Profit pleases ORFU

Union chairman Doug Harvie
Union chairman Doug Harvie
The Otago Rugby Football Union has recorded a $406,800 profit, just over two years after it faced going out of business because of debts of more than $2 million.

The union now has reserves of more than $500,000, and is predicting a small profit for the coming year.

The union was boosted over the past year thanks to a huge gate for its only Ranfurly Shield defence, hosting an ITM Cup semifinal and keeping a tight rein on expenditure.

Union chairman Doug Harvie said the union was happy with the result and how it had come about.

''We have to pay tribute to the management at the union, who have kept a close eye on all the expenses and have not wasted a penny,'' he said.

''It has been a very good year. If we look back over the years it would be a long time since Otago rugby has recorded a profit, of this size anyway.

''I'm proud of the work the team has done and the way the team played.''

The union won the Ranfurly Shield for the first time in 56 years and a crowd of about 18,000 attended the side's first and only defence, when it lost narrowly to Hawkes Bay.

A home semifinal, also against Hawkes Bay, was another unexpected positive on the balance sheet.

The union budgets conservatively for ITM Cup games and the crowd of 18,000 - about four times what would have been expected - was a real financial shot in the arm.

The union had been budgeting for a small profit of about $40,000 last year, so the profit of $406,859, with equity of $548,493, was a good result.

The union's income was $2.74 million and expenditure was $2.33 million, with player wages costing just under $1.2 million. Commercial income grew from $762,917 to $986,787 and ITM Cup revenue from $214,944 to $375,153.

Mr Harvie, a chartered accountant, said a change in the way the provincial model was set up by the New Zealand Rugby Union helped, but at the start of the financial year the union faced getting less money from the NZRU than the previous year.

But tight control, combined with board governance and discipline, had helped, and that would continue, he said.

There would be no spend-ups with money in the bank.

''We are not that flush. I would say we are entering a quiet jog and not running yet.''

In March 2012, the union was a few days away from going out of business, with debts of $2.2 million and creditors failing to come to agreement.

But a rescue package was nailed down and the union traded its way out of difficulty, albeit with some concessions from creditors.

Mr Harvie said the union was looking at developing some community rugby projects and getting people playing the game.

But every project would have to be costed and if it did not stack up, it would not go ahead.

He said player wages had decreased slightly, but were still a large part of the budget and attracting corporate backing was harder in a city which also housed a Super 15 team.

When asked whether the union would consider repaying some creditors who lost money when the deal was agreed to save the union from liquidation, Mr Harvie said that would not happen.

''The reality is what happened was most of the minor creditors were paid back in full, the medium creditors got 80c in the dollar and the major creditors had contracts and agreements.

''The major one of those was the city, but the deal we have done with the stadium gives them a fair chunk of the gate money when we play games.''

The union will hold its annual meeting on Monday night.

Out of the red
2009: $5.9m loss
2010: $634,871 loss
2011: $862,000 loss
2012: $134,656 profit
2013: $406,859 profit



I think it's important to remember why the ORFU almost went bankrupt. For years they charged less for Carisbrook tickets than it cost to run the place - now they have a contract where DVML charges less for using the stadium than it costs to run and now they make a profit. It's not really surprising they're making money now is it? As part of the ORFU bailout deal they outsourced the loss-making bit to the ratepayers, and this guy is actually proud of that. He thinks he's doing us a favour - I think he's unclear unclear on the whole 'favour' concept.

The real problem, the one that ORFU refused to face, is the whole not changing more for tickets to games than they cost to put on thing - apparently there's no institutional financial memory in the Dunedin professional sporting world. It's time to fix this. Someone has to have a hard word with these people and explain about how balance sheets work. Perhaps a remedial small business accounting course that explains that to make a profit you have to charge more than you spend.


If the ORFU had to meet the full cost associated with putting on rugby games at the stadium, it is doubtful whether it would report a profit.

Or meet the full  financial settlement cost with all of its former creditors.  In full, at the time the debt was due, it was not able to do that.

Did the city ever receive its $2 million that was owed?  In an actual transaction, not a paper entry?  Where is that transaction recorded, for the avoidance of all doubt? 

Gate takings?

It is really drawing a long bow to suggest that the ORFC is doing rate payers a favour by handed over a percentage of gate takings. What is that percentage? how much does it contribute to the monies provided to the ORFC? The loss on Carisbrook alone was $3.1 million due to Council having to purchase it to save the ORFC. Is there any chance we can see some figures re what rate payers get from gate takings? Is it a significant number, does it cover the costs re the rate payer contribution to the facility? This is not being down on rugby, this is just about a bailed out organisation paying back the community it accepted money from. Why is it so hard for rate payers to get proper numbers re something we collectively own?

Payback time?

I am pleased the ORFU is getting its house in order, but how about paying back ratepayers for bailing you out? Some contribution would be appreciated, but it seems they are now more interested in buying a stake in the Highlanders. The arrogance is quite stunning.

Selective reading

I bet no-one takes notice of the bt about the DCC being paid back via gate takings.  No way - down with rugby! 

Ludicrous claims

The moral obligation that the ORFU has to behave as a respected part of our society and pay it's debts and obligations is not removed just because the ratepayers were held over a barrel and forced to pay the ORFU's bill for things like holding their black tie gala. 

Claiming that the city is somehow being repaid the debt it is owed by the ORFU because it gets some of the gate monies from the rugby stadium is ludicrous - DVML loses money year in and year out largely because rugby and its fans don't pay enough to use the stadium. After all, we would financially be far better off, and our rates would be lower, if the stadium was closed and the ORFU wasn't 'paying back' the money they owe us in this manner.

The ORFU got a sweetheart deal to use the stadium and have DVML do much of their back office work as part of the secret deal the city signed to help them avoid bankruptcy. If they're making a profit while we have to prop up DVML through our rates it's time that this deal was renegotiated - this time in public so we can see how our money is being spent.

Love my rugby.........but

It is great that the ORFU have made a profit (I contributed towards that) but I think some recognition and payment to the city or those creditors who were not paid in full would be a very nice gesture. Without the fans, city and suppliers where would the ORFU exactly be right here right now?



How quickly the ORFU forgets .......


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