The New Zealand Rugby Union today announced an improved bottom line result for the 2011 financial year of $9.6 million, reflecting the final accounting reconciliation from the investment in Rugby World Cup 2011.
This was a turnaround from the 2010 loss of $9.4m which was also driven by the accounting treatment of the tournament's costs and foreign exchange impact.
"We are satisfied with our overall financial performance in the face of economic conditions which continue to be the most challenging our organisation has faced for many years," NZRU Chairman Mike Eagle said.
The 2011 result was largely made up of RWC 2011 foreign exchange gains of $13.4m and an operating loss of $3.1m.
The foreign exchange gain reflected the reconciliation between agreed payments from tournament organisers to the NZRU and the value of the sterling held to meet their share of the tournament host fee.
"It's pleasing that the costs of our investment in RWC 2011 have come out as expected," Eagle said. "We have managed to contain our tournament costs to what we forecast in 2005 as well as mitigating the foreign exchange risks.
"The tournament itself was an outstanding success on many levels and obviously winning RWC 2011 was the icing on the cake for our organisation. We do expect long term benefits from our investment in Eden Park, as well as the enhanced commercial value of the All Blacks brand."
Chief Executive Steve Tew said the NZRU continued to face pressure on its revenue streams from economic conditions and the high New Zealand dollar, so posting an operating loss of $3.1m which was in line with budget and similar to the 2010 figure was a satisfactory result.
"Like all businesses we are working hard to contain costs, while also exploring opportunities to grow revenue. The relocation of some key commercial staff to an Auckland office is one part of that strategy, giving us a cost effective way of working more closely with existing sponsors and partners and to better develop new opportunities.
"We will also shortly be announcing several significant sponsor renewals and that is a strong sign of confidence in our commercial model.
"We are budgeting to break even in 2012. In recent years, we have run operating losses which have been financed from our strong reserve position. While this is not sustainable in the long term it has been critical in allowing us to maintain our investment in the game and to assist provincial unions in these difficult times.
"The deliberate use of our cash reserves has been carefully considered by our organisation and we believe this is an appropriate response to the global financial crisis."
The NZRU provided $18.6m in funding to provincial unions and Super Rugby franchises in 2011, similar to the amount provided in 2010.
"This has meant the normal business of rugby from the grassroots level through to the professional level can continue," said Tew.
"We are mindful of the challenges facing unions and our support has helped ease some of the pressure they face. While some are clearly weathering tougher conditions than others, it is heartening to see a profit turnaround for a number of unions.
"We must all live within our means and the 2011 Provincial Union player payment figures provide further evidence that the message is getting through. Overall player payments across the 14 ITM Cup unions declined by $1.73m or more than 8 per cent.
"We expect overall player payments to fall again this year."
Further financial information will be released at the NZRU annual general meeting on May 24.