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Rugby unions post collective surplus despite environment

Published: Fri 2 Aug 2019 08:48 AM
Christchurch, 02 August 2019 — After a record setting performance in the previous financial year, and despite a challenging environment of declining revenue, the Mitre 10 Cup rugby unions have posted another healthy collective surplus for the 2018 financial year (FY18). This according to the 8th 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 Mitre 10 Cup. It shows a combined collective surplus of $1.2 million for FY18. The result is down on the previous period’s high water mark of $3.8 million achieved in FY17 on the back of the British and Irish Lions tour to New Zealand.
But Deloitte partner Grant Jarrold says the decrease in collective surplus was expected due to no large international events happening in FY18.
“It was always going to be a difficult task for administrators to post a similar result to FY17’s record collective surplus. But the unions’ administrators have maintained sound financial management by reducing expenditure to correspond with decreased revenue.”
In FY18, total revenue was down 6.0 percent to $74.5 million, down from $79.2 million in FY17. The largest revenue earner for FY18 was from ‘Grants & Sponsorship’, which accounted for 77.6 percent of total revenue.
Total operating expenses decreased by $2.4 million (3.2 percent) to $72.0 million in FY18, led by a decrease in ‘Administration’ expenses of $4.8 million (24.8 percent) during the period.
Ten of the 14 unions achieved a surplus in FY18, down from 11 in FY17.
In FY18, the group of unions that are based in the same city as a Super Rugby franchise accounted for only 45.0 percent of total revenue. This is the lowest percentage contribution from those five unions in the last decade.
Looking ahead, Mr Jarrold says that continued prudent financial management will remain paramount for Mitre 10 Cup union administrators in FY19.
“Revenue levels may decrease as match related income is expected to fall due to the competing interests between the Mitre 10 Cup and the Rugby World Cup throughout September and October,” he says.
Other highlights from the State of the Unions report include:
• For the fifth year, the report looked at the financial performance of the Heartland Championship unions. They continued their trend of surpluses, posting a collective surplus of $410,000 for FY18, slightly down from FY17’s collective surplus of $473,000.
• New Zealand Rugby (NZR) reported a net loss for FY18 of $17.3 million, a decrease from their FY17 surplus of $29.9 million. However, their $189.5 million in revenue posted in FY18 was the second largest revenue they have ever reported. These results come after the significant effect that the British and Irish Lions tour had on NZR’s financials in FY17.
• For the Mitre 10 Cup unions, the number of player registrations grew collectively by 1,145 (0.9 percent) to reach total player numbers of 132,895. The greatest increase in player numbers was in the senior grades with registrations increasing by over 2,000, an increase of 10.0 percent from 2017 that has restored playing numbers in this grade to 2012 levels. There was growth in both male (8.7 percent increase to 21,504) and female (28.1 percent increase to 1,832) player registrations in this age group.
• Social media continues to develop as a key channel for unions to engage with their supporters. Combined Facebook followers increased 3.6 percent to 520,604, Twitter followers grew by 4.2 percent and Instagram saw the greatest increase in both actual numbers and percentage terms as the unions’ collective followers grew by 41,165 (38.3 percent) over the year.
• Continuing to increase the focus on diversity and inclusion is important for the unions going forward. It should be a critical focus for any organisation seeking to survive in the 21st century, but particularly for an organisation that canvasses as diverse a range of ages, regions and backgrounds as rugby does. Attracting a more diverse employee, volunteer and player base, particularly in leadership, management or governance roles, will help rugby unions better understand, predict and support an increasingly diverse group of sponsors and fans.
“Financially, the combined balance sheet of NZR, the Mitre 10 Cup unions and the Heartland unions show an encouraging trend of increasing equity. Improving equity in itself enables administrators to consider new ways of investing in the game, in community initiatives and delivering high-performance programmes,” says Mr Jarrold
“But change is constant, and with evolving societal demands, keeping up with the play is vital for the future of the nation’s favourite game,” he concludes.
The full State of the Unions report, including summaries of the consolidated financial performance and financial position results for the last five years, as well as individual union accounts for the last two years, can be found at www.deloitte.com/nz/state-of-the-unions.

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