Mass redundancies at New Zealand Rugby are expected to claim members of the executive team, emphasising the scale of the financial challenges confronting the game.

NZ Rugby announced redundancies to staff last Monday and it is understood the drastic restructure involves most roles being disestablished, with nearly 50 per cent of the 180 fulltime jobs set to be lost.

The grim news comes after NZR announced a $7.5 million loss for 2019, and forecast a $120m decline in revenue for the current financial year in the wake of the sport's halt due to the Covid-19 crisis.

NZR had already cut all staff wages by 20 per cent – a figure halved thanks to the government subsidy.

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Widespread job losses will, therefore, hit hard across the board.

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The Herald has learnt that chief rugby officer Nigel Cass, employed by NZR since 2001 and on the executive team for the past three years, will be among those to depart. His farewell has been communicated to provincial unions, but he is expected to serve through to the end of the year in order to ride out the worst of the pandemic's implications.

While Covid-19 has accelerated and greatly expanded the scale of redundancies, the sweeping McKinsey findings delivered in February were also a major catalyst for change.

Among other recommendations around streamlining several duplicated rugby resources, the review is believed to have identified the need for greater accountability in regards to travel costs and related bookings.

While redundancies at NZR headquarters don't directly extend to provincial unions and Super Rugby franchises, funding cuts are affecting headcounts at all levels of the game.

The 14 provincial unions will endure 15 per cent cuts to their respective annual payments – each province receives $650,000 from the national body. The likes of Taranaki and Waikato, among others, are therefore in more perilous financial positions than before Covid-19 hit. Many unions do not have any cash reserves, leaving some on the brink of collapse.

Gloomy times for NZ Rugby. Photo / Photosport
Gloomy times for NZ Rugby. Photo / Photosport

The next concern is ongoing negotiations between NZR and the Players' Association around cuts to provincial union player salaries. Some unions fear the yet-to-be-agreed figure could impact their ability to field a team in this year's Mitre 10 Cup competition.

One provincial union source told the Herald there were $14m worth of player contracts that need to be paid and no clear indication of how that will be achieved.

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Confirmation on Thursday of Super Rugby's domestic return in a 10-week derby competition between the five New Zealand franchises from mid-June is positive, but it also raised financial concerns about the immediate impact of these matches initially being played behind closed doors.

As Covid-19 took hold, NZR handed $250,000 bailout packages to each of the five franchises but there are now fears the resumption of games may see the Super entities regress.

While Super Rugby crowds have plummeted over several seasons, franchises are understood to generate a large portion of revenue – for some as much as 50 per cent which equates to around $2.5 million per-season – from gate takings.

Super Rugby franchises do not directly benefit from broadcasting revenue as such, with NZR using that money to pay the players, the head coaches and one assistant.

The resumption of two games each weekend will involve franchises immediately picking up the bill for other assistant coaches, doctors, physiotherapists, strength and conditioning trainers, mental skills workers and other staff, many of whom are on reduced hours but in reality will now return to full-time work.

With no gate takings, these wages must be paid with only reduced sponsorship revenue to rely on.

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NZ Rugby CEO Mark Robinson. Photo / Photosport
NZ Rugby CEO Mark Robinson. Photo / Photosport

Conversations between NZR and the Super franchises around this aspect are understood to be ongoing, with particular concern being raised by private equity holders in the franchises.

In 2011, NZR partially loosened their stranglehold on the franchises by tendering 49 per cent stakes in the five teams but the experiment has proved only partially successful, with battles over control causing ructions.

In an interview with the Herald, Sport and Recreation Minister Grant Robertson acknowledged the pain the sector is feeling in these troubled times.

"We're seeing the impact at every level. Sport grinding to a halt has put a lot of pressure on organisations that are effectively businesses," Robertson said. "We've been in constant communications with the major franchises, professional teams and codes.

"We've seen big job losses at NZ Rugby; we've seen the Mainland Netball Zone decide to fold and NZ Netball stepped in there but that gives you a scale of it at that level.

"It then filters all the way down to grassroots and community sport. Clubs that rely on class four gaming funding, sponsorship … it's tough at every single level.

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"We're having conversations and working as closely as we can."

While one source described NZ Rugby as top heavy and having lost sight of "what is muscle and what is fat", it is expected the community game will take a significant hit due to the mass redundancies.

Chief executive Mark Robinson is said to be leading the many difficult conversations, with the burden of letting valued staff go said to be weighing heavily on his shoulders.