15 Mar 2012

Otago rugby union saved

12:35 pm on 15 March 2012

Agreement has been reached on a recovery package for the debt-ridden Otago Rugby Football Union.

The New Zealand Rugby Union announced on Wednesday night the key parties - the NZRU, Dunedin City Council, Dunedin Venues Management Ltd, New Zealand Rugby Players Association and the Bank of New Zealand have agreed on a package.

Key points include the NZRU providing a $500,000 loan for working capital, the city council and events management company forgiving debt of $480,000 (in rent and administration from the old Carisbrook Stadium) and the NZRU confirming All Blacks Tests in Dunedin in 2013 and in 2014 in addition to this year's Investec Rugby Championship Test against South Africa.

The events management company runs the new Forsyth Barr Stadium.

The players' association, NZRU and Otago union will continue to work together to reduce the 2012 player contracting spend by $290,000 from the original budget.

The union has debts of more than $2 million, and faces an expected loss of $750,000 this year. It had twice extended a deadline for putting itself into liquidation to complete a deal with its backers.

"This is an historic day for an historic institution," says NZRU chief executive Steve Tew. He says it is very satisfying to have reached this point for the 131-year old organisation, given how bleak the picture was several weeks ago.

Mr Tew says the NZRU has also written off its $270,000 loan to the Otago union.

He told Morning Report it was important to make sure the union did not fold, and he will be watching carefully how test matches perform financially.

Mayor positive

Dunedin mayor Dave Cull says the deal will secure professional rugby matches at provincial, super rugby and international levels at the new council-owned Forsyth Barr Stadium for three years. The stadium will also receive an expected $200,000 from a North-South fundraising match in June.

Mr Cull says that had Otago Rugby Football Union been liquidated the council would not have been able to retrieve any money.

"So if we get anything, it's a bonus. I don't see this as a write-off. We're at least likely to get 50 cents in the dollar, which is a damn sight better than losing it all."

The deal was passed by the council eight votes to five. Mr Cull says it's clear not all councillors are happy about the writing off of debt, and continue to have no faith in the Otago union.

Fate of board unclear

Under the rescue package, the NZRU announced on Wednesday that the Otago board would resign and the constitution would be be modernised.

The NZRU says it aims to to put the Otago union on a sustainable long-term footing.

However board chair Wayne Graham told Morning Report that not all board members will necessarily resign, as it would be foolish if they all stood down.

He says some of the best business brains sit on the board, which had inherited a legacy of debts that had been mounting for between 10 and 20 years.