Remembering rugby's debts

The Otago Rugby Football Union surpluses are to be welcomed, albeit with caveats, words of caution and a recollection of past pain.

To record a $406,800 profit only two years after facing going out of business because of debts of more than $2 million is as good as any union stalwart might have hoped.

Even if the union was boosted last season by the crowd of 18,000 at its Ranfurly Shield defence and by holding an ITM CUp semifinal, the key to the turnaround itself has been in controlling costs.

The union lived for several years well beyond its means and got itself into an appalling position. Not only did the Carisbrook millstone weigh it down, but it paid grossly inflated salaries to players, ran too big a staff and failed to keep tight controls on expenditure.

This plight was allowed to drift and the union became deeper and deeper in debt.

Sometimes a crisis is necessary to force change. That hit in 2012 with the union on the brink of liquidation.

It was saved only when the Dunedin City Council agreed to write off a debt of more than $400,000 (understandably with great reluctance), Dunedin Venues Management Ltd wrote off $80,000 and the New Zealand Rugby Union lent the ORFU $500,000.

An agreement was reached with the Bank of New Zealand over a $1.2 million loan. Player wages were slashed by $300,000 and All Black tests confirmed for Forsyth Barr Stadium.

A debt recovery plan was put in place for local creditors and $270,000 loaned by the national union was turned into a grant.

At the time, this process was described editorially in this newspaper as ''swallowing dead rats''.

The city council, which was not blameless in its part in allowing the situation to deteriorate so badly, was forced to make the best of a poor situation as it at least secured the rugby's team medium-term residency at the stadium.

It is worth remembering, too, other creditors ended up out of pocket.

Thanks to contributions from businesses and the public about $250,000 was raised, with a similar amount donated by union board members Laurie Mains, Sir Eion Edgar and John Faulks.

This $500,000 went towards meeting the $687,000 owed to 180 small creditors. Those owed up to $5000 received all their money in the end. Those owed more than $5000 received that amount and a proportion of the rest.

The governance structure of the rugby union was revamped and new people are in charge. Nonetheless, they and the rugby community should still remain grateful for the help the sport received.

They have been privileged in the support forthcoming, and must never exhibit the arrogance that rugby was often prone to display.

Rugby, while far from being everyone's interest, is one activity which binds Otago across its varied communities and geographic distances.

This was exemplified last year when the province revelled in the distraction of a week of Ranfurly Shield fever.

The excitement and success was all the more treasured after the woes and grim prognosis in early 2012.

There are arguments that, having made the healthy profit this year, the union should now look at paying back some of its dishonoured debts, notably to the ratepayers of Dunedin.

That would be welcome. Realistically though, the current board members see their duty as securing the future of rugby and, prudently, now want some money in the bank.

There could well also be difficulties in deciding repayment priorities.

One of the positives to arise from the debacle has been a return to provincial rugby like it once was.

Local players are more prominent and, provincially, rugby runs more as a combination of amateur and semi-professional. Provincial rugby has been forced to operate more like other sports.

Otago rugby can pay back its community by maintaining a tight ship while playing with heart, spirit and pride.

So far so good. From the dark days of two years ago, Otago rugby has got on with it and performed both on the field and administratively with credit.

 

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