It has been asked to repay a portion of the Covid wage subsidy payments the union received during the pandemic — and Otago is not alone.
The Ministry of Social Development is seeking to recover almost $3million from the country’s 14 major rugby provinces.
The New Zealand Herald reported the ministry had told the unions they must respond to the request by early next month, and that the ministry was determined to recover $2.9m of the $9.7m in wage subsidies that were effectively claimed by both New Zealand Rugby and the provinces.
Ministry spokesman George van Ooyen told the Herald the decision to seek partial repayment was "based on the eligibility criteria for the wage subsidy not being met in some instances".
"MSD is continuing to engage with NZR and the provincial unions as part of its normal recovery process."
It is unclear how big the bill is for each union.
Otago chief executive Richard Kinley told the Otago Daily Times the ORFU’s "maximum exposure" was $228,518.
The ORFU reported a profit of $956,793 in March 2023. But even with a healthy financial situation, a bill of that magnitude would hurt.
It would soak up a good portion of the $1m the ORFU got out of the Silver Lake deal.
Not all the other unions are in good shape financially, though. The Wellington Rugby Football Union is considering selling down its 50% share of the Hurricanes after it returned a massive loss of close to $1m in 2022.
Kinley confirmed the unions were fighting the demand from the MSD, arguing New Zealand Rugby had sought assurance on their behalf from the MSD before lodging the wage subsidy claims.
"Otago, along with the other NPC provincial unions, worked collaboratively and closely with both MSD and NZR when preparing and filing our wage subsidy claims during the Covid-19 pandemic in 2020," he said.
"All parties acted in good faith at that time, ensuring the provincial union’s applications met MSD’s wage subsidy criteria.
"MSD have subsequently reviewed all applications that were made, and have now formally requested repayment of wage subsidies relating to certain player wages.
"Otago Rugby and the other affected provincial unions have communicated openly and transparently with MSD, providing all requested information as part of the review process.
"A final outcome is still to be reached."
Rugby Southland chief executive Steve Mitchell could not be reached for comment but told The Southland Tribune it could repay the debt, which is understood to be about $80,000.
"From Rugby Southland’s perspective, we followed all of the advice that was given, and that advice was not correct," Mitchell said.
"As soon as we were aware of the debt that may be incurred, we have a contingency plan in place.
"But our stance would still be that we took the right advice from the right people and if it was imposed on us, we would be completely disappointed."
