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New Zealand Rugby expects 70-per-cent revenue drop due to Covid-19

New Zealand Rugby's chief financial officer Nicki Nicol (by All Blacks Collection/Getty Images)

New Zealand Rugby (NZR) has today (Thursday) reported a better-than-expected loss of NZ$7.379m (€4.16m/$4.52m) for the 2019 financial year, but has stated that it is expecting a 70-per-cent drop in revenue this year due to Covid-19.

NZR today staged its annual general meeting online, weighing up the impact of the global pandemic on its finances. For the year ending December 31, 2019, the annual loss came in 37 per cent ahead of the budgeted figure of NZ$11.8m with national unions traditionally being hit in the year of Rugby World Cups due to a reduction in the number of test matches they are able to host.

NZR posted a loss of NZ$1.863m in 2018, and chief financial officer Nicki Nicol admitted that the current economic disruption amid Covid-19 made it difficult to put 2019’s results into perspective. However, total revenue of NZ$187.183m was just one-per-cent down on 2018 and represented a 40-per-cent increase when compared to the last World Cup year in 2015.

Broadcast rights revenue fell from NZ$73.332m to NZ$57.454m, but the year saw NZR’s relationship with pay-television broadcaster Sky further strengthened with the re-negotiation of a rights deal. In October, Sky extended its rights deal with New Zealand Rugby, with the “revolutionary” new contract involving the sport’s national governing body becoming an investor in Sky.

The five-year deal extends Sky’s existing broadcast rights to competitions organised by Sanzaar, rugby union’s regional governing body comprising the unions of South Africa, New Zealand, Australia and Argentina, to 2025.

The contract running from 2021 to 2025 includes exclusive coverage of all Rugby Championship national team matches, the Steinlager Series featuring the All Blacks, the Super Rugby and Mitre 10 Cup club tournaments and all New Zealand’s other domestic competitions, including women’s competitions like the Farah Palmer Cup.

At the time, Sky said the five-per-cent equity stake to be taken by NZR recognised the “increased alignment and strengthened relationship” between the two parties, their mutual support for one another and shared commitment to develop and promote the game. The stake is listed on NZR’s balance sheet as being valued at NZ$19.4m under “other investments and income in advance”.

Income from sponsorship and licensing deals rose from NZ$68.074m to NZ$72.906m as NZR renewed or signed new partnerships with Mitsubishi Motors, Replay, Jockey, EY, Downer, SAS and Tourism New Zealand in 2019. Matchday revenue fell from NZ$28.072m to NZ$16.352m.

“When you consider the significant impact on broadcasting and match day revenue in a Rugby World Cup year due to a condensed international programme, the commercial income from sponsorship and licensing has been a real success story,” Nicol said.

Earlier this month, NZR and the New Zealand Rugby Players’ Association (NZRPA) agreed to a package of payment changes as the governing body looks to save NZ$25m in payments during the pandemic.

Nicol today said cash reserves of NZ$93m had provided a vital buffer against the initial economic impact of Covid-19. She stated: “This has been beneficial in a year when there has been a massive shock to our revenue and we have had to respond by quickly reducing costs across all of rugby. Everyone is playing their part. We must now consider a total reset as we look to rebuild the sport in a financially sustainable way.”

The Covid-19 shutdown has frozen all rugby activity in New Zealand. Commenting on the future direction for the sport, NZR chief executive Mark Robinson said: “We’re working within government and Ministry of Health guidelines to make sure we can get rugby back on the pitch as soon as possible.

“In the meantime we’ve had to cancel most of our budgeted activity across all levels of the organisation this year. This is an opportunity for us to focus on our priorities for rugby to get through this challenging time together.”