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Community participation and support crucial to sustainability of Rugby Unions

Deloitte ‘State of the Unions’ report highlights decline in provincial rugby unions’ revenues

Community participation and support are crucial to the on-going viability of the country’s provincial rugby unions and the continued success of the nation’s favourite game at the highest levels, according to a Deloitte Sports Review released today.

The ‘State of the Unions’ Deloitte Sports Review examines the annual financial accounts over the last five years of the 14 semi-professional and amateur rugby unions competing in the ITM cup. It shows that collectively revenues are falling and reserves are being eroded, potentially threatening the future success of the game in New Zealand.

Revenue earned by the 14 rugby unions competing in the ITM Cup (excluding the professional rugby franchises competing in Super Rugby) dropped 11% from $77 million in 2010 to $68 million in 2011. This is 19% down on the $84 million earned five years ago. On average, over two-thirds of total revenues in 2011 were from grants and sponsorships from the New Zealand Rugby Union (NZRU), the corporate sector and others. The remaining revenue streams for the unions include match related revenues, retail sales, event management and other sundry incomes.

Of particular concern is the decline in match related revenues, which include gate takings and hospitality. This revenue has fallen 58% in the past five years from $21 million to $9 million, accounting for the lion’s share of the total $16 million decline in revenues.

However, Deloitte partner Grant Jarrold said there are signs unions are working harder to contain costs in a difficult environment and have made some progress in turning the financial picture around. Only five of the 14 ITM Cup unions posted profits in 2010 with this improving to nine unions in 2011 and the combined deficit falling from$2.3m to $630,000 over the same period.

Mr Jarrold added that the large corporate sponsorships and other grants that have filtered into the grass roots game in the past can no longer be relied upon in the current commercial climate.

“Now more than ever, the unions need to look for innovative ways to build community support and encourage increased attendance to reverse the worrying trend of declining match related revenues. Otherwise changes to the structure of the game in this country will become inevitable,” says Mr Jarrold.

He points to the fact that a relatively small increase of 500 spectators paying an average price of $20 per ticket at each of the regular season games of the ITM Cup would have eliminated the combined net deficit in 2011 with all other things being equal.

“The importance that our provincial rugby unions hold for the on-going success of our national team should not be forgotten as they are responsible for fostering the development of the game and its players throughout New Zealand,” Mr Jarrold concludes.

The full State of the Unions Deloitte Sports Review can be found at www.deloitte.com/nz/stateoftheunions.

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