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Home / Sport / Rugby

Rugby: Sky darkens ahead of new watch

Gregor Paul
By Gregor Paul
Reporter·
7 Apr, 2007 05:00 PM5 mins to read

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Steve Tew takes over from Chris Moller at the end of the year. Photo / Kenny Rodger

Steve Tew takes over from Chris Moller at the end of the year. Photo / Kenny Rodger

KEY POINTS:

When Steve Tew takes the wheel of the New Zealand Rugby Union next year he'll do well to note the sun behind him and the rain clouds ahead. His predecessor, Chris Moller, arrived in December 2002 with a brief to make the NZRU a sleeker corporate beast and to rebuild tarnished relations at Sanzar and IRB level.

The former Fonterra director had his hands full. He was appointed chief executive in the aftermath of the lost 2003 World Cup co-hosting rights.

There was a new board, morale was low, external relationships had been damaged and the public perception of the NZRU was of a body out of touch with the professional game.

Things didn't get any easier for Moller in November 2003 when the All Blacks crashed out of the World Cup.

"That was the lowlight," says Moller. "We were favourites in many people's books to win the tournament and that semifinal was a game we were expected to win.

"It was a very difficult night for the coaches and the players."

That horrid night in Sydney on November 15 was both the nadir and catalyst to get the union in shape to make amends in 2007.

Out went All Black coach John Mitchell in a messy coup which ushered in Graham Henry and vastly improved relations between the executive and the All Blacks and also between the All Blacks and their external shareholders.

With that in place, Moller and his chairman, Jock Hobbs, began pressing the flesh at the IRB get-togethers.

The axing of South African boss Riaan Oberholzer and Australia's John O'Neill in early 2004 made it easier to build bridges with the Sanzar partners.

By the end of 2004 there were clear reporting lines throughout the NZRU and in December a five-year broadcast deal was secured with News Limited that equated to an annual increase in revenue of 16 per cent.

A successful Lions tour in 2005 brought in an extra $25 million and also helped to persuade Moller to extend his contract so as he could lead a campaign to win the 2011 World Cup hosting rights.

Justification of that decision to stay came on November 17, 2005, when New Zealand won the rights. It was also irrefutable proof relations had been rebuilt with IRB members.

'We knew that Japan would conduct a public, media campaign but we wanted to talk to the people who would be putting their hands up to vote. I heard Mike Miller [IRB chief executive] say that we are one of the best unions in the world and held in the highest regard.

"That is enormously pleasing to hear and also a huge tribute to Jock."

Moller gave some thought to finishing what he started and staying on to 2011. After five years in the hot seat, though, he felt it was time to move on. His tenure will sit as the benchmark.

Escalating profits were posted in each of his years except 2006. Commercially, the NZRU is expanding its frontiers, signing global sponsors and enjoying strong merchandise sales in off-shore markets.

But the boom times might have been and gone and the rain clouds are gathering just as Tew gets ready to begin his watch.

Moller benefited from a long-term currency hedging deal which fixed the payment of the broadcast and adidas contracts at about 42US cents.

That deal kept the union in the black until it expired at the end of 2005. A $4.8 million loss was posted this year - a concern as the cost of running professional rugby teams continues to rise steadily.

Last year the NZRU had to finance an enlarged All Black squad, the Junior All Blacks and Maori. A total of 91 players won higher honours and while all three teams were assembled in June, it cost the NZRU $435,000 a week in player payments alone.

The collective negotiated at the end of 2005 has guaranteed players retainers, again pushing up costs. With so much money heading out, Tew needs to work at bringing more in.

The broadcast deal with News Limited remains the key source of revenue and the renegotiation in 2010 has to be innovative and radical if it is to produce fair value. Off-shore markets have to be fully exploited and, closer to home, Tew needs to have a long look at the provincial competition and determine if New Zealand can sustain three tiers of professionalism.

The NZRU has committed to retaining all core activities this financial year - all national teams in existence will remain in operation - and wants to cut $2 million in discretionary spending. But some provincial sides are spending at unsustainable and potentially catastrophic rates.

"The single biggest concern is the affordability of the game," says Tew. "The nature of sport is such that as revenues rise so will expenditure. There is real pressure coming from international markets for players and that is driving costs. There are a multitude of challenges but, in the end, money drives a lot of factors and we need to get that right."

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