A close up on results State of the Unions Deloitte Sport August 2016 FGVIGW .(nu. . Deloitte. Introduction 1 Executive summary 2 Financial performance 6 Financial position 13 Rugby at the grassroots 15 Heartland Championship Unions 17 New Zealand Rugby 19 Supporter Engagement 20 Consolidated financial information 24 About this publication 29 Glossary $000 Thousands (New Zealand Dollars) $m Million D&A Depreciation and amortisation FY Financial year NZR New Zealand Rugby Union Inc. (trading as New Zealand Rugby) Super Rugby Investec Super Rugby State of the Unions: Deloitte sports review Introduction Introduction A financial review of the country’s leading rugby unions reveals the overall state of the game remains resilient in a challenging environment, with a few key areas for improvement. Reversing the trend of reducing revenue is an essential area for the unions to focus on to ensure a viable future. The unions are key players in fostering the development of the nation’s favourite game and their financial wellbeing is central to the continual delivery of success at the highest levels. 1 State of the Unions: Deloitte sports review Executive summary Executive summary Welcome to the 5th edition of the Deloitte Sports Review, a review of the 14 semi-professional and amateur rugby unions competing in New Zealand’s premier provincial rugby competition: the Mitre 10 Cup. Deloitte’s review of the annual financial accounts of the 14 Mitre 10 Cup rugby unions shows that, just like a team’s season, they are still vulnerable to dropping a game after a period of successive wins. After the improved performances over the past few years by keeping tight control on their expenses the unions have not been able to sustain the improving performance in FY15. The result for the 2015 season was a substantial loss wiping out the gains from the prior year, although not as significant as losses in each of the years from 2007 to 2010. developing the community game for those stakeholders they represent, including clubs and schools. Of concern for the unions is the trend of decreasing revenue over the past two years, most significantly in Match Related Income and a slow decline of Grants and Sponsorship indicative of challenging market conditions faced by not-for-profit organisations and those in the entertainment business. While there was a corresponding fall in expenditure in some areas the final results were impacted by an increase of administration costs. Any decline in profitability ultimately affects the amount of funds used to develop the game at grassroots level. Unions need to consider the risks of not investing sufficient resources in the development of high performance rugby in their communities and balance that with the need to keep Financial Performance 2 Financial Highlights The financial performances and positions of the Mitre 10 Cup unions have been consolidated and the highlights of their consolidated financials are set out below. At the back of this publication summaries of the consolidated financial performance and position results for the last five years, as well as individual union accounts for the last two years are available for viewing. •• FY15 posted an overall deficit of $1.4m, the first deficit from the consolidated unions since 2011. This result is down $2.6m on FY14 when the combined unions recorded a $1.2m surplus. •• Total revenue achieved by the unions for FY15 was $63.8m , a decrease of $3.6m (5.4%) from FY14. This is the lowest total revenue that has been reported since at least 2007. •• A breakdown of the three revenue sources for FY15 shows it is split 70.7%, 13.5% and 15.8% between grants & sponsorships, match related income and other revenue respectively. State of the Unions: Deloitte sports review xecutive summary I State of the Unions: Deloitte sports review Executive summary •• The majority of the combined total revenue for all unions was once again provided by the five provincial unions with Super Rugby franchises based in their home cities generating 46.4% of the total revenue for all unions in FY15. This is another drop in percentage from previous years as the other unions continue to grow their revenue, and the drop in revenue from Super Rugby provinces in FY15. •• It is understood that NZR has provided additional provincial union grant funds in 2016. These new funds will assist the reversal of the declining trend of revenue in future years and is the result of increased broadcast revenue across the professional game flowing back to grass roots. •• Total operating expenditure was slightly down for FY15, decreasing by $0.9m (1.3%) to $65.1m. Operating expenditure has dropped a total of $3.0m (4.4%) in the past five years. •• Total operating expenditure for FY15 has been broken down into three categories: match related expenditure (45.2%), growing the game expenditure (28.7%) and administration (26.1%). •• From FY14 to FY15, administration expenses increased by $1.2m and funds invested in growing the game have decreased by $0.3m. Mitre 10 Cup Unions – Consolidated Results 4.0 3.0 $m 2.0 1.0 - (1.0) (2.0) FY11 FY12 FY13 FY14 FY15 FY13 FY14 FY15 Mitre 10 Cup Unions – Total Revenue 80.0 60.0 $m •• The smallest and potentially the most visible of the revenue sources, match related income, decreased by $1.8m (16.9%) from $10.4m in FY14 to $8.6m in FY15. Revenue from grants & sponsorships decreased by $0.6m (1.3%) to $45.1m . This follows a similar trend as over the past five years, both match related income and income from grants & sponsorships have decreased a total of 2.5% and 6.4% respectively. 40.0 20.0 - FY12 FY11 Revenue: Match Related Revenue: Sponsorship & Grants Revenue: Other Unions with Super Rugby Franchises Mitre 10 Cup Unions – Operating Costs Unions need to consider the risks of not investing sufficient resources in the development of high performance rugby in their communities and balance that with the need to keep developing the community game for those stakeholders they represent, including clubs and schools. 26% 24% 47% 29% FY14 v FY15 Outer Ring = FY15 Inner Ring = FY14 Administration 29% Team & Match Related Costs Growing The Game 4 Mitre 10 Cup Unions – Consolidated Accumulated Funds 45% - (1.0) State of the Unions: Deloitte sports review Executive summary (2.0) FY11 FY12 FY13 FY14 FY15 FY13 FY14 FY15 Mitre 10 Cup Unions – Total Revenue 80.0 $m 60.0 40.0 20.0 - FY12 FY11 Revenue: Match Related Revenue: Sponsorship & Grants Revenue: Other Unions with Super Rugby Franchises Mitre 10 Cup Unions – Operating Costs Financial Position •• Accumulated funds for the provincial unions decreased by $1.4m from FY14 to $31.2m in FY15. The FY15 result reduced the overall equity back to below the level it was in FY13. One union (Waitako) remains in a negative equity position as noted in previous reports. •• Total assets owned and employed by the unions have increased from $49.8m in FY14 to $52.1m in FY15. The main increase is new facilities investment in one union (Canterbury). •• Short-term and long-term borrowings have increased with a large movement in long-term borrowings which has increased $5.3m (271.1%), mainly driven by Canterbury’s increased borrowings. However, on a more positive note, payables and accrued expenses have decreased by 12.1% over the financial year. 24% 47% 45% 29% 29% FY14 v FY15 Outer Ring = FY15 Inner Ring = FY14 Team & Match Related Costs Administration Growing The Game Mitre 10 Cup Unions – Consolidated Accumulated Funds 35.0 30.0 25.0 20.0 $m •• The provincial unions have cut into their working capital positions with net working capital for all unions decreasing to $5.6m (18.1%) in FY15. The working capital ratio for the unions has decreased from a ratio of 1.49 in FY14 to 1.45 in FY15. This is the same ratio level seen in FY13, however is an improvement from the FY11 year which had a working capital ratio of 1.17. 