NZR earmarks $20m for players
Gregor Paul
New Zealand Rugby hauled in more than $250 million last year. It’s the most they have banked in a year and led to them posting a record $33 million profit.
The financial picture for the national game has never looked so rosy — the money has never been as good as this. Yet there is no sense of the game having hit the jackpot as the belief is that rugby faces some strong headwinds in the years to come.
The Lions tour was the key driver of the increased revenue — generating $40 million of extra income. That was slightly higher than predictions but it’s money that only comes every 12 years and therefore NZR has to spread the windfall thinly.
Not only that, but last year it spent some of the predicted Lions income by increasing payments to the provincial unions. But what’s keeping everyone from celebrating is that while the money has never rolled in quite the way it has, nor has it rolled out quite as quickly either.
NZR is, metaphorically, running to a stand still. Due to the revenue sharing agreement with the New Zealand Rugby Players’ Association, any jump in NZR income tends to be diverted into the Player Payment Pool — the fund from which profes- sional players are paid.
Much of the increased revenue is used to increase payments to players to ward off the threat of them heading overseas. New Zealanders are always in demand globally, but those on the frontlines of the talent war say the market here is under unprecedented pressure with French, English and Japanese clubs, all more aggressive and all offering individuals more money than ever before. As a consequence, NZR has placed $20 million in trust that will be available to bolster the PPP between now and 2020.
The other major headwind lurking is the impending renegotiation of the current broadcast deal which expires at the end of 2020.
In 2016, NZR enjoyed a 100 per cent increase in broadcast income and banked $104 million from TV and media companies last year.
They also saw a 14 per cent hike in sponsorship and licensing income — mainly from improving terms with AIG, Sanitarium and ASB — and as a result have 80 per cent of their future income until 2020 locked in.
But the great unknown is what happens in 2021 and NZR chief executive Steve Tew says the next broadcast rights agreement effectively holds the key to the financial future.
“Post-2020, we have a deficit projection that we can’t live with, so we either change our expenditure model or we find ways to generate more money.
“That’s why we have to diversify revenue streams but we are also working hard to make sure that the next broadcast negotiations are fruitful.
“The way people are consuming sport is changing rapidly. If we don’t make it [TV income] grow, then we will have to shrink the business.”
Tew says broadcast negotiations will likely begin later this year.