Rugby unions post solid financial results

04 August 2015

Rugby unions post solid financial results

Deloitte State of the Unions report shows third consecutive annual surplus for ITM Cup rugby unions

The ITM Cup rugby unions have achieved a combined annual surplus for the third year in a row, according to the fourth edition of the Deloitte Sports Review “State of the Unions” report released today.

The report examines the annual financial accounts of the 14 semi-professional and amateur rugby unions competing in the ITM Cup. It shows a combined collective surplus of $1.2 million for the 2014 financial year (FY14). This result follows consecutive surpluses of $3.2 million and $0.5 million in 2013 and 2012 respectively, after a run of five successive years of losses between 2007 and 2011.

Deloitte partner Grant Jarrold says that a third year in a row of collective surpluses is an astonishing turnaround for the rugby unions.

“The overall performance in FY14 was a sound achievement generating the second largest collective surplus recorded. This excellent result was on the back of keeping tight control on expenditure and despite a slight drop in revenue,” he says.

The combined revenue earned by the 14 ITM Cup playing unions was $67.8 million for FY14, a $1.4 million (2.0%) decrease over the FY13 revenue results. Combined revenue has dropped $8.8 million (11.5%) in the past five years.

Total operating expenditure for FY14 was slightly up from the previous year, increasing by $0.2 million (0.3%) to $66.0 million. However, operating expenditure remains down from five years ago, dropping a total of $11.4 million (14.7%) since 2010.

“The positive trend of financial results demonstrates that the unions have settled into a pattern of controlling their expenses to achieve surpluses,” says Mr Jarrold.

“It is especially heartening to see that the unions’ have been able to keep operating costs at a manageable level while continuing to provide community level grass roots rugby with financial support.”

Collectively the unions invested $19.1 million in FY14, and a total of $103.5 million in the last five years, in improving facilities and the development of the game at the grassroots level.

“Keeping the health of the game at the grass roots level in good condition is fundamental to retaining support and growing the viability of the unions,” says Mr Jarrold.

Mr Jarrold added that Deloitte also analysed the accounts of the smaller amateur Heartland unions.

“These unions hold their own financially, confirming that they invest all that they earn back into the rugby community in the smaller provincial towns and the country,” he says.

“Overall, the financial control of New Zealand’s provincial rugby appears to be in good hands with prudent management and governance in place.”

“As the financial management of the unions continues to improve, a number of unions are now in a position to take advantage of the capital bases they have accumulated. They have opportunities to grow and diversify their revenue streams which may have previously proved difficult to fund,” concludes Mr Jarrold.

Other highlights from the Deloitte Sports Review State of the Unions report include:

• 15.2% of total FY14 revenue is from match related income, 68.7% is from grants & sponsorships, and 16.1% is from other revenues such as administration fees.

• Match related income has decreased by $0.6 million (5.5%) to $10.3 million in FY14, while revenue from grants & sponsorships has increased by $0.4 million (0.9%) to $46.7 million over the year. Over the past five years, both match related income and income from grants & sponsorships have decreased, down 31.1% and 8.8% respectively.

• Income from grants & sponsorship continues to be heavily reliant on contributions from New Zealand Rugby and grants from non-casino gaming trusts.

• The five provincial unions with Super Rugby franchises based in their home cities generated 48.3% of total revenues of all unions in FY14, a drop from previous years as the other unions begin to grow their revenue.

• The breakdown of total operating expenses in FY14 includes 47.1% for match related expenditure, 28.9% for growing the game expenditure and 24.0% for administrative expenses.

The full State of the Unions Deloitte Sports Review can be found at www.deloitte.com/nz/stateoftheunions.

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