26% 15.0 10.0 5.0 FY11 FY12 Consolidated Accumulated Funds FY13 FY14 FY15 Net Working Capital 5 State of the Unions: Deloitte sports review Financial performance Financial performance An emerging trend of diminishing revenue and belttightening to reduce expenditure has had an impact on the financial landscape of the unions. Collectively, the New Zealand provincial unions participating in the top tier national competition posted a deficit in FY15 after positive results over the previous three years. The headlines highlight a serious situation for the rugby unions however not everything is dire as the end result is significantly impacted by the deficit of one union (Wellington). Overall, in FY15, nine of the 14 unions achieved a surplus compared to 11 unions in FY14. However, the individual results underline a tough environment that rugby administrators operate in as only one union bettered its FY14 financial result. This is a concern to all stakeholders of the game because if there is a disposition to dismiss the result off as a ‘one-off’, there is the risk that the one becomes successively many. In FY15, the unions earned $8.6m from match related income, a decrease of $1.8m (16.9%) from FY14. This segment of revenue for the unions is the most visible Mitre 10 Cup Unions – Revenue Bridge 90.0 (9.6) 80.0 2.2 70.0 (1.8) (3.6) 60.0 50.0 $m Administrators of the game have controlled expenditure in the past few years to live within their means, reflecting the reduction in revenue. However, as many other not-for–profit organisations will attest, there comes a point where there are no more notches on the belt to tighten and other avenues must be sought to resolve the situation facing them, in some cases resorting to a restructure of the way the organisation operates. At the moment the preferred answer, by no means straightforward or easy to carry out, is to increase revenue. Revenue has been analysed in three categories: match related income, grants & sponsorships and other revenue. Revenue generated by the New Zealand provincial unions participating in the top tier national competition decreased by $3.6m to $63.8m in FY15, a drop of 5.4%. This is the lowest level of revenue that the unions have collectively reported since FY07, the first year included in our analysis. Over that period the total amount of revenue generated by the Mitre 10 Cup unions has decreased by $20.3m (24.1%), most significantly from match related income which has decreased by 56.0%. 40.0 30.0 20.0 10.0 2010 Postive Movement 2012 Negative Movement 2013 Total Revenue 6 Mitre 10 Cup Unions – Game Day Results 2014 2015 30.0 20.0 10.0 State of the Unions: Deloitte sports review Financial performance 2010 Mitre 10 Cup Unions 2013 2014 – Revenue Bridge 2015 2012 Postive Movement Negative Movement Total Revenue 90.0 (9.6) 80.0 2.2 70.0 (1.8) (3.6) 60.0 Mitre 10 Cup Unions – Game Day Results $m 50.0 8.0 30.0 6.0 20.0 4.0 10.0 2.0 $m 40.0 2010 - Postive Movement 2012 2013 Negative Movement 2014 2015 Total Revenue (2.0) (4.0) (6.0) (8.0) 2011 Game Day Revenue 2012 Game Day Expenses Mitre 2013 10 Cup 2014 Unions – Game2015 Day Results Net Game 8.0 Day Surplus/(Deficit) 6.0 4.0 income category by 15.5%. This indicates that 2.0 team performance on the pitch, while key to encouraging participation from supporters, would not be the most (2.0) significant factor influencing supporters’ decision to spend money in support of (4.0) their team. $m for the average fan to get an indication of the financial performance of their union, and can be surmised by the number of spectators in the stands at Mitre 10 Cup matches or,Cup as the case may be for some Mitre 10 Unions – Total Revenue unions, the number of empty seats. (6.0)13% 16% The decrease was consistent across the unions with only three unions reporting The Canterbury union reported an increase (8.0) 15% 17% 2011 gate income 2012 an increase in match related income, with of 33% in its FY15 including the greatest increase achieved being the semi-final and final games where Game Day Revenue Game Day Expenses 3.9% higher than the prior year. There its team reclaimed the Premiership title are several contributing factors that to make it seven wins in eight seasons. commentators will mention that attributed Canterbury’s annual report attributed to the overall decrease in match related their ‘Ticket for Everyone’ product as a key income, including that the provincial driver to increasing crowd attendance. The competition ran concurrently, and in 71% competition, FY14 v FY15 with the 2015 Rugby World 68% Outer Ring = FY15and unions not being able Mitre 10 Cup Unions – Total Revenue Cup in England, Inner Ring = FY14 to capture their supporters’ attention Revenue: Match Related Revenue: Sponsorship & Grants Revenue: Other and expenditure during the international 16% tournament. 55.0% FY13 FY14 13% 15% 71% 68% 50.0% Revenue: Sponsorship & Grants Revenue: Other 45.0% 40.0% FY12 Even with a fall in game day revenue by 13.6% from FY14, overall the unions are ever closer to breaking even on game day, with only a small loss in FY15 ($0.2m). 60.0% 20,000 FY11 Net Game Day Surplus/(Deficit) 17% $000 To highlight the matter, the analysis of one of the successful on-field unions for 2015 shows the Hawke's Bay team hosting (and winning) the Championship semi-final Investec Rugby Based and final, inSuper addition to their five Unions Ranfurly– Revenue Shield games during the regular season 80,000 in 2015. This would normally be viewed as 60,000 an incredibly successful year. However, the Hawke's team’s fantastic results were FY14 v FY15 Outer Ring = FY15 not enough to increase the union’s match Inner Ring = FY14 40,000 related income from the prior year. In Revenue: Match Related FY15 the union suffered a decrease in this basic premise of this initiative allows the union’s commercial partners to engage with their respective customer bases with a unique offer, as well as encouraging more supporters to attend home games. This is an example of a union identifying a segment of their target market and utilising different ticket pricing models to enhance the revenue gathering opportunities from 2013 2014 and leveraging 2015 their their supporter base commercial partners. FY15 7 State of the Unions: Deloitte sports review Financial performance This is a great improvement on the game day deficit