It is understood the board acknowledges that a major institutional reset is needed to turn the accounts from red to black, but that there may not yet be alignment on the best way to do that, or indeed how quickly change needs to happen.
It’s not a secret that within the walls of NZR there is acceptance that some kind of restructuring is needed following the departure of New Zealand Rugby Commercial (NZRC) chief executive Craig Fenton last year.
The set-up of operating NZRC and NZR as separate entities with separate boards and executive teams is creating expense, duplication and confusion.
The former needs to exist because equity partner Silver Lake’s investment is in NZRC, not NZR.
But having seen a headline loss of almost $20m and costs spiral out to $305m, the board knows it needs to come up with a new executive structure to gain more capability, get better oversight and drive down costs.
The speculation is strong that a new position of group chief executive will be created – a position that will sit across both NZR and NZRC, and have respective commercial and rugby general managers reporting directly to that person.
This would be a huge change, and would inevitably see new executives arrive at NZR, but given $76m has poured out of the game in the past three years, what does the game’s future look like without radical reorganisation at HQ?
It is thought some directors are fearful that if they change too quickly, they will have a board and executive operating with limited institutional knowledge.
There are others, it is believed, who say the institutional knowledge has limited value because it is not running the business the way it needs to be run to be sustainable.
Chairman David Kirk is believed to be eager to align everyone on the board behind whatever change proposition gets made, and the $19.5m loss has pushed the argument in favour of those directors who want it to happen quickly.
What the latest accounts do is reiterate that NZR wrongly believed in 2020 that it wasn’t generating enough money to effectively run the professional and community games in 2020, and simultaneously, that it had too many unsustainable fixed costs – most notably the 36% revenue share agreement with the players and the 17% distribution to the provincial unions.
The solution it fixed on was to bring in US fund manager Silver Lake as an equity partner to inject more capital that could be invested in new revenue streams.
At the same time, it tried to lower the revenue share of the professional players with a tiered formula so that their allocated percentage of income became increasingly smaller.
Three years on, and there is little to no evidence of Silver Lake’s investment and supposed capability having made any impact.
All that has happened since 2022 is that NZR is doing all the same things – selling sponsorships and playing All Blacks tests in places such as Japan, London and the United States – but more expensively.
This is why chief executive Mark Robinson has made 2025 the year in which the game restructures itself to operate within a new sustainable financial model.
Inevitably, Robertson will want to come back to those fixed costs. He’s convinced the professional players are overpaid, and having cut provincial union funding by $2.7m last year, there will be more attempts to cut it again.
But while these two big-ticket items may seem like the obvious places to make big cost savings, these are not necessarily the right areas to be swinging the axe.
What the accounts show – with the (27%) jump in administration costs from $21.9m in 2023 to $27.8m – is that there may be a lack of oversight on everyday expenditure, and perhaps a culture of excess that has developed because of the corporatisation of the organisation.
NZR board members Patsy Reddy and Bailey Mackey travelled to Britain for New Zealand Rugby Commercial board meetings last year, when both knew they would be standing down the following month.
When the All Blacks played in Tokyo, there were 75 NZR personnel there – split between players, coaches, management and administrative and executive staff – 29 of whom had to be paid for by NZR, staying at the $900 a night Conrad Hotel.
And how many reviews by external contractors and professional services companies have been commissioned in the past few years, and what, if anything, have they delivered in terms of practicable action?
There are questions, too, to be asked about whether there is an overinvestment in teams in black at the expense of provincial rugby.
Expenditure in teams in black rose 9% last year, from $75.9m to $83.7m. What specifically drove that number higher is not clear.
But as an example of where money might have been spent without a strong enough case, the All Blacks were able to take seven extra players to Japan to bolster their 36-man squad, which came at an estimated total cost of about $450,000 split between wages, flights and accommodation.
The red flag expense, though, is the $12m that has been pumped into the content hub NZR+. Media companies across New Zealand are genuinely bewildered about what exactly the money has been spent on, as there is so little to show for it in terms of quantity or quality.
NZR+ has spent $12m to gain viewing figures that could have been achieved by posting a video of the All Blacks doing the haka and a few “best of” highlights packages on YouTube.
And finally, there is the growing expense of running the C-suite across both NZR and New Zealand Rugby Commercial.
In 2023, NZR spent $7.5m on directors’ fees and executive salaries. In 2024, that number was $7.67m, with the executive component accounting for $6.4m, up from $6m.
That increase came despite there being 11 – down from 13 – executives on the payroll last year and reflects various compensation and termination payments that were made.
That $7.67m figure is more than the $7m NZR spent on Heartland teams last year and more than the $5.4m it spent on its five foundation Super Rugby clubs, and is perhaps the spending that best of all illustrates why a restructuring is imperative if the national body is ever going to see money in exceeding money out.
Gregor Paul is one of New Zealand’s most respected rugby writers and columnists. He has won multiple awards for journalism and has written several books about sport.
