KEY POINTS:
The New Zealand Rugby Union (NZRU) today announced a $1.7 million financial loss for 2007, a better result than it had predicted.
The union had budgeted on a $4.4 million loss, which would have followed a $4.8 million loss in 2006. The union's reserves have dropped to $78.9
million.
NZRU chief executive Steve Tew said while the loss was a disappointment, he was pleased to announce an improvement on last year at today's annual meeting in Wellington.
The result again demonstrated how the NZRU's financial performance was dependent on the shifts in the international currency market and the sustained high value of the New Zealand dollar.
"The greater part of the NZRU's revenue is received in foreign currency so foreign exchange sensitivity exerts a significant and unavoidable pressure on the financial situation of rugby in New Zealand," Tew said in a statement.
He said the deficit could have been considerably worse if not for a financial decision when the value of the New Zealand dollar dipped below 70 cents against the US dollar in August.
The NZRU was able to take out contracts to hedge more than US$23 ($29.2 million) in 2007 revenue and US$13 million in 2008 revenue at an exchange rate of 68 cents.
"This decision, to hedge such a significant portion of foreign exchange at a rate that transpired to be a market low for the year, had an extremely positive effect on the 2007 financial result, providing savings of approximately $6 million," he said.
Tew said the NZRU also made savings of $2.5 million on overheads and day-to-day costs, which had a limited effect on rugby activities and services.
Revenue was $101.7 million, up more than $8 million on last year while expenses climbed more than $5 million to $103.4m.
The NZRU's own annual "scoreboard" marked itself a lowly 52 per cent for the year, compared to 84 per cent in 2006.
A large reason was the All Blacks' failure at the World Cup, where they lost in the quarterfinals.
Another major shortcoming was "a failure to reach expected levels in specific game development and competition areas".
In his annual report, chairman Jock Hobbs said the New Zealand rugby community faced a number of multi-layered and interconnected issues, including foreign exchange exposure, funding, community rugby, the global rugby landscape, and the effectiveness of New Zealand's competitions.
"We need to change if we are to meet the needs and expectations of rugby fans, players and officials at all levels," Hobbs said in his speech to the meeting.
In his review of 2007, Hobbs said the rugby World Cup had cast a long shadow over what had been a promising year.
"The New Zealand Rugby Union failed to fulfil the hopes and expectations of so many of our stakeholders and supporters. For an organisation - and a country - that sets its standards and expectations very high, the loss was incredibly difficult to accept."
- NZPA