of $1.2m in FY13. Unions must continue to look for efficiencies with their game day expenditure as the corresponding revenue remains low in its current state. sponsorship has decreased over time, including falling $0.6m to $45.1m (down 1.3%) in FY15, its decline has been slower than the other revenue categories, proportionally increasing the unions’ reliance on this funding. The importance of match related income has less weighting on the financial results than previously, as it formed 13.5% of the total revenue generated in FY15 compared to 23.3% in FY07. However, even though the direct financial impact of match related income has lessened over the recent rugby seasons, it remains a key indicator of the health of the union as the number of spectators at the game is one of the key elements to successfully negotiating improved and new commercial sponsorship arrangements – part of the largest contributor to the unions’ revenue. Since the inception of the Deloitte State of the Unions report, grants & sponsorships has been the most significant revenue category for the provincial unions dating back before FY07, and increasingly so. Even though the total value of grants & Grants & sponsorships income is derived predominantly from New Zealand Rugby (NZR), community and gaming trusts and commercial sponsors. With grants & sponsorships responsible for such a large portion of revenue it is important that unions maximise their opportunities with commercial sponsors. This needs to continue to be a fundamental part of the unions' focus to ensure they continue to maintain and grow their existing commercial relationships with their sponsors and other funding entities, as well as exploring other opportunities to build affiliations with new sponsors. 8 It is indicative of the challenging market conditions that in FY15 half of the Mitre 10 Cup unions reported a decrease in grants & sponsorships revenue compared to the previous year. The decrease of Wellington’s grants & sponsorships by almost $0.5m was a key element of that union’s substantial deficit for the year. Similar to previous years, only 9 of the 14 unions disclosed their NZR funding in their financial statements. For those unions that provided disclosure, the total funding to the individual unions ranged between $1.0m and $2.2m, a slight increase on the previous year. NZR’s financial statements show that they distributed grants of $9.5m to provincial unions (including those outside of the Mitre 10 Cup) in FY15, an increase of 3.2% on the previous year. These funds benefit rugby in the unions across professional, academy and junior players. As a result of NZR’s recent broadcast deal and the changes to the Provincial Union Funding Model the unions will receive more funding in 2016 than prior years. However, while they will undoubtedly grateful for the increase in future grants from NZR, rugby administrators should 71% FY14 v FY15 Outer Ring = FY15 Inner Ring = FY14 Revenue: Match Related 68% State of the Unions: Deloitte sports review Financial performance Revenue: Sponsorship & Grants Revenue: Other $000 Investec Super Rugby Based Unions – Revenue 80,000 60.0% 60,000 55.0% 40,000 50.0% 20,000 45.0% 40.0% FY11 Other Unions FY12 Super Rugby Unions Revenue FY13 FY14 FY15 Super Rugby Unions as a % of total revenue not relax as they need to continue to focus on diversifying their income streams, and not rely on NZR. The professional game income for broadcast rights is even more critical for provincial unions than before as other sources of revenue continue to decline. Currently the NZR grants only constitute about a quarter of the Mitre 10 Cup unions’ grants & sponsorships income. Focus needs to remain on getting the best deals out of existing and new commercial partnerships. Failure to retain, improve or garner new sponsorship will see unions risk substantial financial losses, the potential of exhaustion of accumulated funds, and ultimately to dire predicaments for unions. Broadcast revenue flows from television viewership. We do not have statistics to assess the changes in the Mitre 10 Cup viewership numbers. Other revenues also fell from FY14 by $1.3m (11.5%) to $10.1m, as three of the larger unions earned reduced revenue in areas like event management. Collectively, the five unions that are based in home cities to Super Rugby franchises generated 46.4% of revenue in FY15. This was down again from the prior year when these unions were responsible for 48.1%. The total revenue for these five provinces has decreased over the past four years, a decrease of 15.9% since FY11. Conversely, the other Mitre 10 Cup unions have collectively increased their revenue by 3.0% over the same period. Revenue generation continues to be driven by those unions that are home cities to Super Rugby franchises; however the other unions are gradually increasing their contribution to provide a more diverse mix of revenue across all provinces. In FY15 the majority of revenue was earned by Auckland ($9.9m ), followed by Canterbury ($7.2m), Wellington ($5.0m), and Waikato ($4.8m). The ranking of the largest four unions by revenue is unchanged from the prior year. Revenue continues to be dominated by the unions that are home to Super Rugby franchises, with the exception of Otago. Hawke's Bay and Bay of Plenty come in at 5th and 6th respectively, closely followed by Taranaki. As the Mitre 10 Cup unions’ revenue has collectively decreased over the past few years, the unions have managed to reduce their overall expenses as well. Total operating expenditure decreased by $0.9m (1.3%) to $65.1m in FY15, the lowest reported collective expenditure since 2007. The overall breakdown of total operating expenses in FY14 is 45.2% for match related expenditure, 28.7% for growing the game expenditure and 26.1% for administration expenses. Operating expenditure has been analysed in three categories: team and rugby related expenditure, growing the game expenditure and administration expenses. Team and rugby related expenditure includes player payments, team management salaries, staff on-costs and other game day related expenses associated with hosting and travelling to matches. In FY15, team and rugby related expenditure decreased by $1.7m (5.4%) from FY14, returning to the previous trend of team and rugby related expenditure decreasing every year since FY09, with the exception of the slight increase in FY14. Growing the game includes expenditure directly and indirectly aimed at the development of both the current player base and providing for the next generation of players. Types of expenditures included in this category include amateur competitions, training costs, expenditure associated with attracting grants and sponsorship, advertising and marketing expenditure and any grants made, or dividends paid, to affiliated unions. The overall breakdown of total operating expenses in FY15 is 45.2% for match related expenditure, 28.7% for growing the game expenditure and 26.1% for administration expenses. 