Rugby: NZRU posts $2.9 million profit

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 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.

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.

"It's very satisfying to have strengthened our overall financial position, which positions New Zealand rugby well for future challenges and opportunities," Chief Executive Steve Tew said in a statement.

"Looking forward, we will again review our cash reserves position once we have completed the SANZAR broadcast renegotiation which will cover the period 2016 to 2020."

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.

New Zealand rugby has struggled in recent years as the global financial crisis squeezed sponsorship markets, while the strong New Zealand dollar affected sponsorship revenues, with many of the agreements paid in euros or US dollars.

The 2005 British and Irish Lions tour helped generate an annual profit of more than $23 million and boosted the cash reserves to more than $81 million.

Those reserves have slowly been eroded in tough conditions over the last nine years, with the NZRU having to guarantee part of any operational losses from hosting the 2011 World Cup.

The NZRU's eventual share of the $31.3 million loss was about $10 million.

Tew said a new sponsorship agreement with multinational insurer AIG and the extension of long-standing agreements with other sponsors had helped the balance sheet.

The increased revenue had helped the governing body increase their disbursements to the semi-professional provincial level of the game, which helped turn around their financial positions.

New Zealand's provincial unions have struggled with the move to professional rugby with the NZRU providing periodic 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.

"This improvement is a tribute to the hard work unions have put in to contain costs and safeguard their commercial revenue in what has been a very challenging economic climate now for some years," Tew added.

"Obviously there is no room for complacency.

"We must all continue to keep a close eye on costs and work hard to retain the support of fans and our commercial partners as we strive together to keep the game strong."

 

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