Otago Rugby Union kept afloat as city, national union, BNZ step in

Thursday 15th March 2012 1 Comment

The Otago Rugby Football Union has been handed a lifeline after the Dunedin City Council agreed to a deal where it forgives $480,000 of outstanding debt in return for more All Blacks test matches in the coming two years.

The deal was finalised after a seven-hour council meeting in Dunedin yesterday, and will see the New Zealand Rugby Union loan ORFU $500,000 for working capital and sign up to a bigger sponsorship deal with Bank of New Zealand, according to a statement by the NZRU.

Otago players will have to tighten their belts, with the national and local bodies working with the New Zealand Rugby Players Association to strip out $290,000 from the budget for player contracts.

“The union faces the future with more certainty and one where the mistakes of the past must not be repeated,” NZRU chief executive Steve Tew said. “There will be immediate and significant changes to ensure the union is better equipped to face the challenges of the future, quite apart from the financial measures being put in place today.”

The ORFU’s financial strife emerged last month when its board said the body faced liquidation amid mounting debts and dwindling ticket sales. That came after six years of deficits, compounded by the 2009 sale of Carisbrook Stadium to the city council at a loss after the union had been borrowing against the stadium as a means to keep cash coming in.

ORU’s outstanding debts to local businesses will be at the top of the repayment queue, and council’s Dunedin Venues Management, which operates Forsyth Barr Stadium, secured a three-year venue hire agreement with the Otago Rugby Union and will manage the administrator’s commercial and sponsorship rights.

The sporting administrator’s board has to resign as part of the deal, and its constitution will be overhauled. The NZRU will have oversight of all player contracts, access to the administrator’s books, and will have an observer at all the Otago union’s board meetings.

Tew said the national body “will be insisting on ongoing scrutiny of its business plans and accounts.”

BusinessDesk.co.nz

Comments from our readers

On 15 March 2012 at 10:29 am Roger said:

If the ORFU board doesn`t resign then what prevents it all happening again