9 State of the Unions: Deloitte sports review Financial performance ??lill?" i State of the Unions: Deloitte sports review Financial performance Not included in the above figures are the increasing amounts of dedicated staffing resources that unions are tasking with the development of the game at the grassroots level. These personnel costs, including rugby development coaches and referee development, are often grouped in with other administrative salary expenses in the unions’ financial statements and are consequently captured in our analysis as administration costs rather than growing the game expenditure. Administration costs are those required to operate the unions and includes items such as management and finance personnel, office costs, communication costs and audit fees. In FY15, the unions’ administrative costs increased on the previous year for the second year in a row, rising by $1.2m to $17.0m, a 7.3% increase on FY14. Mitre 10 Cup Unions – Operating Costs 80.0 70.0 60.0 $m 50.0 40.0 30.0 20.0 10.0 - FY11 Growing The Game FY13 FY14 FY15 Administration Mitre 10 Cup Unions – Team Expenses 40.0 40.0% 30.0 35.0% 30.0% 20.0 25.0% 10.0 - 20.0% FY11 Team Expenses FY12 FY13 FY14 FY15 Team Expenses as a % of Total Revenue Mitre 10 Cup Unions – Growing the Game 25.0 40.0% 20.0 35.0% 15.0 30.0% 10.0 25.0% 5.0 20.0% $m It will be a concern for a number of rugby administrators that administration costs increased when all other expenses decreased in line with the reduction in revenue. In previous years we noted that the unions had settled into a pattern of controlling their expenses which remains the case for most unions. FY12 Team & Match Related Costs $m In FY15 growing the game expenditure reduced by 1.8% from FY14 to $18.7m in FY15. The unions as a group have spent $0.3m less in FY15 than the previous year, the second year in a row that expenditure in this category has decreased. Over the past two years $2.3m less is being used to invest in growing the game in the local communities. Collectively over the last five years, the unions have spent $97.9m on improving facilities and developing of the game at the grassroots level. - 15.0% FY11 Growing the Game FY12 FY13 FY14 FY15 Growing the Game as a % of Total Revenue 11 State of the Unions: Deloitte sports review Financial performance It will be a concern for a number of rugby administrators that administration costs increased when all other expenses decreased in line with the reduction in revenue. In previous years we noted that the unions had settled into a pattern of controlling their expenses which remains the case for most unions. Revenue by Union - FY13 to FY15 12,000 10,000 $000 8,000 6,000 4,000 2,000 Auckland FY13 BOP FY14 Canterbury Counties Hawke's Bay Manawatu North Harbour Northland Otago Southland Taranaki Tasman Waikato Wellington Manawatu North Harbour Northland Otago Southland Taranaki Tasman Waikato Wellington FY15 Net Surplus/Deficit by Union – FY13 to FY15 800 600 400 200 - $000 (200) (400) (600) (800) (1,000) (1,200) (1,400) (1,600) Auckland FY13 12 BOP FY14 Canterbury FY15 Counties Hawke's Bay 2,000 State of the Unions: Deloitte sports review Financial position Auckland FY13 BOP FY14 Canterbury Counties Hawke's Bay Manawatu North Harbour Northland Otago Southland Taranaki Tasman Waikato Wellington Southland Taranaki Tasman Waikato Wellington FY15 Net Surplus/Deficit by Union – FY13 to FY15 Financial position 800 600 400 200 - $000 (200) (400) (600) (800) (1,000) (1,200) (1,400) (1,600) Collectively the key balance sheet items have taken a downward turn in an unsuccessful financial year, however the good management of the unions’ balance sheets in previous years has ensured that the financial positions remain strong for most unions. Auckland FY13 BOP FY14 Canterbury Counties Hawke's Bay Manawatu North Harbour Northland Otago FY15 Mitre 10 Cup Unions – Accumlated Reserves 10,000 8,000 $000 6,000 4,000 2,000 - Auckland FY14 BOP Canterbury Counties Hawke's Bay FY15 Manawatu North Harbour Northland Otago Otago Southland With nine of the 14 Mitre 10 Cup unions negative equity position they held in FY13. achieving a surplus correspondingly Even though the majority of the unions the same unions also recorded an increased their accumulated funds improvement in their equity positions in many of them remain in precarious FY15. It was the disappointing result of equity positions with half of the unions Mitreof 10the Cup Unions Net Working FY15less than $1.0 million in equity, several unions that– outweighed theCapital having which could be wiped out in a couple of bad years of financial performance. Net Working Capital $000 (column) 6,000 small surpluses achieved by the majority. Identical to last year, only one union, 5,000 Waikato, maintains a negative equity position, 4,000 and it is troublesome that the unions’ equity position has deteriorated 3,000 over the last two financial years. The net working capital of an organisation, calculated as its current assets less current liabilities, indicates the organisation’s ability to pay its creditors 2,000 Auckland and Canterbury continue to be in a timely manner. In general, ratios of the1,000 largest unions with $9.9 million and $7.3 current assets to current liabilities of million respectively in accumulated funds. 1.5 to 2.0 or greater are preferred. In percentage terms Southland gained the Working capital management is an (1,000) most, increasing by 25.1%, and Manawatu important facet of a business and its continued their turnaround gaining 23.9% execution can have a large impact on the (2,000) Auckland BOPstepCanterbury Counties Bay Manawatu of North Northland Otago as they took a further away from the Hawke'sfunctioning a Harbour business and the rugbySouthland Net working capital Ratio of current assets to liabilities CA/CL Taranaki Tasman Waikato Wellington Wellington unions are no different. FY15 was a reversal of the prior year’s increase and the unions have returned to a similar position as in FY13 with a decrease of $1.2 million (18.1%) in FY15. Overall, the unions’ working capital position deteriorated from FY14 by moving from a ratio of 1.49 to 1.45 in FY14. 7.0 6.0 Ratio of current assest to current liabilities (circles) (2,000) Seven of the 14 unions are sitting in a positive net working capital position. 5.0 This is a weakening of the position in FY14 when 4.0 nine unions were in a positive position. This is symptomatic of the reduction in3.0revenue suffered by a number of the unions as their 2.0 cash balances decreased by $4.3m (36.3%) to $7.5m in FY15. This is an area that union 1.0 administrators will have to keenly manage 0.0 their short term cash position of their organisations. (1.0) Taranaki Tasman Waikato Wellington 13 Growing the Game 2,000 Growing the Game as a % of Total Revenue BOP Canterbury Counties Hawke's Bay Manawatu State of theAuckland Unions: Deloitte sports review Financial position FY13 FY14 North Harbour Northland Otago Southland Taranaki Tasman Waikato Wellington Waikato Wellington FY15 Net Surplus/Deficit by Union – FY13 to FY15 800 600 Mitre 10 Cup Unions – Consolidated Accumulated Funds 35.0 30.0 $000 There400 are seven unions who have current liabilities 200 in excess of their current assets, which suggests that they could struggle to pay debts as they fall due in the short (200) term (although this difference may have (400) occurred due to different accounting (600) treatment by each union). 