Rugby in New Zealand is living beyond its means and must learn to budget accordingly, the New Zealand Rugby Union said as it announced a $9.4 million loss for 2010 on Thursday.The loss takes into account a $6.4 million disbursement to cover part of its share of a projected operating loss of about $40 million for the rugby World Cup later this year.
The figure was an improvement on the $15.9 million loss it posted in 2009.
"Rugby as a sport has been living beyond its means for too long," NZRU Chairman Mike Eagle said.
"It is incumbent on us to ensure that the rugby organisations we are responsible for do not extend themselves beyond their ability to sustain and support themselves."
The NZRU provided financial assistance to a number of provincial unions, as well as Super rugby franchises the Otago Highlanders and Waikato Chiefs in 2010, and also took on a greater share of provincial contracts for top players under a new collective bargaining agreement.
Those payments, of about $2 million in salary costs for All Blacks and higher-earning provincial players that had been assumed by the NZRU, and the grants to the Super rugby franchises, had accounted for a large portion of the $3 million operating deficit.
"It is now urgent that all of our rugby organisations take steps to safeguard the future and ensure their sustainability by managing costs and revenue appropriately," he added.
"We must also take a conservative approach to team and player costs to minimise the risk and potential damage that the current financial crises can do to our game."
NZRU Chief Executive Steve Tew said the loss had been expected and met budget.
"Obviously, we would prefer to at least be achieving break-even," Tew said.
"But in the current context the 2010 result was satisfactory in that we came in under our operating budget while at the same time provided additional financial support to provincial unions."
The NZRU, who still hold cash reserves of just under $36 million, expected to return to profit this year because of a successful hedging strategy that was used to cover its portion of the losses on the operating costs of the World Cup.
"We will see last year's deficit reversed in the 2011 year as the NZRU is able to recognise the gains made on our hedging arrangements that were put in place to cover our commitments to the IRB for hosting the (World Cup) tournament," Tew said.
The figure was an improvement on the $15.9 million loss it posted in 2009.
"Rugby as a sport has been living beyond its means for too long," NZRU Chairman Mike Eagle said.
"It is incumbent on us to ensure that the rugby organisations we are responsible for do not extend themselves beyond their ability to sustain and support themselves."
The NZRU provided financial assistance to a number of provincial unions, as well as Super rugby franchises the Otago Highlanders and Waikato Chiefs in 2010, and also took on a greater share of provincial contracts for top players under a new collective bargaining agreement.
Those payments, of about $2 million in salary costs for All Blacks and higher-earning provincial players that had been assumed by the NZRU, and the grants to the Super rugby franchises, had accounted for a large portion of the $3 million operating deficit.
"It is now urgent that all of our rugby organisations take steps to safeguard the future and ensure their sustainability by managing costs and revenue appropriately," he added.
"We must also take a conservative approach to team and player costs to minimise the risk and potential damage that the current financial crises can do to our game."
NZRU Chief Executive Steve Tew said the loss had been expected and met budget.
"Obviously, we would prefer to at least be achieving break-even," Tew said.
"But in the current context the 2010 result was satisfactory in that we came in under our operating budget while at the same time provided additional financial support to provincial unions."
The NZRU, who still hold cash reserves of just under $36 million, expected to return to profit this year because of a successful hedging strategy that was used to cover its portion of the losses on the operating costs of the World Cup.
"We will see last year's deficit reversed in the 2011 year as the NZRU is able to recognise the gains made on our hedging arrangements that were put in place to cover our commitments to the IRB for hosting the (World Cup) tournament," Tew said.
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