NZ Rugby facing $130 million loss in revenue amid coronavirus turmoil

New Zealand Rugby is facing a potential $130 million loss in budgeted revenues as Covid-19 threatens to extinguish hopes of a rebooted 2020 season. Now they could also be facing a showdown with the Super Rugby clubs and Provincial Unions in what is becoming a battle for survival. 

Source: 1 NEWS

The "doomsday" figure was outlined by NZ Rugby CEO Mark Robinson to all Provincial Unions and Super Rugby clubs during a conference call yesterday. The organisation has also moved to reduce pay for its employees and has effectively frozen its budget for the foreseeable future. Fears were raised during the call that the next quarterly payment from NZ Rugby to its provincial unions was "at risk". 

With Super Rugby suspended indefinitely, the five New Zealand clubs have requested assistance from the national body and are expecting a response as early as Monday.

New Zealand Rugby’s Board was set to meet on the matter today. Some sports business insiders believe that, as part of that assistance, private investors in those clubs will also be seeking an extension to their existing rights heading into the 2021 season. The current license agreements with New Zealand Rugby expire in September.

As it stands, New Zealand Rugby retains the crucial intellectual property rights for the five New Zealand Super Rugby teams, the Blues, Chiefs, Hurricanes, Crusaders, and Highlanders.

It is understood the clubs have outlined their desire to take control of these assets from New Zealand Rugby to more adequately protect the private investors.

With New Zealand Rugby’s reserves (approximately $90 million) at risk of being exhausted by the Covid-19 crisis, the organisation may have no alternative but to relinquish their rights to the private licencees to ensure a deal is struck before the September deadline. 

So far, each of the clubs has made moves to reduce staff pay, and redundancies are considered likely. The existing financial positions of the five clubs vary, but sources say all could collapse in the next three to four months unless added financial protections or more attractive license terms can be put in place.

New Zealand Rugby would not appear to be in a position to lose private capital at such a perilous time for the sport. 

Compounding the issue is the widening gap between the expectations of the Super Rugby Clubs and those of the Provincial Unions. As the constituent members of New Zealand Rugby, many of the key provincial rugby administrators believe they should take precedence if and when competitive rugby resumes.

If that were to be before the end of 2020, it would see the Mitre 10 Cup and a salvaged Super Rugby competition battling for available airspace. Where that would leave the players, from a contractual point of view, is as yet unknown. 

During yesterday’s conference call, some provincial delegates sought to defer any cost saving measures until the matter of precedence can be addressed.

One source close to the discussions told 1 NEWS that this would be folly, and that some provincial unions could risk financial ruin if they do not act swiftly to mitigate existing expenses.

As it stands, the unions are still fully expecting to receive their payments from the national body. 

NZ Rugby CEO Mark Robinson told media on Monday that the organisation is still hopeful that the All Blacks will play this season, which would be a massive shot in the arm for the sport.

As it stands, with the effects of New Zealand’s lockdown - and its eventual duration - still unknown, and the world still coming to terms with the rising human cost of the Covid-19, there can be no guarantees in this respect. 

Unfortunately for New Zealand Rugby, its key stakeholders are desperate for some guarantees of their own.