25.0 (800) 20.0 $m Like(1,000) most other not-for-profit organisations, 15.0 the(1,200) rugby unions are managed by people who have a good understanding that they (1,400) 10.0 are(1,600) only today’s stewards of the game, and Auckland BOP Canterbury Counties Hawke's Bay Manawatu North Harbour Northland Otago have a responsibility to those that came 5.0 before them, and toFY14 the future FY13 FY15generations to follow. Due to this the administrators FY13 tend to act in a more conservative nature than normal business operations. However, the accumulated reserves that the unions even though the unions are not-for-profit have amassed over their existence, the organisations and not businesses in the same applies to the short term liquidity. If traditional sense, they still operate in an expected revenue is not generated, or an environment that requires them to use their unexpected sizable expense arrives to be business acumen and operate the unionsReserves in paid, resulting in a significant unbudgeted Mitre 10 Cup Unions – Accumlated a professional and business-like manner. loss, unions could soon see their cash 10,000 $000 As previously mentioned overall cash 8,000 balances decreased by $4.3m caused by seven of the unions' cash balances (cash 6,000 less any overdraft balances owing and short4,000 term borrowings) decreasing by 39.1% to 112.1% of their respective cash 2,000 This will be distressing for several balances. of those rugby administrators if they do not have cashflow management plans for their unions already in place and short term (2,000) Auckland Canterbury Counties funding planned fromBOP a financial lender, FY14 FY15 wealthy benefactors or NZR as the place of last resort. Mentioned earlier in this report was the risk that one or a few years of substantial losses would have the potential to erase Southland Taranaki Tasman FY14 FY15 NZR among other providers, and a $4.9m loan from the BNZ to the Canterbury union to assist the union’s redevelopment of its facilities at Rugby Park, Christchurch. The importance and responsibility that our provincial unions hold for the on-going reserves severely diminished. From the success of our national and Super Rugby face of it, it appears that North Harbour teams should not be overlooked. It is the provides an unfortunate example of this as country’s Mitre 10 Cup and Heartland their loss of $152,000 contributed towards provincial rugby unions that have been the severe reduction of their cash assets, charged with the great responsibility and the establishment of short and long of the development of the game, the term borrowings. encouragement of its supporters and, vitally for future national team success, its Currently there are four Mitre 10 Cup talent. This responsibility involves providing unions with negative cash balances (taking New Zealand’s talente mpetitions from the into account overdraft facilities and short Hawke's Bay Manawatu North Harbour Northland Otago Southland Taranaki Waikato to first Wellington development ofTasman kids learning catch term borrowings). Associated with the Otago Wellington a ball, to secondary school-age players borrowing there are seven unions that understanding the nuances of the game, have reported long term borrowing, to administering its semi-professional which collectively increased by $5.3m in competition, the Mitre 10 Cup, whilst FY15 to $7.25m. The two significant loans securing financial stability. that contribute to the overall amount is a substantial loan to the Waikato union by 6,000 7.0 5,000 6.0 4,000 5.0 3,000 4.0 2,000 3.0 1,000 2.0 - 1.0 0.0 (1,000) (2,000) Auckland Net working capital 14 BOP Canterbury Counties Hawke's Bay Manawatu Ratio of current assets to liabilities CA/CL North Harbour Northland Otago Southland Taranaki Tasman Waikato Wellington (1.0) Ratio of current assest to current liabilities (circles) Net Working Capital $000 (column) Mitre 10 Cup Unions – Net Working Capital FY15 State of the Unions: Deloitte sports review Rugby at the grassroots Rugby at the grassroots While financial measures are a useful way to measure activity and the health of an organisation, these metrics do not always account for the key contributors to the well-being of an organisation, particularly for volunteer based not-for-profits like the rugby unions. A key measure of the health of many not-for-profit organisations is the number of active members involved in the organisation. In the case of rugby unions and their clubs this is the strong number of volunteers that coach, manage and transport the numerous teams at all levels, paint the lines on the fields, put up the pads on the posts, set up the flags and ‘crowd control’ electric fences on the sidelines, organise the laundering of the shirts, halftime drinks and manage the bar, kitchen and cleaning of the changing rooms and clubrooms. It is almost too toilsome to count the number of volunteers that make the game run at the grassroots level and consequently the data is not readily available to analyse. However, each of the unions and their clubs will be keenly aware of retaining and recruiting the required number of volunteers to ensure that players of all ages continue to enjoy playing rugby. been gradually trending upwards, having grown by 4.4% since 2010, which is a good indicator of the health of the unions. Of that growth, with more than half the number of player registrations, the age group ranging from birth to 12 year olds had the greatest increase in participation in rugby, rising by 12.5% since 2010. There was an apparent ‘bump’ in numbers following the 2011 Rugby World Cup held in New Zealand and the unions Mitre 10 Cup Unions – Player Registration Movement 1.15 1.10 1.05 1.00 0.95 Another key measure of health for unions is the number of player registrations that they manage. Nationally more than 150,000 rugby players were registered with their clubs, and consequently their unions, in 2015. Specific to the Mitre 10 Cup unions, player registration numbers have 0.90 0.85 2010 2011 Source: New Zealand Rugby Base period – 2010 = 1.0 2012 2013 2014 2015 0-12 year olds 13-20 year olds 21 year olds and over Mitre10 Cup unions 15 State of the Unions: Deloitte sports review Rugby at the grassroots Mitre 10 Cup Unions – Player Registration Movement 1.15 1.10 1.05 1.00 0.95 0.90 0.85 2010 2011 Source: New Zealand Rugby Base period – 2010 = 1.0 have managed to continue to grow their registrations from that point. On the other hand, the numbers are not as positive for the 13 to 20 year old age group or the senior grades, with both categories declining by 3.2% and 4.2% respectively. The other key feature of the player registrations is the pleasing increase of female registrations in the Mitre 10 Cup unions. While the number of male registered players has remained relatively flat since 2010, the number of female player registrations has increased by 156.9% over the same period. In 2010 females comprised 8.3% of the total number of player registrations, and due to the flatness of the male numbers and the exponential growth of female rugby players, females now make up 12.4% of the registered rugby players in the Mitre 10 Cup unions. With growth in the key areas of female players and junior rugby, the unions will be positive about the future of the game in their regions. 