Thursday 12th April 2012
|Text too small?|
The New Zealand Rugby Union reported a slightly smaller operating loss than expected in the latest financial year after keeping a lid on Rugby World Cup costs, and it’s expecting to break even in 2012.
The sports administrator made an operating loss of $3.1 million in the 12 months ended Dec. 31, smaller than the $3.6 million budgeted for and in line with the $3 million loss in 2010.
When unrealised exchange rate gains of $13.4 million are included, the NZRU’s operating loss turned to a net profit of $9.6 million, turning around a bottom-line loss of $9.4 million a year earlier, which was caused largely by unrealised exchange rate losses.
Net results since 2005 have been affected by foreign exchange gyrations caused by the fact the NZRU had to pay a 55 million pound hosting fee to the International Rugby Board for the RWC hosting rights, and then hedged the foreign exchange exposure created by that fee until after the cup was held.
It was only 90 days after the RWC tournament was completed that a final wash-up was undertaken, in which the NZRU booked its $700,000 share of the losses from the tournament. Deducting that from the hedging gains gave the union an official gain on hosting the RWC of $12.4 million.
“It’s pleasing that the costs of our investment in RWC 2011 have come out as expected,” chairman Mike Eagle said in a statement. “We have managed to contain our tournament costs to what we forecast in 2005, as well as mitigating the foreign exchange risks.”
Chief executive Steve Tew said the rugby union will continue to face pressure on its revenue streams due to a strong kiwi dollar and tough economic conditions, and is budgeting to break even in 2012.
“In recent years we have run operating losses which have been financed from our strong reserve position,” Tew said. “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.”
The union had cash reserves of $25.3 million as at Dec. 31, which are expected to rise to $45 million by the end of this year.
The operating loss is calculated after the $18.6 million in funding channelled to the provincial unions and Super Rugby franchises, a similar level to 2010, and includes a $148,000 write-off on amounts owed to the national body by the Otago Rugby Union, which was the subject of a rescue package last month.
“We are mindful of the challenges facing unions and our support has helped ease some of the pressure they face,” Tew said. “While some are clearly weathering tougher conditions than others, it is heartening to see a profit turnaround for a number of unions.”
More details will be released at the NZRU’s annual meeting on May24.
No comments yet
NZ dollar mixed after strong Australian employment data
Energy efficiency key to lowering cost of renewables push - EECA
Paper recycling costs rising 35% as export markets collapse
First Union leading rivals for biggest average pay claims, says bargaining firm
Fonterra to go coal-free 11 years ahead of schedule
Huawei committed to NZ even if govt doesn’t come around on spy fears
Mercury points to peaking gains as FY production drops 10%
Asset Plus sells Heinz Watties distribution centre for $29.1 mln
18th July 2019 Morning Report
COMMENT: RBNZ's key political omission in its bank capital proposals