Report paints bleak picture
Government bailout saved pro teams
The Government’s emergency bailout saved some professional sports teams from extinction, with Wellington Phoenix among those predicting in April they wouldn’t survive longer than three months.
In KPMG’s Covid-19 financial impact analysis prepared for national funding body Sport NZ, dated May 16 and publicly released yesterday, the country’s major sports laid bare the pandemic’s impact on their balance sheet.
That prompted Sport NZ in early June to dish out $4.6m in total to Netball NZ ($2.2m), NZ Rugby ($1.25m), the Phoenix ($950,000) and the Warriors ($200,000) in emergency funding as part of Budget 2020.
It was designed to assist netball’s ANZ Premiership, and Super Rugby Aotearoa, to resume their competitions and for the Phoenix (A-League) and Warriors (NRL) to return across the Tasman.
Sport NZ commissioned KPMG to evaluate the financial impact of Covid-19 with assistance from the sports who provided forecasts of revenue and costs for 2020.
They were also asked to provide three-month and six-month projections of post-Covid impact on their revenue but as the report stated: ‘‘some sports did not provide forecast for six-month disruption, saying they would not be able to continue in that case’’.
In the report, the Phoenix forecast pre-Covid revenue of $7.6m and costs of $8.6m for this year.
Their three-month post-Covid projection was a $3.5m loss of revenue, or 46 per cent, with no home games in prospect and no broadcast revenue with the A-League on hold.
Sport NZ chief executive Peter Miskimmin said on June 4 the Phoenix painted a bleak picture to former NZ Rugby boss Steve Tew who assessed each sport.
‘‘The risk to us, and the Phoenix was, if they did end up folding they would give up their licence to the A-League and that would have been a barrier to any New Zealand team going back into the A-League. We were trying to protect a really important part of our pathway, which is the elite franchises.’’
On a national scale, NZ Football forecast $15.8 million in lost revenue for a six-month postCovid period, or 58 per cent.
Basketball NZ and NZ Rugby League each provided just a threemonth forecast, too. Basketball predicted it would lose $3m in revenue (43 per cent) and league $3.6m (44 per cent).
The Warriors did not respond to requests for financial forecasts, the report said.
Meanwhile Netball NZ and the Breakers basketball team each forecast they would lose up to 80 per cent of their annual revenue.
According to the report, NNZ forecast $46.7 million of revenue and $44.7m of costs for 2020 before Covid-19 shut down its ANZ Premiership after one round in March. Netball Mainland, which oversaw the Tactix franchise, was an early casualty and went into voluntary liquidation in April.
The six-month impact for NNZ was forecast to be $37m in lost revenue, a drop of 79 per cent.
The Breakers, currently in the off-season of the Australian National Basketball League which is set to resume in December, forecast revenue of $5.8m and costs of $7m before Covid-19.
That predicted revenue would drop $4.7m in the ensuing six months, the report said, or 80 per cent.
New Zealand Rugby predicted $241.3m in revenue and $285.4m in costs, pre-Covid. After three months NZR forecast a mammoth drop of $164.6m in revenue, or 68 per cent.
The report was produced one month before Super Rugby Aotearoa resumed, and NZR has since confirmed it shed 25 per cent of its workforce at head office.
Costs were cut heavily across the major sports. The report said NZR reduced costs by 46 per cent in the three-month post-Covid period, while NZRL saved 39 per cent, NZ Basketball 37 per cent and NNZ 35 per cent.
According to the report, revenue included commercial income, membership and affiliation fees, Sport NZ investment and grants and donations (including betting and gaming distributions).
Of the other ‘phase one’ sports, Hockey NZ predicted a 65 per cent revenue drop in the six months post-Covid, or $18.3m.
The least affected according to the report’s forecasts were Snowsports (a 14 per cent revenue drop, or $600,000) and New Zealand Cricket (a 16 per cent revenue drop, or $13.9m). NZC is hoping to resume its international season as scheduled in November. Its preCovid forecasts for 2020 were $86.6m in revenue and $86.8m in costs, the report said.