16 2012 2013 2014 2015 0-12 year olds 13-20 year olds 21 year olds and over Mitre10 Cup unions Mitre 10 Cup Unions – Player Registration Movement 1.60 1.50 1.40 1.30 1.20 1.10 1.00 0.90 2010 2011 Source: New Zealand Rugby 2012 Females 2013 2014 Males Base period –  2010 = 1.0 While the number of male registered players has remained relatively flat since 2010, the number of female player registrations has increased by 156.9% over the same period. Heartland Unions – Player Registration Movement 1.15 2015 Mitre 10 Cup Unions – Player Registration Movement 1.15 State of the Unions: Deloitte sports review Heartland Championship Unions 1.10 1.05 1.00 0.95 Heartland Championship Unions 0.90 0.85 2010 2011 Source: New Zealand Rugby Base period – 2010 = 1.0 2012 2013 2014 2015 0-12 year olds 13-20 year olds 21 year olds and over Mitre10 Cup unions Mitre 10 Cup Unions – Player Registration Movement 1.60 1.50 1.40 the financial This is the 2nd year of including performance of the 12 unions1.30with teams playing in the 1.20 Heartland Championship. Similar to last year, the unions 1.10 have continued to live within their means and have collectively improved their financial well-being as small 1.00 not-for-profit organisations. 0.90 2010 The Heartland Championship unions have continued their run of small surpluses with FY15 being the collective unions’ fifth consecutive positive result. In FY15 they achieved a combined surplus of $159,000, an increase of $125,000 from FY14 and the number of unions achieving surpluses increased by one to nine of the twelve unions. The Heartland Championship unions generated an increase in revenue of 6.4% from $7.2 million to $7.8 million in FY15. The unions’ overall expenses also increased, however only by $340,000 (4.7%) hence the increase in surplus overall. In addition to the analysis completed for the Mitre 10 Cup unions; we have also examined player registrations for the Heartland Championship unions. Overall the number of players registered has declined over the past six years, dropping 6.0% since 2010. While player registrations in the senior grades in the Heartland unions have remained flat over the period analysed, it is a concern that, 2011 2012 with more than half of the registrations Females coming in the junior grades, this age group Source: New Zealand Rugby has period dropped by =16.7% Base –  2010 1.0 since 2012. The increase in 2012 is an apparent effect of the positive work carried out by the unions and NZR to encourage more children to play rugby in the heartland communities after the hosting of the Rugby World Cup in 2011. Rugby administrators will be mindful of the potential future impact if these current trends were to continue for their clubs, volunteers and supporters. 2013 2014 2015 2014 2015 Males Heartland Unions – Player Registration Movement 1.15 1.10 1.05 1.00 0.95 0.90 0.85 2010 2011 Source: New Zealand Rugby Base period – 2010 = 1.0 2012 2013 0-12 year olds 13-20 year olds 21 year olds and over Heartland unions 17 State of the Unions: Deloitte sports review Heartland Championship Unions Heartland Rugby Unions - Consolidated Results Heartland Rugby Unions - Consolidated Results 250 10.0 8.0 6.0 200 4.0 150 - $000 $m 2.0 100 (2.0) (4.0) 50 (6.0) (8.0) - (10.0) FY11 Income FY12 FY13 Expenses FY14 FY15 FY11 FY12 FY13 Surplus/Deficit New Zealand Rugby Operating Revenue 140.0 120.0 100.0 $m 80.0 60.0 40.0 20.0 (20.0) 18 FY11 Revenue: Commercial FY12 Revenue: Match Related FY13 Revenue: Other FY14 FY15 Surplus/(Deficit) after tax FY14 FY15 150 - $000 $m 2.0 100 (2.0) State of the Unions: Deloitte sports review New Zealand Rugby (4.0) 50 (6.0) (8.0) - (10.0) FY11 Income FY12 FY13 Expenses FY14 FY15 FY11 FY12 FY13 Surplus/Deficit New Zealand Rugby New Zealand Rugby Operating Revenue 140.0 120.0 100.0 80.0 $m The small $463,000 deficit recorded in FY15 for the NZR is their first deficit since FY10. However this has not stopped New Zealand's national rugby body from continuing to invest in the game with an increase in the level of grants given to the unions of 3.2% in FY15. These grants remain the major source of revenue for the provincial unions and are critical for them to be able to operate and develop the game further in their communities. 60.0 40.0 20.0 The FY15 results continued the four year cycle of a change in the proportional mix of revenue earned. With a Rugby World Cup year leading to fewer test matches (consequently less match related income) and correspondingly the ‘other’ income increases due to the revenue generated from the international tournament. NZR has having recently negotiated an improved broadcasting deal resulting in an increase in future potential revenue. This means that they need to continue to monitor their expenditure to ensure they can continue to support the provincial unions (as their representatives in the regions) to grow the game in the local communities. (20.0) FY11 Revenue: Commercial FY12 Revenue: Match Related FY13 Revenue: Other FY14 FY15 Surplus/(Deficit) after tax Like most other not-for-profit organisations, the rugby unions are managed by people who have a good North Harbour understanding that they are only today’s stewards of Counties Manukau the Wellington game, and have a responsibility to those that came BOP before them, and to the future generations to follow. Northland Mitre 10 Cup Unions - Equivalent percentage of population engaged via Facebook Canterbury Tasman Manawatu Taranaki Southland Auckland Hawke's Bay Waikato 19 FY State of the Unions: Deloitte sports review Supporter engagement Supporter engagement The social media environment is constantly changing and if businesses are not utilising the platforms regularly and appropriately to engage with the target audience, businesses will get lost in the online noise, and this is no different for the unions. Social media has continued to develop as a key way for unions to get direct engagement with their supporters. Facebook still leads the way as the most popular platform for unions to be able to communicate with supporters. Unions should note that Instagram has overtaken Twitter as a platform with a greater following. Rugby administrators will need to be mindful of how they manage their marketing campaigns as each of the social media platforms hosts a slightly different segment of the target market. Without rich content and messages that engage with followers unions will be in a similar situation as if they operated no social media platforms. A summary of the unions’ social media statistics can be found in the table below. Last year we analysed the use of social media by unions including what platforms they were using and the interest levels in them. The trend from last