An interest-free grace period on a publicly funded $3 million debt is the most recent in a series of loan variations granted to the financially troubled professional rugby team Moana Pasifika.
Interest on the debt will not accrue during the grace period; rather, the term of the loan has been varied to accept an interest-free period, Sport New Zealand, which issued the loan, told the Herald.
The year-long concession suspended some $183,000 in interest payments. It was agreed in March by the Crown entity at the request of the Super Rugby Pacific team’s chief executive, Debbie Sorensen.
Sorensen’s formal request for the relief noted “the current economic climate has placed significant financial pressure on our operations, making it challenging to meet the obligations on the loan”.
Sport NZ has provided a string of changes to the Super Rugby Pacific team since it drew down the loan in February and May 2023.
Taken together, they cast repayment in some doubt and raise questions about the financial footing of the team, which has attracted an enthusiastic following, especially among Auckland’s Pasifika community.
Moana Pasifika Ltd (MPL) is the commercial entity which operates the rugby franchise; however, the team is unusual in that MPL’s shareholder is a charity.
One of the team’s main stated purposes is to feed players to the national rugby teams of Samoa and Tonga.
Julie Morrison, group manager of strategy, policy and investment at Sport NZ, said the agency agreed to the debt relief measures “in recognition of Moana Pasifika’s financial challenges and not wanting to burden them further, whilst working with them to get the original loan repaid”.
She said the agency does not consider the loan “concessionary” (which means below market rates).
The loan – made to underwrite the team’s operations – was drawn in two $1.5m payments to cover the team’s significant cash shortfalls and allow it to pay its bills.
It bears interest of 5% per annum, at least notionally. However, over the two-and-a-half year period since it was drawn, the interest owing has been successively forgiven and deferred such that no interest payments have yet been made.
Interest of $20,000 was forgiven in May 2023 and further interest of $166,000 was forgiven in February 2024; the subsequent grace period interest is deferred.
The team’s first interest payment is now due in March 2026.
In addition, $450,000 in principal repayments were also deferred through a 2024 variation to the loan agreement, which pushed the repayment period out by nearly two years to late 2034.
The team made a first repayment of principal, $150,000, in March 2025. The next payment is due this month.
(Sport NZ previously told the Herald it had written off $298,000 of the loan interest. It subsequently clarified that $186,000 was forgiven and a further $183,000 is deferred through the grace period.)
Moana Pasifika Ltd was established in 2021 and played its first Super Rugby Pacific season in 2022.
The team’s shareholder was originally Moana Pasifika Charitable Trust (MPCT) and is now the healthcare and education-focused charity the Pasifika Medical Association Group (PMA).
The team’s funding comes through New Zealand Rugby, World Rugby, sponsorship revenue and more modest cash streams such as ticket sales.
The Sport NZ loan, alongside other public money including a $1m Sport NZ grant, has also been an important part of the mix (MPCT also received a further $500,000 Sport NZ grant).
Since inception, the team have struggled to pay their bills. Last year, Moana Pasifika were absorbed by the PMA, to which they have always been closely linked.
From inception until last year, Sir Michael Jones, still a Moana Pasifika board member, was chairman of both the team and the PMA-controlled entity Pasifika Futures Ltd – which held the charity’s single-largest funding contract until July 1.
In addition, Sorensen is the long-time chief executive of the PMA and was a Moana Pasifika director from the team’s inception until May 2024.
She served as Moana Pasifika’s vice-chair and chair of the team’s audit committee. She left the board in May 2024, several weeks before it was formally acquired by the PMA and she is now the team’s chief executive.
The PMA has emphasised that it has sufficiently deep pockets to fund the professional rugby team without taxpayer help – at last disclosure, it had net assets of some $22m, largely made up of a portfolio of commercial real estate.
However, documents released to the Herald under the Official Information Act (OIA) show that despite coming under the PMA umbrella in the middle of last year, the team continued to seek relief on their public debt.
And Sorensen’s 2025 request for interest relief was made at the same time the PMA learned it would lose its most significant public contract.
When the first half of the Sport NZ loan was drawn down in February 2023 to fund a shortfall in operating costs, it was Sorensen, as chair of the Finance, Audit and Risk Committee, who wrote to confirm: “the board has agreed to exercise the drawdown of the underwrite facility to address cashflow issues during FY2023″.
And it was Sorensen who wrote, just a few months later, to formally request that the loan be written off: “Our management has been in discussions with you about converting the underwrite facility into a grant. The board would be grateful for your consideration of this matter.”
She noted that the team was established under a trust structure and they were not capitalised by investors.
“The underwrite facility [the Sport NZ loan] in effect is a form of working capital typically provided through shareholder funds. Having this facility being converted to a grant programme will enable the trust to move forward in a stronger financial position,” Sorensen argued.
Since the loan was issued, previous chief executive of the team, Pelenato Sakalia, Sorensen and board chair Jones (who remains board chair of MPL) all met with Sport NZ to variously seek both additional funding for the team and debt forgiveness.
So far, Sport NZ has resisted the requests for outright loan principal forgiveness. But it appears clear from the correspondence that the cash-strapped team’s revenue has never matched the optimistic figures on which its business case was based – the Ministry of Foreign Affairs and Trade (MFAT) stumped up $85,000 for that work, undertaken by Deloitte, and it provided a further $250,000 to help establish the team.
The released correspondence notes that the business case relied on pre-Covid figures, despite its completion in the middle of the pandemic (it was undertaken in late 2020 and finalised in early 2021).
The Herald asked the MFAT for the business case document under the OIA, but the agency said it does not hold it.
Whether the PMA is now willing and able to capitalise the team sufficiently – or whether other investment arrangements will be made – remains an open question.
In 2023/24, PMA disclosures show it provided the team with a $1.85m concessionary loan – unsecured, interest-free and repayable on demand.
And in July 2024, when it bought the team outright, it absorbed Moana’s debt of $4.85m.
The Herald put questions to Sorensen about funding and the team’s future; she did not respond.
Minister of Sport Mark Mitchell said the Government was not advised of $166,000 of loan interest forgiveness or of the current grace period – both of which were approved by Sport NZ after the 2023 election.
“I have made it clear to Sport NZ that I expect to be kept informed of any requests for further loan concessions,” Mitchell said.
He also noted that Te Puni Kōkiri (the Ministry of Maori Development) is close to releasing the results of an independent review into allegations about the PMA, including questions raised over conflicts of interest and its former Whānau Ora commissioning agency, Pasifika Futures.
In early 2025, the PMA learned that it would lose its single-largest revenue source, Whānau Ora commissioning funding, amounting to $44m in the last fiscal year.
While that money flowed to its controlled entity Pasifika Futures Ltd, the contract paid the PMA a management fee of up to 20% of the funding.
In addition, the contract also paid millions of dollars for contracted services directly to PMA entities and also to the Moana Pasifika Charitable Trust.
Until mid-2024, the trust was both the shareholding entity of the Moana Pasifika team and the funder of community-level sport and other programmes.
The PMA has emphasised that the Whānau Ora funds (intended to help struggling Pasifika families and communities) never flowed to the professional team, rather, they funded the community-level programmes.
PMA chair Kiki Maoate welcomed the review and said his organisation is fully co-operating.
But the loss of the Whānau Ora contract also means that the PMA’s own ranks, including its Etu Pasifika health and social services clinics in Auckland and Christchurch, have suffered heavy cuts, including the loss of doctors and nurses.
Moreover, several former staff who spoke to the Herald said that pouring further dwindling PMA funds into the professional team has become internally contentious for the ostensibly health and education-focused charity.