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ANALYSIS: The New Zealand Rugby books for 2019 tell the story of an organization that is indebted to some prudent decisions in the past but needs to look again at its model to ensure a future.
Despite all the talk of robust existing cash reserves, the reality is that NZ Rugby has been stepping on water for a decade (and more).
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Tumua Manu evades Pita Gus Sowakula during the Taranaki-Auckland match last year. Auckland received $ 2.8 million from NZ Rugby.
In 2010, its financial statements revealed that the total equity was $ 88.9 million. On Thursday we saw that the 2019 total was $ 86.7 million.
Covid-19 is going to take a big chunk out of that rainy day bottom, potentially tens of millions, and if NZ Rugby ever wants to rebuild it to withstand another event like the coronavirus, it will have to change its model.
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* Nick Farr-Jones urges Rugby Australia to copy New Zealand’s system
* New Zealand Rugby weighs in if a $ 15 million lump sum is due while Covid-19 bites down hard
There are two ways to go.
Either increase revenue (this is why NZ Rugby was so desperate for the money tree that he believed it represented the failed ‘Championship of Nations’), or reduce costs.
Good luck increasing revenues in the post-Covid 19 climate. It will be a challenge because the economic damage caused by the coronavirus will persist long after the public health emergency ends.
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Bay of Plenty was one of the Miter 10 Cup success stories last year and received $ 2.1 million from NZ Rugby.
And, if you drill down into the results released Thursday, you can see that NZ Rugby’s trade arm is already firing – generated $ 73 million in sponsorship and licenses in 2019, bigger than the money issued ($ 57.4 million) and up to $ 5 million from a year earlier A slap on the back for that team.
So, you look at the costs.
New Zealand allocated $ 33 million to provincial unions in 2019.
The Miter 10 Cup unions received $ 27.9m, with Auckland getting the most ($ 2.79m) and Southland the least ($ 1.44m – see full list below). The Heartland unions received a total of $ 5.3 million.
If consultants had access to these figures (and McKinsey, the consultants that NZ Rugby has been working with, presumably they did) would be like red meat for them.
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New Zealand Rugby President Brent Impey prefers Super Rugby instead of going back to the NPC days.
And it’s not necessarily just the size of that $ 33 million figure that consultants would look at, but whether there is any duplication at the provincial level with other parts of the New Zealand rugby ‘ecosystem’ (for example, at the Super Rugby level) .
To be clear: this is not a recommendation, but the result of hard-earned experience working in the media in Australia and New Zealand in the past 15 years.
Our industry has been in a state of constant state interruption during that period and when consultants came for us, and they did, they went after the parts that we as experts consider essential (goodbye dear sub-editors).
And also to make clear NZ Rugby’s commitment to provincial rugby, the $ 33 million allocated last year represents 37% of its operating activity expenses. That is a significant amount.
However, these are clearly challenging times that put pressure on the entire business model.
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Player payments are a big expense for NZ Rugby, but they are set as a fixed percentage of revenue.
One solution would be to say, “Let’s cut player salaries.”
It is not so simple. Under its collective employment agreement with the NZRPA, NZ Rugby reserves approximately 36.5 percent of “player-generated revenue” for players.
NZ Rugby had total revenue of $ 187 million in 2019, most of it considered ‘player generated’, so the pot was considerable.
It is likely to decline in 2020, but NZ Rugby knows it can’t be too hard on wages, certainly at the highest level, or the next flight to Tokyo will be taken by All Blacks.
As a result, provincial unions are in a difficult situation.
They know that NZ Rugby has hitched their car to Super Rugby instead of a return to the NPC and that their competition has been neglected for an age.
They could also point to the $ 94 million in ’employee benefits’ that NZ Rugby paid in 2019 and ask if the national body also owes a cut.
But equally, they might be looking forward to more challenges ahead for provincial rugby.
NZ Rugby awards to provincial unions in 2019
Auckland – $ 2.79m
Bay of Plenty – $ 2.12m
Canterbury – $ 2.54m
Manukau Counties – $ 2.06 million
Hawke’s Bay – $ 1.82m
Manawatu – $ 1.66m
North Harbor – $ 1.91m
Northland – $ 1.96m
Otago – $ 1.83m
Southland – $ 1.44m
Taranaki – $ 1.83m
Tasman – $ 1.75m
Waikato – $ 2.17m
Wellington – $ 2.06 million
