Rugby unions’ financial results falter
Deloitte State of the Unions report shows collective loss in FY15 ending run of three years of collective surpluses
After three straight years of achieving combined surpluses, the Mitre 10 Cup rugby unions have combined to post a substantial deficit for the 2015 financial year (FY15). This according to the fifth 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 loss of $1.4 million for FY15. The result is the first deficit from the consolidated unions since 2011 and is down $2.6 million from the FY14 combined surplus of $1.2 million.
Deloitte partner Grant Jarrold says an emerging trend of diminishing revenue with little room for achieving cost savings has had an impact on the financial landscape of the unions.
“While the loss is not as significant as the losses experienced in each of the years from 2007 to 2010 it is still a concern and highlights a serious situation for the rugby unions,” says Mr Jarrold.
“As many other not-for-profit organisations will attest, there comes a point where there are no more notches on the belt to tighten and other avenues must be sought to resolve the situation facing them.”
The combined revenue earned by the 14 Mitre 10 Cup playing unions was $63.8 million for FY15, a $3.6 million (5.4%) decrease over the FY14 revenue results and the lowest total revenue reported since the initial State of the Unions report.
Total operating expenditure for FY15 was slightly down from the previous year, decreasing by $0.9 million (1.3%) to $65.1 million. Despite a slight rise in operating expenditure last year, the longer-term trend shows it has dropped a total of $3.0 million (4.4%) over the past five years.
Total administrative expenses increased by $1.2 million (7.3%) to $17.0 million in FY15 while the amount invested in growing the community game has decreased by $0.3 million.
“Despite less than stellar financial results for FY15, the situation is not a dire as it may seem at first glance,” says Mr Jarrold.
“Nine of the 14 unions achieved a surplus and 7 of the 14 are sitting in a positive net working capital position in FY15. While the five unions that are based in cities home to Investec Super Rugby franchises once again generated the lion’s share of revenue (46.4% of total revenue) the other unions have collectively increased their revenue by 3.0% over the past 5 years. In addition, over the last five years, the unions have collectively spent $97.9 million on improving facilities and the development of the game at the grassroots level,” he adds.
“Overall sound management of the unions’ balance sheets in previous years has insured that the financial positions remain strong for most unions in FY15.”
“Despite taking a step backwards in FY15, unions are in better shape now than they were several years ago. However, continued pressure on traditional sources of revenue means they are more reliant on New Zealand Rugby grants than before. To help themselves, the unions could explore more innovative ways to increase and diversify revenue, as well as find new ways to grow support for their representative teams,” concludes Mr Jarrold.
Other highlights from the Deloitte Sports Review State of the Unions report include:
- Player registration numbers for the Mitre 10 Cup unions have been gradually trending upwards, having grown by 4.4% since 2010. The number of female player registrations has increased 156.9% over the same period and females now make up 12.4% of the registered rugby players in the Mitre 10 Cup unions compared to 8.3% in 2010.
- For the second year the State of the Unions report looks at the financial performance of the twelve Heartland Championship unions. They have continued their run of small surpluses in FY15, the unions’ collective fifth consecutive positive result, achieving a combined surplus of $159,000; an increase of $125,000 from FY14 with nine of the twelve achieving a surplus.
- Social media continues to develop as a key channel for unions to engage with their supporters. Facebook leads the way as the most popular platform but unions use of Instagram has seen an increase in followers of 254.4% in FY15, increasing from 16,500 to over 58,000 followers during the year.
The full State of the Unions Deloitte Sports Review can be found at www.deloitte.com/nz/stateoftheunions.