NZ Rugby full-year profit shrinks by 86% as costs rise

New Zealand Rugby's annual profit dropped about 86 percent as the national sports administrator's costs grew faster than its income.

Profit shrank to $373,000 in the year Dec. 31, from $2.5 million a year earlier, the rugby union said in a statement. Income rose 3.2 percent to $120.8 million, while costs increased 5.3 percent to $120.2 million. Cash reserves were little changed at $62.6 million, from $63.7 million a year earlier.

NZ Rugby returned to profitability in 2013, after posting annual losses since 2008. The organisation has focussed on ways to make the game more profitable, including the sale of Super franchises, as provincial unions face the squeeze from dwindling attendance and, in some cases, poorly managed finances.

In 2012, the Otago Rugby Union chalked up its sixth straight deficit, and was kept alive through rescue packages from the national body and the Dunedin City Council, before returning to profit in 2013.

NZ Rugby wants the sport to be financially self-sustaining across all levels by 2016. To help achieve that, it plans to build a shared service model for back-office functions and create real-time reporting and forecasting tools for all provincial member unions to use.

Chief executive Steve Tew said the sports administrator was reviewing its overall investment plan including funding to Provincial Unions, Super Rugby teams and its cash reserves policy this year, once the renewed broadcast contracts covering the 2016 - 2020 period are finalised and the revenue stream confirmed.

The annual combined surplus of the 14 ITM Cup unions was $1.2 million, down on $3.3 million a year earlier, as four undisclosed unions slipped back into the red, the administrator said.

"Much good work has been undertaken by unions in recent years to work smarter and look for innovative ways to grow commercial income so it's great news to see another collective surplus," Tew said. "The smaller surplus underlines the fact that challenges to grow income and contain costs remain and we will continue to offer advice and support as needed."

Last year, Sky Network Television, New Zealand's dominant pay-TV company, signed a conditional contract to renew its five-year deal from 2016 with the NZ Rugby and the SANZAR unions for an undisclosed amount. The rugby union gets almost three quarters of its income from commercial contracts, including broadcast and sponsorship deals.

(BusinessDesk)