining unions, including the dangerous negative equity positions of Manawatu, Otago and Waikato, suggest that one poor operating year could jeopardise the ability of the unions to continue to operate as a going concern," the report says.
Otago Rugby Union reported the worst result - a net deficit of more than $800,000 in the 2011 year.
Chairman Doug Harvie said Otago "hit rock bottom" earlier this year when it was almost forced into liquidation, and conceded the Deloitte report was not being alarmist.
Deloitte says unions need to look for innovative ways to build community support and encourage increased attendances to reverse the worrying trend of declining match-related revenues and ticket sales.
"That's certainly a big focus of ours," Mr Harvie said. "It's absolutely grassroots stuff."
Mr Tew said claims in the report that rugby's future was under threat because of the financial problems were "a fair observation". But the NZRU was in a much stronger position than many other organisations, thanks to its strong reserves base.
During the financial crisis it had dipped "judiciously" into those reserves to help struggling unions.
"You can't do that forever . . . Bottom line is you can't spend what you haven't got in the bank."
Deloitte partner Grant Jarrold said the sharpest drop in provincial unions' revenues came last year, probably because of the Rugby World Cup.
Total revenues had dropped $16m, or 19 per cent, since 2007. Half of that decline came in 2011.
Deloitte says the unions' falling earnings are largely due to a decline in match-related income, such as gate takings and hospitality, which fell $12m during the five-year period.
On average two-thirds of the unions' total revenues come from grants and sponsorships from the NZRU, the corporate sector and others.
However, there were signs the struggling unions were starting to contain costs, Mr Jarrold said.
Nine unions posted profits in 2011, compared with only five in 2010, and the combined deficit had fallen from $2.3 million to $630,000 in the same period.
- © Fairfax NZ News