How will NZ Rugby
It wasn’t a happy coincidence that NZ Rugby had $93 million stored away when Covid-19 struck in March.
The cash, term investments and managed funds were set aside as insurance for an unforeseen financial crisis, and meant NZ Rugby could at least take comfort from knowing it wouldn’t be wiped out.
But it still had to act swiftly, and make brutal decisions.
NZ Rugby asked its 180 staff – including contracted players – to accept pay cuts. Later it culled up to 50 per cent of the staff.
NZ Rugby chairman Brent Impey told media after the annual meeting on April 30 that the financial loss for 2020 would be massive: ‘‘I can’t tell you a figure … I will say it’s in the tens of millions of dollars, but a heck of a lot less than the 93 (million dollars) which would take us out.’’
After NZ Rugby had announced a loss of $7.4m for 2019 – an improvement on the budgeted loss of $11.8m – the damage caused by the pandemic has been horrendous, and the ripple effect through to 2021 and beyond will be significant.
Super Rugby was shuttered in mid-March, the inbound tests against Wales and Scotland were scrapped and the Rugby Championship has been reduced to a Tri Nations competition because the Springboks have refused to participate. Adding to the mayhem, NZ Rugby lost the Rugby Championship hosting rights to Australia and there will be no northern tour.
Fewer games mean reduced payments from broadcaster Sky, as well as a drop in income from ticket sales and advertising from home fixtures.
The birth of Super Rugby Aotearoa, in conjunction with crowds attending under alert level 1 was a saviour for the five clubs; NZ Rugby was grateful it could offer Sky content in the form of SRA, the Mitre 10 and Farah Palmer Cups and two Bledisloe Cup tests in New Zealand.
It was like a ray of bright light in the gloom, while the remainder of the sporting world watched with envy.
When Impey was asked after the annual meeting about how much of its cash reserves it could drill into, he said boards generally have a policy and that NZ Rugby’s was ‘‘broadly’’ 40 per cent of its fixed operating costs.
‘‘With a [potential] two-thirds drop in revenue, we’ve also had to bring costs down. We’re looking at a multimillion-dollar loss this year, but we’ve got ourselves into a position where we’re able to come forward into next year.’’
You need optimism at a time like this.
Prior to Covid-19 that $93m would have been considered a tidy nest egg. When the dirt hit the fan, it became a saviour as NZ Rugby braced for a 70 per cent decline in revenue.
Chief financial officer Nicki Nicol reiterated: ‘‘This strong cash position at year-end and robust application of our reserves policy has allowed some much-needed respite to support the organisation with revenue shocks associated with Covid-19.’’