year to this year has been really positive, with overall Facebook likes increasing by 29.2%. A similar trend was also shown in Twitter as they had an increase in followers of 27.2% resulting in bringing total followers of the unions' tweets to over 50,000. However 20 the standout performer over the last year is the unions’ use of Instagram, as the provincial unions’ engagement of this social media platform has had an increase of 254.4% in followers. Their followers have shot up from just under 16,500 in 2015 to over 58,000 in 2016. Overall, across all of the social media platforms, this signifies the amount of Mitre 10 Cup followers that the unions are engaging via social media has increased 38.5% over the year. With the supporter base for Mitre 10 Cup increasing on social media, this consequently means the unions’ messages are being shared to a wider audience. With the growth and reach expected to continue to increase, any marketing can broadcast the unions’ and their sponsors’ messages to a wider range of potential customers to build greater brand affinity and loyalty. The key for the provincial unions is to turn this increased following into greater match day attendances to boost their revenue. The attendances will increase due to the loyalty built or through the unions offering followers discounts, early bird tickets or fan give-aways. While offering these deals may not increase revenues immensely, it will allow for greater interaction and atmosphere at the stadium, further solidifying the loyalty and support for their team. To continue the increase in followers, the provincial unions need to stay up to date with the latest features to ensure they provide the greatest level of supporter engagement. One of the newer features allowing a greater level of engagement is Facebook’s ‘Live’ product. This innovation allows the user to live stream what they are doing or watching to a wide audience, while taking questions and comments from viewers. The benefit for unions is the potential it gives them to build a better rapport and engage with their supporters more directly by giving followers an inside look into their teams that is not available through SKY TV or normal social media contact. This feature is already being used by fans in the crowd to show their experience which only bodes well for the unions as they are getting a greater reach than their current followers. This is also an opportunity for unions to invite others to come to the game to enjoy and share their game day experiences. State State of the of the Unions: Unions: Deloitte Deloitte sports sports review review Supporter Executive engagement summary 21 State of the Unions: Deloitte sports review Supporter engagement ITM Cup Unions Population Base (‘000s) Facebook likes (‘000s) Twitter Followers (‘000s) Instagram followers (‘000s) Auckland 796.5 117.4 8.3 15.4 Waikato 326.9 80.3 5.6 6.3 Otago 142.0 39.9 4.4 6.1 Canterbury 478.0 31.2 4.4 9.7 Hawke’s Bay 158.9 24.4 2.1 0.6 Wellington1 397.6 23.6 7.4 3.0 Taranaki 127.4 15.4 4.8 5.1 BOP 236.2 15.2 2.3 2.3 96.5 13.7 3.0 2.9 Counties 437.5 13.6 4.1 0.8 Tasman 146.8 12.6 3.0 1.8 Northland 166.1 11.9 1.9 1.0 Manawatu 127.8 11.5 2.9 3.4 North Harbour 292.9 6.0 3.1 - Southland 1 Wellington operates separate social media accounts for the WRU and Lions. We have combined the figures for our reporting purposes Super Rugby teams Crusaders Chiefs Hurricanes Blues Highlanders All Blacks Population Base (‘000s) Facebook likes (‘000s) Twitter Followers (‘000s) Instagram followers (‘000s) 740.7 363.8 74.0 78.2 1,228.5 288.7 65.5 58.6 967.0 254.3 34.9 71.5 1,255.5 210.2 52.0 51.5 317.8 191.8 40.5 60.9 4,509.4 4,142.6 648.0 665.0 The key for the provincial unions is to turn this increased following into greater match day attendances to boost their revenue. The attendances will increase due to the loyalty built or through the unions offering followers discounts, early bird tickets or fan give-aways. 22 20.0 Revenue: Commercial Revenue: Match Related Revenue: Other Surplus/(Deficit) after tax (20.0) State of the Unions: Deloitte sports review Supporter engagement FY11 FY12 FY13 FY14 FY15 Commercial Revenue: Match of Related Revenue: Othervia Facebook Surplus/(Deficit) after tax Mitre 10 Revenue: Cup Unions - Equivalent percentage population engaged North Harbour Counties Manukau Wellington BOP Northland Canterbury As noted last year unions must offer a game day experience that exceeds what is available for the viewer at home in order to compete with the television viewing experience. Social media could be a key method the unions have been looking for to provide this greater experience. Unions could use social media features to allow people in the stadium to interact with the venue and make choices to enhance their experience. This could include being able to select the music for breaks in play, send messages to the team and crowd on the big screen or vote for their player of the match. This will make the supporters feel truly engaged and that they are a part of the game day experience and able to influence the team. Most importantly to get supporters to the stadiums, unions need to use social media as a feedback mechanism for supporters to comment about their experiences while at the game allowing for the ground officials to respond in a timely fashion to make the experience as enjoyable as possible for the fans. This will allow a greater experience in the future as well as fans feeling like their team and community are listening to them which will get them more engaged. Tasman Mitre 10 Cup Unions - Equivalent percentage of population engaged via Facebook Manawatu Taranaki Southland North Harbour Auckland Hawke's Bay Counties Manukau Waikato Wellington Otago BOP 0% 5% Northland Jul 2015 Canterbury 10% 15% 20% 25% 30% Jul 2016 Tasman Manawatu Taranaki Southland Auckland Hawke's Bay Waikato Otago 0% 5% Jul 2015 10% 15% 20% 25% 30% Jul 2016 Most importantly to get supporters to the stadiums, unions need to use social media as a feedback mechanism for supporters to comment about their experiences while at the game. 23 State of the Unions: Deloitte sports review Consolidated financial information Consolidated financial information Consolidated summary financial performance A summary of the consolidated financial performance over the last five years is presented below. $000 Summary Financial Performance FY11 FY12 FY13 FY14 FY15 Revenue Match related income 8,821 9,586 10,938 10,332 8,603 Grants and sponsorship 48,220 45,575 46,162 46,586 45,138 Other revenues 11,405 11,833 12,126 10,919 10,072 68,446 66,994 69,226 67,837 63,814 Team and match related costs (33,548) (31,649) (31,060) (31,081) (29,398) Growing the game (19,362) (19,770) (20,998) (19,083) (18,696) Administration (15,182) (14,343) (13,695) (15,801) (16,972) (68,092) (65,762) (65,753) (65,965) (65,065) 354 1,232 3,473 1,872 (1,252) (2,265) (1,682) (1,670) (1,751) (1,691) 1,300 1,009 1,422 1,043 1,524 (611) 559 3,225 1,164 (1,418) (15) (20) (22) - - (626) 539 3,203 1,164 (1,418) Total Operating expenditure Total Surplus before interest, depn & amort D&A& impairments Net