NZRU FINANCIAL RESULTS

NZRU announces 2009 financial results
The New Zealand Rugby Union has announced its financial results for 2009, posting a record loss of $15.9 million attributed in part to the impact of the global recession on income, and accounting for the investments in hosting Rugby World Cup 2011.
The result was announced at the NZRU Annual General Meeting held in Wellington today.
The loss follows a modest profit of $366,000 in 2008.
NZRU Chief Executive Steve Tew said the result was disappointing for the game.
“Of the loss, $9.5 million is on our operating budget, mainly from a shortfall in income on All Blacks Test matches at home and abroad, reduced interest income and increased expenditure on medical support and players due to a higher than normal number of injuries incurred.
“In relation to RWC 2011, we have accounted for our one-third share of the operating losses incurred by Rugby New Zealand 2011 Limited which have increased as expected as the tournament nears, and some unrealised foreign exchange losses that will be recovered in future periods based on the specific arrangements we have in place.”
Mr Tew said: “While we are fortunate that our financial position is very strong, the game cannot continue to spend more than it earns and this result, on top of some worrying Provincial Union results, sends a very clear message. Consequently, we have made revenue growth and cost management a priority for 2010.
Mr Tew also noted that the NZRU’s accumulated reserves and reserves policy allowed the organisation to respond to the challenges faced in 2009.
“We have often said that our reserves were accumulated to protect rugby in times of difficulty and there is no doubt that the combination of events in 2009 created financial stress for the whole game.
“We are fortunate that we were able to utilise our reserves to continue to invest in core areas of the game like community rugby development and retaining players even as we were forced to make difficult spending choices in other areas.”
The ongoing investment in rugby included core grants to Provincial Unions of $8.3 million and further distributions to Provincial Unions and Franchises of an additional $8.1 million in tagged funding, resulting in a total distribution of $16.4 million.
In addition to the operating result and RWC 2011 treatment, the financial performance was also impacted by exchange rates and reduced interest income on offshore funds which were also attributable, in part, to the ongoing economic downturn.
“We hold a significant amount of reserves in British pounds against the payment we will make to the IRB for Rugby World Cup 2011 and in line with accounting requirements these funds have to be re-valued at the end of each financial year.
“We have specific arrangements in place to hedge the foreign exchange risk on this payment, however frustratingly due to accounting requirements the gain on this arrangement to offset the unrealised foreign exchange losses cannot be recognised until 2011.
“So any fall in the pound has a direct impact on our year-end result as we saw in 2008 and again last year,” Mr Tew said.
NZRU Priorities for 2010
The NZRU also announced today the key priorities for 2010. The priorities are:
1. Implementing the Community Rugby Plan;
2. Ensuring the All Blacks are a winning team;
3. Driving revenue generation, cost management and sustainability throughout the game;
4. Implementing the 2011 RWC legacy programme to cement the benefits of hosting Rugby World Cup;
5. Delivering outstanding competitions for fans, players and commercial partners; and
6. Building stronger relationships with our partners and stakeholders.