Aviation, tourism and energy writer for the Business Herald

Provincial rugby finances take a mauling

Auckland's Simon Hickey takes on Taranaki's Marty Mckenzie  at Eden Park last year. Photo / Nick Reed
Auckland's Simon Hickey takes on Taranaki's Marty Mckenzie at Eden Park last year. Photo / Nick Reed

Rugby unions' finances have taken a mauling, with a report out today showing they've sunk into the red as revenue shrinks and cost of administration grows.

After three straight years of combined surpluses, the Mitre 10 Cup rugby unions have combined to post a $1.4 million loss for the 2015 financial year.

The Deloitte State of the Unions report examines the annual financial accounts of the 14 semi-professional and amateur unions and finds the first combined deficit since 2011. Five out the 14 unions suffered losses.

In the 2014 financial year there was a combined surplus of $1.2m.
Deloitte partner Grant Jarrold says falling revenue with little room for achieving cost savings impacted the financial landscape of the unions.

While the loss was not as significant as the losses from 2007 to 2010, it was still a concern and highlighted a serious situation for the rugby unions, he said. "As many other not-for-profit organisations will attest, there comes a point where there are no more notches on the belt to tighten and other avenues must be sought to resolve the situation facing them."

The combined revenue earned by the 14 Mitre 10 Cup playing unions was $63.8m for the 2015 financial year, a $3.6m (5.4 per cent) fall from the year before and the lowest total revenue reported since the first State of the Unions report five years ago.

Most revenue - $45m - comes from sponsorship and grants with just $8.6m from match related sales. New Zealand Rugby accounts show they gave $9.5m to the unions, including those outside the Mitre 10 Cup.

Total operating expenditure for the 2015 year was slightly down from the previous year, decreasing by $0.9m to $65.1m. However, administrative costs increased for the second year in a row.

Total administrative expenses increased by $1.2m (7.3 per cent) to $17m while the amount invested in growing the community game has decreased by $0.3m.

"It will be a concern for a number of rugby administrators that administration costs increased when all other expenses decreased in line with the reduction in revenue."
Jarrold said the situation was not as dire as it may seem at first glance.

Half the unions had a positive net working capital position. Five unions that were home to Super Rugby franchises once again generated the lion's share of revenue (46.4 per cent of total revenue) the other unions have collectively increased their revenue by 3.0 per cent over the past five years.

Despite taking a step backwards in 2015, unions were in better shape now than several years ago, he said.

In 2012 Otago needed a bailout from the Dunedin City Council and New Zealand Rugby after falling deep into debt and facing big losses.

The Deloitte report found the 12 Heartland Championship unions continued their run of small surpluses achieving a combined surplus of $159,000. Nine out of 12 of the unions were in the black.

Jarrold said continued pressure on traditional sources of revenue meant all unions were more reliant on NZ Rugby grants than before.

"To help themselves, the unions could explore more innovative ways to increase and diversify revenue, as well as find new ways to grow support for their representative teams." he said.

Click here for the full report:

- NZ Herald

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