Covid-19 has claimed almost half New Zealand Rugby's cash reserves – a staggering loss of around $40 million this year.
The scale of that financial hit comes as NZ Rugby chief executive Mark Robinson confirms the national body is in preliminary discussions with global private equity companies keen to acquire a stake in the game, possibly as early as next year.
"There could be a scenario where it comes into play for some time next year but that's a big if," Robinson told the Herald this week in a state of the nation interview. "We're quite open with different parties at the moment."
In April, when the national lockdown froze all activity, NZ Rugby projected a worst-case $100 million loss attributed to a 70 per cent revenue decline, should the game not return this year.
Since then the success of Super Rugby Aotearoa, largely attended by healthy crowds, the Mitre 10 Cup and belated All Blacks tests mitigated the financial toll, somewhat.
Yet despite laying off a quarter of staff and making sweeping cutbacks - scrapping this year's Heartland Championship, age grade representative rugby, sevens events and reducing provincial union funding by 15 per cent – the Herald can reveal NZ Rugby's revenue has declined 36 per cent for the year.
"As rugby returned during the year certainly the revenue forecasts improved but we also incurred a number of costs directly associated with that.
"We're still sitting in a situation where the loss we will post will be in the tens of millions of dollars. It will be a significant loss to New Zealand Rugby for the 2020 year."
Cash reserves that began the year at $86 million have dropped by 47 per cent due to the Covid-19 shutdown and significant reduction in All Blacks tests, Robinson revealed.
"Depending on what the final loss is they will come back significantly from there – likely under $50 million dollars.
"Most people would say you have reserves for those reasons to absorb shocks. We were fortunate over the years people who were guardians of the union stored away that level of resource to be able to cope with situations like this.
"We're very conscious that we're not in a situation now for that to recur with any regularity at all. As we set about reimaging what the game could look like, financial sustainability across the board is central in that."
NZ Rugby's cash reserves were last insulated thanks to the 2017 British and Irish Lions tour which netted around $40 million – an injection that allowed regular losses to be managed since then.
In 2019, NZ Rugby reported a $7.4 million loss.
"Without a major event like that coming anytime soon, it's clear we're going to have to cut our cloth to recognise that we're coming into uncertain times and we've got to be very financially prudent."
In May the Herald revealed NZ Rugby were in discussions with several private equity companies, including US giants Silver Lake and Luxembourg-based CVC Capital Partners, who have invested heavily in European rugby, to strike a landmark deal.
Significant progress has been made on this front, with the provincial unions informed of developments last Monday.
In attempts to guarantee revenue for the next five years Robinson confirmed talks with private investment companies were accelerating, but he refused to name a preferred partner.
"It's far too early to say. There's various parties that have expressed an interest so we'll work through that.
"We are open to looking at partners who may invest in New Zealand Rugby. We're only at the initial stage of that but there's clearly a lot of work going on around the world on that. It's only right for us as we look at doing the best possible things for the game and trying to explore all avenues that we investigate something like this. We're beginning that process as we speak.
"The target would be to take the capital and capability that comes with it to look at super changing the revenues around the game to be able to provide some of the resilience the game needs to remain sustainable and work through the kind of shocks we've seen this year, if they come again in the future.
"We aren't putting a huge amount of pressure on ourselves around that. There are no guarantees around this coming off, but it's something we feel we've got to do right by game to have a look at."
Any private equity deal comes with significant risks but the injection of revenue may help offset further cutbacks.
With a desire to merge academies, among other provincial union roles with the Super Rugby entities, more belt tightening is expected next year. The Herald understands the provincial unions could be hit by a 20 per cent decline in funding in 2021.
"We're going out consulting on that at the moment. We have proposals with our provincial unions about funding, high performance pathways and what competitions might look like. That's been with them for a week or so.
"I don't want to get into too much detail as to what those proposals are because we want to have genuine feedback in all those areas, but the overriding key in all this is the game has to change.
"There's a lot of work and thought going into asking are there inefficiencies, is there duplication, where can we do things differently that not only save in terms of cost but might also be a better way of doing things over time."