The New Zealand Rugby Union has posted a NZ$1.9 (£900,000) million loss for 2018 and is predicted to be facing a massive NZ$30m (£15.5m) cumulative deficit over the next five years raising more concerns over the financial health of the sport.
While the 2018 loss was $1.4m better than the $3.3m it had budgeted for, New Zealand media reported that Colin Groves – the Waikato Rugby Union chairman – used his speech at Wednesday’s annual general meeting to highlight that NZR has a projected $30m deficit coming over the next five years.
In 2018, there was a record $63m (£32m) on player payments, $31m (£16m) spent on “game development” and $8m(£4m) invested solely in the women’s game.
NZR chief executive Steve Tew insisted it was something they expected to be able to overcome and said: “We prepare long-term financial projections which we share with the provincial unions on a regular basis and if nothing changes we will have a deficit over that period, but as we’ve shown in the last 10 years we’ve worked very hard to fill those gaps.
“Part of it is driven by foreign exchange gains. When we signed AIG and Adidas [sponsorships] and some of the broadcasting contracts we were able to secure some long-term foreign exchange positions, which have been very beneficial.
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“We’ve been spending that income, but that income is not going to be repeated because the dollar is in a different position and the next time we sign long-term contracts we may not get those gains. That’s money we have to replace or stop spending.”
NZR earned $189m (£98m)in 2018, which was up 17 percent from 2016, but significantly down from the $257m (£132m)the 2017 Lions tour helped generate. The increase in revenue from 2016 to 2018 was mainly driven by the increase in commercial sponsorship and licensing income to $68m(£35m).
Tew was adamant 2018’s result was a positive sign and added: “We’re very pleased with our result. As you know, 2017 was a record profit because of the British and Irish Lions, and we have to effectively spread that out over a period of time. So we are deliberately budgeting a loss in 2019, as we did in 2018. We’re spending money that we’ve earned one year that has to last ideally for 12 [years], but it won’t.”
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