Recession, results behind ORFU loss

Home » Sport » Rugby
By Steve Hepburn on Tue, 9 Feb 2010
Rugby | ORFU

The Otago Rugby Football Union has recorded an operating loss of more than $750,000 for the past year, with its chief executive blaming the recession and saying players had under-performed.

The union lost income from sponsorship, membership and gaming machines to post an operating loss of $764,531 for the 2009 year to November 30.

It continues a run of financial losses and chairman Ron Palenski and chief executive Richard Reid said the result was "obviously very disappointing".

They had budgeted to break even.

The total loss was $5.9 million, but that included a more than $4.5 million loss on the one-off sale of Carisbrook and the write-off of almost $650,000 in development work.

"We are like any sporting organisation in the middle of a recession. It is very hard work out there. We are reliant on a lot of different streams of funding and a lot of those are down," Mr Reid said.

He pointed to a High Court ruling which adversely affected sporting groups' ability to obtain gaming-machine income.

"We are in the sort of game where expenses are mainly fixed but income can be very variable."

If the team was successful, it was easier to sell memberships, sponsorship and commercial deals.

All were down.

The Otago team finished too far down the table, he said.

Otago finished 10th in the Air New Zealand Cup.

Otago paid $1.3 million to players last year, down $30,000 from the year before.

"It is all too easy to blame the coaches but they do not play the game. We had a reasonable squad and if you asked yourself, was it better than 10th? You'd have to say yes.

"The playing results of Otago on the field do have an impact on the financial side of things. There is no doubt about that."

Mr Reid said it was not necessarily about the players being accountable but playing to their potential and he felt they should be able to do that.

12next ›last »
»

A name, residential address, and (preferably residential) telephone number is required from readers who comment on ODT Online. These details will not be visible to site visitors.

Recesssion?

Submitted by MikeStk on Tue, 09/02/2010 - 10:34am.

I think that blaming the recession is too easy. If anything, it would seem that the ORFU has lost less since the recession started.
If they want to start making money from games again they're going to have to move back to weekend afternoon games when people actually want to attend games and will bring the kids, otherwise they will lose the next generation.

However, the city has already bailed out the ORFU once by paying them $7m too much for Carisbrook and building them a free stadium to replace it - we're not going to do it again.

The ORFU needs to get its act together and cut back on its expenses - no more perks for the boys - and become viable, or shut up shop.

»

The saviours of the stadium

Submitted by russandbev on Tue, 09/02/2010 - 10:11am.

The financial results of the Otago Rugby Football Union should not be surprising to anyone, let alone those on the board. What is interesting is the ongoing belief espoused by Mr Palenski of the ORFU that this business that they are involved in is a sporting enterprise.

It is not. As has been pointed out many times by many correspondents, people go – or rather don’t go – to professional rugby matches to be entertained in exactly the same way that they will go to any other performance, whether it is athletic or artistic.

Of course, any business with fixed costs and variable income will always face problems, and most work towards ensuring that the service or product that they are offering is one that customers will find attractive.

But when it is revealed that the cost of paying the performers in the ORFU is about twice the loss of the business, and if it is assumed that the number of contracted players is 26 (which is the last ODT published data), then the average annual salary for each of these players is $50,000.

When their performance is assessed by their employers as “not good enough”, it makes you wonder just why the level of remuneration is set at this level. Granted, the ORFU and other professional rugby businesses are all in the business of attracting or retaining the best performers, but all this reveals is that the total number of franchises or professional rugby teams in this country is too high. That seems plain enough.

What is particularly worrying is that this is the business that the CST, the DCC and the ORC have all based their hopes on in being the main operating funder of the new ratepayer-funded rugby stadium.

While it has been clear to any interested observer that the ORFU have, in the past 4 years been losing money at the rate of close to a million dollars a year, it is not at all clear just how this failing business is going to be the saviour of the stadium. It is more than time for the ORFU, the DCC, and DVML to show us in clear unequivocal terms just how this is going to happen.

»

overreaching ourselves

Submitted by digger on Tue, 09/02/2010 - 9:04am.

I think the most significant comment is by Ron Palenski when he says how difficult it is to administer a sports team 'especially in a city the size of Dunedin'. This is the same argument that the council was told by consultants in the appendices of the CST Feasibility Report. We have grossly overreached ourselves. The 'dream on' rantings of the proponents of the stadium, where they have carried the gullible along with them, is now bearing rotten fruit.

»