New Zealand rugby’s financial position improved in 2013 with the national body’s war chest of cash reserves swelling to $63.7 million, while all 14 top-tier provinces returned to surplus after years of turmoil.
The NZRU posted a NZ$2.9 million ($2.48 million) profit in 2013, down slightly from NZ$3.2m a year earlier but on the back of increased disbursements to the country’s provinces and a boost in the contribution to the players’ collective agreement.
Profit had been forecast at only $790 000, the NZRU said.
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Cash reserves also swelled by more than $13 million to $63.7m in the last financial year as they generated or extended lucrative sponsorship agreements.
New Zealand rugby has struggled in recent years as the global financial crisis squeezed sponsorship markets, which eroded a healthy cash surplus of more than $81m generated after the last British and Irish Lions tour of the country in 2005.
The NZRU also had to guarantee part of any operational losses from hosting the 2011 World Cup, eventually contributing about $10 million towards covering the $31.3 million loss.
“People talk about a rainy day. Well it was raining and we sought shelter,” NZRU chief executive Steve Tew said from Auckland via telephone about having to eat into their reserves during the financial crisis.
“We had the experience of keeping the business of rugby going through the financial crisis when a lot of businesses had to retrench more than we did and, in a very considered way, we used up some of our cash reserves.”
Tew said the NZRU was already looking forward to the next Lions tour in 2017 and while it should generate a windfall in terms of revenue, the organisation planned on it having a long term affect rather than a short term boost to the balance sheet.
“We take the Lions income in that year and while it’s banked in that year our view is that it’s got to be smoothed out over the 12 years between tours,” he added.
“The Lions are also a pinnacle rugby event. Apart from rugby World Cup, which we’re not going to host again for a long time, it’ll be the biggest thing we have in this country for a decade, so we’re really looking forward to it.”
Tew said a new sponsorship agreement with multinational insurer AIG and the extension of long-standing agreements with other sponsors had helped their 2013 balance sheet.
Revenue increased to $117m last year from $106.6 million in 2012, though expenditure increased by a similar amount – up to $114.1m from $103.4m.
Increased payments to players and the provincial unions, including the introduction of a retainer system for the country’s rugby sevens players as they build to the 2016 Rio Olympics, had contributed to the higher expenditure.
The increased disbursements to the semi-professional provincial level of the game had helped turn around their financial positions.
New Zealand’s provincial unions have struggled with the move to professional rugby with the NZRU periodically providing loans to financially pressured unions, while only last-minute negotiations saved the Otago union from liquidation in 2012.
All 14 top-tier unions reported profits for 2013 with a combined surplus of $3.3 million, compared to $620,000 in 2012 when only nine unions were in the black, the NZRU said.
The unions had a combined deficit of $630,000 in 2011 and Tew had warned after the Otago bailout that unions had to begin living within their means.
“The provincial unions have worked very hard to bring their (financial) models into scale,” Tew said.
“I commend everyone in the provincial unions for working hard to deliver the results they have.
“The challenges, however, are still there and there is no room for complacency.”