Rugby: Union can now focus on rugby

Richard Reid
Richard Reid
The Otago Rugby Football Union has recorded a cash loss of $50,000, and claims it is now a "lean and mean" business.

•  Sales of Highlanders seasons tickets up 150%

With one-off, non-recurring depreciation and property realisation costs, the union's overall result for the last financial year was a loss of $634,871.

But chairman Wayne Graham said $584,329 of that was non-cash.

He stressed the union was not in the same state as other unions such as Southland and Wellington, which were likely to report hefty cash losses in the next few weeks.

The ORFU recorded an operating profit of $6026 but with bank interest of $56,568, the cash loss was $50,542.

Graham said to declare a cash loss was disappointing but the union could look forward to moving to the new stadium and then concentrate solely on rugby.

Union general manager Richard Reid said the non-cash loss was based on the difference between what properties were sold for and their depreciated book value in the union's accounts.

With the union leaving Carisbrook later this year, the union's board decided to write off the full value of the assets which make up the depreciation amount, as they would not be replaced, he said.

"In the future the union will have no need for tractors, mowers and other ground equipment, as it will be shifting premises.

However this does swell the depreciation component reported in the accounts," Reid said.

Reid said with revenue of about $5.5 million and with the aim of breaking even, to get within 1% of that target was a pretty good result.

Graham said there would be sadness at leaving Carisbrook but excitement at moving to the new stadium.

`The single focus now is on running Otago rugby.

We are not a groundsman, a property manager, a caretaker.

Our business will be rugby," he said.

Graham said the union owning Carisbrook meant having to service a $500,000 loan every year which was becoming impossible.

"The injustice of the sale of Carisbrook was that the ORFU was left with a $1.2 million debt.

"But we had our hands tied. We had an $8 million debt before selling Carisbrook and we had to service a $500,000 loan every year.

"To service a loan that is 10% of your revenue is just not sustainable.

"We have been attempting over the last 18 months to tidy that up."

Reid said over the past three years there had been $1.25 million taken out of the expense line.

"In January 2008 we had 26 staff and now we have 19 so we are not that highly geared."

Graham said the board had worked extremely hard over the past year in looking at the business.

Sponsorship had increased by $250,000 over the past year.

"We have now reached the situation where we are lean and mean and we are now preparing to move to a new stadium and leave the old ground behind."

The union spent $1.1 million on players, and could not spend any more, Graham said.

The team finished dead last in the ITM Cup, and changes had been put in place to improve this year, Graham said.

Money from gates covered just 2% of revenue.

Reid said even if the team was successful, gate income would only cover about 10% of revenue.

The 2011 year will be a challenge, especially with the union not hosting a test, which was worth about $300,000.

But it had the added bonus of hosting the last game at Carisbrook, against Southland, on August 6, the first game at Forsyth Barr Stadium, against Manawatu on August 17 and then the next game at the new stadium, against old foe Canterbury, Reid said.

The union will present its annual report at the annual general meeting on March 7 at Carisbrook.

 

Add a Comment

OUTSTREAM