Rugby Union forecasts return to profit after $9.4m loss

NZ Rugby Union chief executive Steve Tew. Photo / Greg Bowker

The New Zealand Rugby Union (NZRU) is predicting a return to profit this year after announcing a $9.4 million loss for 2010 at its annual meeting in Wellington today.

The NZRU attributed the loss, which was budgeted for, to the financial commitment of hosting the rugby World Cup later this year and to new funding and financial assistance provided to provincial unions and franchises.

Last year, the NZRU lost $15.9 million.

NZRU chief executive Steve Tew said it was forecasting a $10.3 million profit for 2011, banking on a $13.4 million surplus from the rugby World Cup offset by a forecast $2.4 million operating deficit.

The costs associated with hosting the rugby World Cup made up $6.4 million of the $9.4 million loss announced today and the operating deficit of $3 million made up the rest of the loss.

Tew said that despite the loss, the result was acceptable given the economic environment.

"We would prefer to at least be achieving break-even, but in the current context the 2010 result was satisfactory," Tew said.

The operating deficit was largely made up by $2 million in increasing funding to provincial unions and additional support for the Super rugby franchises.

The support of the franchises included financial assistance for the Highlanders after the NZRU underwote its $340,000 loss in 2010.

Under the terms of the collective agreement agreed in 2009, the NZRU took over responsibility for the salaries of domestic players in the national provincial championship greater than $60,000 which resulted in around $1 million in costs moving from the provincial unions to the responsibility of the NZRU.

Provincial unions also received payments of $1 million for All Blacks selected in last year's initial Tri Nations squad.

But Tew warned provincial unions they still had to exercise sound financial judgment despite the extra funding.

"Just as we did last year, we have stated today the importance of our franchises and provincial unions living within their means."

Tew said the global financial crisis, New Zealand's economic plight and strong dollar, were continuing to pose challenges, but successful hedging arangements against foreign currency fluctuations would allow the NZRU to reverse the deficit in this year's accounts.

"We will see last year's deficit reversed in the 2011 year," said Tew.

- NZPA