Report finds most ITM Cup unions' revenue is in decline, writes Jonathan Carson and Fairfax. 

The Waikato Rugby Union is confident in its financial future despite a new report saying one bad year could jeopardise its operations.

The State of the Unions report, from accountancy firm Deloitte, states that the collective revenues of the country's 14 ITM Cup unions have dropped nearly 20 per cent in the past five years, potentially threatening the future of the game.

It also states that the "dangerous" negative equity position of the Waikato union - and others - suggested that one bad financial year could put its future at risk.

Chief executive Graham Bowen agreed with the diagnosis, but said he was confident that the union was taking measures to stay afloat.

"That's a fair comment and we've got to work really hard at finding new revenue opportunities and that's exactly what we're doing."

The Waikato union bounced back from a $684,000 loss in 2010 to make a modest $20,000 net profit last year.

Mr Bowen said the union had tightened up its operations - reducing player salaries and staff, and changing its rental agreement with the stadium.

"The New Zealand salary cap came down to $1.35 million. We self-imposed $1m on ourselves, because we don't believe we can afford any more than that.

"Four years ago we had 26 staff and now we've got 14."

The union was also coming up with creative ways to make money, such as building a house for sale with the help of sponsors, and organising fundraising dinners.

Mr Bowen was banking on the Chiefs' Super Rugby success attracting more fans to the stadium during the provincial season.

"We're pretty hopeful that, on the back of the Chiefs doing well, people will be enthusiastic about rugby and we might see a little bit of a lift in the crowds, because that is a big revenue item that has reduced from four or five years ago."

Deloitte partner Grant Jarrold said most other unions were "teetering", with only eight of the 14 owning assets exceeding their liabilities. Most are not well capitalised, with only Auckland, Wellington and Canterbury having a substantial equity base.

The sharpest drop in the struggling unions' revenues came last year, probably because of the Rugby World Cup, Mr Jarrold said.

Total revenues dropped $16m or 19 per cent in the past five years, but half of that decline came in 2011.

However, Mr Jarrold said there were signs that unions were working harder to contain costs.

Nine unions posted profits in 2011, compared with only five in 2010, and the combined deficit had fallen from $2.3m to $630,000 in the same period.

"If that trend continues we will see a more positive position this time next year."

 

- © Fairfax NZ News

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