Analysis

Converting opportunities

State of the Unions: Deloitte sports review

Change is constant, and with evolving societal demands, keeping up with the play is vital for the nation’s favourite game to remain viable.

A financial review of the country’s leading rugby unions reveals that strengthening the financial position for the benefit of grassroots rugby has been achieved in a challenging environment of declining revenue.

Welcome to the 8th edition of the Deloitte Sports Review, a review of the 14 semi-professional and amateur rugby unions competing in New Zealand’s premier provincial rugby competition: the Mitre 10 Cup.

Our annual review of the accounts of the 14 Mitre 10 Cup unions finds that the collective unions’ administrators have maintained good financial management of their entities by reducing their expenditure
to correspond with the decreased revenue they received. This has enabled the unions to post another healthy surplus in FY18 and continue to improve the overall financial health of the game in New Zealand. This year’s collective surplus was $1.2m and has built the collective financial base of the unions to its largest equity position in the past 12 years.

After the high point of FY17, due in most part to the effect of the British and Irish Lions tour, it was going to be a difficult task for administrators to keep up and post a similar result in FY18. However,
the administrators have turned around and posted their fourth largest surplus since 2007, with Bay of Plenty and Tasman buoying the collective result. Bay of Plenty were the top performer for FY18 on the back of a significant increase in revenue, with Tasman also notably increasing their revenue through test match revenue received for hosting the All Blacks and Argentina in Nelson. The Mitre 10 Cup unions are still reliant on the grants provided by NZR to remain viable.

As the unions enter the FY19 season, prudent financial management is the message for administrators so they can keep up with the play and remain financially stable. Revenue levels may decrease as match related income is expected to fall due to the competing interest between the Mitre 10 Cup and the Rugby World Cup throughout September and October. Some respite in revenue may come from increased grants from NZR as these grants have been trending upwards in recent years, however the administrators’ cannot rely on an increase to maintain a surplus. Consequently, union management may have to make tough decisions between keeping up with the play and building their financial base.