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Cup boosts NZRU returns

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Sportal.co.nz     13 Apr 2012     Getty Images

Chief executive Steve Tew announced in Auckland on Thursday that the NZRU had achieved a $9.6million bottom line profit.

This was possible due to the foreign exchange gain of $13.4million achieved on the initial investment which was hedged from the time the tournament was awarded to New Zealand through to the post-tournament accounting.

The final reconciliation showed the $13.4million gain which when including the loss sustained by Rugby World Cup New Zealand 2011 Ltd (RWC2011) of $700,000 and the operating loss sustained by the NZRU of $3.1million resulted in the final figure of $9.6million.

"The foreign exchange gain reflected the reconciliation between agreed payments from tournament organisers to the NZRU and the value of the sterling held to meet the NZRU's share of the tournament host fee," he said.

Tew said the financial markets of the moment were a 'tough environment to be operating in' but he said the people who ran RWC2011 were deserving of considerable praise.

Tew added that the $3million operating loss was a concern if repeated in the future and would eat into the NZRU reserves which would stand at $45million by the end of 2012.

However, in an effort to understand where the reserves should be in the future a review was underway to determine that. It would be based on the amount it was felt would be necessary if the union was to face a major catastrophe.

Tew added that with the success of the World Cup, the NZRU expected long term benefits from the $10million investment it had made in Eden Park's redevelopment, an agreement which runs for 20 years and which sees the first and third ranked Tests on New Zealand's international home schedule played at the ground over that period.

The NZRU was also aware of the growing need to be represented in the Auckland market and had set up an office in the country's biggest city.

"We are budgeting to break even in 2012. In recent years we have run operating losses which had been financed from our strong reserve position.

"While this is not sustainable in the long term, it has been critical in allowing us to maintain our investment in the game and to assist provincial unions in these difficult times.

"Like all businesses we are working hard to contain costs, while also exploring opportunities to grow revenue. The relocation of some key commercial staff to an Auckland office is one part of that strategy, giving us a cost effective way of working more closely with existing sponsors and partners and to better develop new opportunities," Tew said.

The NZRU was also continuing to fund provincial unions and the latest provincial union player payment figures showed the message was getting through.

"Overall player payments, across the 14 ITM Cup unions, declined by $1.73million, or more than eight percent. We expect overall player payments to fall again this year," he said.

A new collective agreement with the players' association was being negotiated this year.