New Zealand Rugby's fight for survival

Liam Napier/NZ Herald

New Zealand Rugby chief executive Mark Robinson says everyone must share the pain of the coronavirus crisis as he confronts potential revenue losses in excess of $100 million and issues sweeping 40 per cent wage cuts across the organisation for the next three months.

No one in the sporting sphere will be spared the fallout as the global pandemic freezes revenue streams required to keep pay cycles spinning.

In the rugby bubble alone Australia yesterday stood down 75 per cent of its staff; Ireland have deferred payments up to 50 per cent, Wales cut wages by a quarter, while England’s RFU, the world’s richest union, projects a $100 million revenue loss over the next 18 months.

At the helm of New Zealand Rugby, Robinson is charged with tackling this unprecedented shutdown.

In a frank interview with the Herald he details the scope of rugby’s survival battle.

“The overall impact on revenue is significant. The absolute worst case scenario, if we weren’t able to get on the field this year, there is potential risk of north of $100 million in revenue at stake,” Robinson said.

Rugby Australia boss Raelene Castle has refused to rule out cutting another Super Rugby team:

“When we’ve looked at scenarios around that we’ve realised we have to act very quickly in terms of getting costs under control. Preserving cash is absolutely critical.”

Robinson confirmed wage cuts included All Blacks management, Super Rugby coaches and his salary. He added all staff have waved bonuses.

“We’ve gone to a 20 per cent cut in staff salaries across the spectrum – from the board through to all staff in all areas. It’s been very consistent.

“We’ve been very fortunate with the government support subsidy that we’ve been able to still pay people at four days per week. We’re very grateful for that initiative.

“We’ve done everything we can to support our people. New Zealand rugby has a unique culture. There’s a huge amount of people working in areas they’re really passionate about so it’s a challenging process to work through.”

New Zealand Rugby has guaranteed provincial union payments for April but there are no promises beyond that.

Other budgets and activities are frozen. These measures, which aim to save $20 million, include cancelling this year’s Heartland Championship, national sevens tournaments and all representative rugby below the elite provincial level, the Mitre 10 and Farah Palmer Cup.

“When you look at that potential loss of revenue and model that cost-saving activity, we’re still looking at significant scenarios of deficits but we’ve done everything we can at this stage to preserve cash and get through this as best we can.”

Players throughout the rugby world have taken pay cuts. New Zealand athletes will be no different. By next week, all parties are expected to agree a figure, which has been around 25 per cent in other places such as England.

“We’re working with the players quite closely and we’d like to think some time in the near future we can get something finalised in terms of their role. They’ve been really understanding.

Rugby Australia will stand down 75 percent of their staff in what they have called "the toughest decision in the game's history".https://t.co/zgPep31oAB

— RugbyPass (@RugbyPass) March 31, 2020

“We’ve had leads from Dane [Coles] and Beaudy who have been very supportive publicly in terms of their acknowledgement of how critical it is for New Zealand rugby to survive. They fully understand the gravity of the situation.”

Given the uncertainty surrounding any sporting resumption, New Zealand Rugby’s initial three-month pay cuts will be regularly reviewed and Robinson indicated some staff may lose their jobs.

“The scale of the challenge is great so if we’re not recognising things quickly that could impact on the business very seriously.

“We are looking at the structure of the organisation now essentially but we’ll take a bit of time to get that right and understand what the future might look like. There’s certainly the possibility of redundancies in time, but we’ll just have to work through that.”

The longer lockdowns persist, the further New Zealand Rugby will be forced to use cash reserves which are thought to sit between $70 to $90 million.

“We will have to dip into them. We’re still working through exactly what that means and looks like.

“We’ve acknowledged to the board and stakeholders that reserves are there for times of crisis and we’ll be utilising them but we also want to make sure when we get through this we’re in a position that’s positive enough to rebound quickly. That’s part of the balancing act in all this.”

From a global perspective, World Rugby is being asked to prevent unions folding. It also has a crucial role to play in eventually reshaping the test calendar, with the July window unlikely to go ahead.

World Rugby forecast revenue from last year’s World Cup in Japan to exceed $700 million. Profit is expected to register approximately half that figure. Those funds will be needed now more than ever.

USA Rugby is the first union to collapse, filing for chapter 11 bankruptcy due to “insurmountable financial constraints” – though many of their financial issues not related to the coronavirus outbreak.

It may have become widespread in Europe, but for the Southern Hemisphere-bred folks like Matt Giteau, this little convention is still a bit of a mystery… @giteau_rugby #rugbyhttps://t.co/iTJAmKhL0L

— Tom Vinicombe (@TomVinicombe) March 31, 2020

While Robinson’s focus is squarely on New Zealand’s survival he joined a conference call with national union bosses early this week where mutual challenges were outlined to World Rugby.

The scale of potential World Rugby bailout packages hinges on how much, if any, international rugby can be played in the remainder of the year.

“They’ll come back with a plan as to how they might help. We’ve got no indication as to how that might look at the moment but they’re very engaged and they’re being very positive at present.

“They’ll be working through the scenarios and we’ll find out more as we work through it with them.”

Despite the doomsday crisis facing all sports, Robinson remains confident New Zealand Rugby will emerge out the other side.

“We’ve got to make it work and we’re positive we can. Everyone has to share in the pain of this. There’s no way in a small ecosystem like New Zealand rugby that we can’t have everyone pitching in and being part of the solution.

“These situations bring people together to work for the greater good. We’ve found there’s been a huge amount of support to try and understand what people can do to help.

“Whether it be Super Rugby or Mitre 10, Heartland or the players, our commercial partners, everyone is pulling together and I imagine that’s the same right across a range of different sectors in New Zealand business and communities.

“That’s the great thing about Kiwis – we’re used to adversity. We’re a small nation that needs to draw on each other and we’ll get through it.”

This article first appeared on nzherald.co.nz and is republished with permission.