interest Surplus before tax Tax Net surplus / (Deficit) 24 State of the Unions: Deloitte sports review Consolidated financial information Consolidated summary financial position A summary of the consolidated financial position over the last five years is presented below. $000 Summary Financial Position FY11 FY12 FY13 FY14 FY15 Current assets Cash 8,393 8,498 11,406 11,798 7,509 Receivables and prepayments 8,883 7,603 7,391 7,601 6,692 299 330 275 231 350 2,445 3,388 1,162 1,601 3,577 20,020 19,819 20,234 21,231 18,128 9,621 9,861 12,907 12,911 11,936 13,715 13,526 13,782 14,695 19,646 1,536 1,256 1,130 954 2,360 24,872 24,643 27,819 28,560 33,942 44,892 44,462 48,053 49,791 52,071 264 443 184 378 382 10,635 9,110 9,721 10,598 9,323 Short-term borrowings 2,658 1,036 1,524 669 689 Other current liabilities 3,486 2,385 2,562 2,331 2,141 17,043 12,974 13,991 13,976 12,534 2,342 2,643 1,806 1,929 7,222 - 700 823 1,225 1,075 2,342 3,343 2,629 3,154 8,297 25,508 28,145 31,434 32,661 31,239 44,893 44,462 48,054 49,791 52,071 2,977 6,845 6,243 7,255 5,594 Inventories Other current assets Total Non-current assets Investments Property, plant and equipment Other non-current assets Total Total assets Current liabilities Overdrafts Payables and accrued expenses Total Non-current liabilities Long-term borrowings Other non-current liabilities Total Equity Accumulated funds Total liabilities and equity Net working capital 25 State of the Unions: Deloitte sports review Consolidated financial information Summary financial performance by union for FY14 and FY15 $000 For the 2014 Financial Year Summary Financial Performance Auckland BOP Canterbury Counties Hawke’s Bay Manawatu North Harbour Northland Otago Southland Taranaki Tasman Waikato Wellington TOTAL Revenue Match related income 850 946 1,240 220 776 386 162 2,300 361 851 1,280 - 284 676 10,332 Grants and sponsorship 3,404 3,438 5,989 3,073 3,677 3,234 3,262 1,421 2,340 1,817 3,056 3,604 3,989 4,282 46,586 Other revenues 6,352 36 555 59 123 350 330 - 33 446 59 140 1,075 1,361 10,919 10,606 4,420 7,784 3,352 4,576 3,970 3,754 3,721 2,734 3,114 4,395 3,744 5,348 6,319 67,837 (3,118) (2,187) (4,286) (1,829) (2,487) (1,802) (1,282) (2,303) (1,319) (1,725) (2,047) (1,515) (2,388) (2,793) (31,081) Growing the game (3,418) (1,228) (3,312) (833) (1,572) (1,306) (448) (750) (635) (567) (391) (628) (1,738) (2,257) (19,083) Administration (3,808) (686) (89) (579) (289) (379) (1,896) (514) (464) (632) (1,842) (1,355) (809) (2,459) (15,801) (10,344) (4,101) (7,687) (3,241) (4,348) (3,487) (3,626) (3,567) (2,418) (2,924) (4,280) (3,498) (4,935) (7,509) (65,965) 262 319 97 111 228 483 128 154 316 190 115 246 413 (1,190) 1,872 (108) (57) (405) (108) (42) (50) (90) (25) (9) (10) (49) (74) (438) (286) (1,751) - - 324 (13) 20 (8) 1 (8) - (5) 10 50 (90) 762 1,043 Surplus before tax 154 262 16 (10) 206 425 39 121 307 175 76 222 (115) (714) 1,164 Tax - - - - - - - - - - - - - - - 154 262 16 (10) 206 425 39 121 307 175 76 222 (115) (714) 1,164 BOP Canterbury Counties Total Operating expenditure Team and match related costs Total Surplus before interest, depn & amort D&A& impairments Net interest Net surplus / (Deficit) $000 For the 2015 Financial Year Summary Financial Performance Auckland Hawke’s Bay Manawatu North Harbour Northland Otago Southland Taranaki Tasman Waikato Wellington TOTAL Revenue Match related income Grants and sponsorship 645 983 657 184 656 145 32 2,362 334 950 1,067 - 208 380 8,603 3,605 3,383 6,057 2,868 3,733 3,366 3,437 1,338 2,118 985 2,920 3,514 4,011 3,804 45,138 Other revenues 5,667 45 583 216 107 228 242 - 190 1,157 122 147 556 814 10,072 Total 9,917 4,411 7,297 3,268 4,496 3,738 3,711 3,700 2,642 3,092 4,108 3,661 4,775 4,998 63,814 Team and match related costs (2,484) (2,332) (3,363) (1,684) (2,603) (1,823) (1,257) (2,246) (1,387) (1,586) (1,970) (1,646) (2,187) (2,828) (29,398) Growing the game (3,494) (1,244) (3,108) (809) (1,595) (1,360) (454) (753) (829) (701) (258) (683) (1,751) (1,656) (18,696) Administration (3,946) (685) (769) (598) (286) (435) (2,063) (594) (579) (686) (1,806) (1,181) (809) (2,534) (16,972) Total (9,924) (4,261) (7,240) (3,091) (4,485) (3,618) (3,774) (3,593) (2,796) (2,974) (4,034) (3,510) (4,747) (7,019) (65,065) (7) 150 57 177 11 120 (63) 108 (153) 118 74 151 27 (2,021) (1,252) (107) (46) (548) (117) (40) (46) (93) (38) (10) (14) (42) (47) (269) (275) (1,691) 257 - 498 (11) 19 - 4 (6) - (11) - 76 (106) 805 1,524 143 104 7 48 (10) 74 (153) 64 (163) 93 32 181 (347) (1,491) (1,418) - - - - - - - - - - - - - - - 143 104 7 48 (10) 74 (153) 64 (163) 93 32 181 (347) (1,491) (1,418) Operating expenditure Surplus before interest, depn & amort D&A& impairments Net interest Surplus before tax Tax Net surplus / (Deficit) 26 State of the Unions: Deloitte sports review Consolidated financial information Summary financial position by union for FY14 $000 As at the end of 2014 Financial Year Summary Financial Position Counties Hawke’s Bay 131 1 950 185 211 28 2,345 72 757 227 346 124 - 46 25 3 30 10 168 - (7) - - - 7,403 1,576 2,476 112 1,732 415 587 Auckland BOP Cash 5,664 1,060 Receivables and prepayments 1,148 265 - 83 591 Canterbury Manawatu North Harbour Northland Otago Southland Taranaki Tasman Waikato Wellington TOTAL 311 80 488 367 507 284 1,048 - 1,641 11,798 88 210 861 - - 7,601 12 - 22 - 3 410 231 430 - - - 6 1,601 165 1,088 1,017 784 1,136 232 2,508 21,231 Current assets Inventories Other current assets Total Non-current assets 3,217 334 6,292 285 1 - 70 55 - 24 330 111 684 1,508 12,911 Property, plant and equipment Investments 673 134 4,187 3,861 447 186 66 2,082 18 78 128 176 766 1,893 14,695 Other non-current assets 107 - - - 69 - 319 - - 11 - - 413 35 954 3,997 468 10,479 4,146 517 186 455 2,137 18 113 458 287 1,863 3,436 28,560 11,400 2,044 12,955 4,258 2,249 601 1,042 2,302 1,106 1,130 1,242 1,423 2,095 5,944 49,791 Total Total assets Current liabilities Overdrafts Payables and accrued expenses Short-term borrowings - - - 139 - - - 40 - - - - 199 - 378 564 849 4,603 128 1,045 169 599 164 238 300 182 262 715 780 10,598 - - - 40 - - - 42 - 59 - - 528 - 669 Other current liabilities 1,059 - - 72 68 122 - 59 - 123 316 - 412 100 2,331 Total 1,623 849 4,603 379 1,113 291 599 305 238 482 498 262 1,854 880 13,976 Long-term borrowings - - 300 290 160 - - 150 - 275 - - 754 - 1,929 Other non-current liabilities - - 725 - - - - - - - - - - 500 1,225 Total - - 1,025 290 160 - - 150 - 275 - - 754 500 3,154 9,777 1,195 7,327 3,589 976 310 443 1,847 868 373 744 1,161 (513) 4,564 32,661 11,400 2,044 12,955 4,258 2,249 601 1,042 2,302 1,106 1,130 1,242 1,423 2,095 5,944 49,791 5,780 727 (2,127) (267) 619 124 (12) (140) 850 535 286 874 (1,622) 1,628 7,255 Non-current liabilities Equity Accumulated funds Total liabilities and equity Net working capital 27 State of the Unions: Deloitte sports review Consolidated financial information Summary financial position by union for FY15 $000 As at the end of 2015 Financial Year Summary Financial Position Auckland BOP 3,153 1,219 842 342 Counties Hawke’s Bay 66 1 330 205 2 2,418 87 786 204 180 Canterbury Manawatu North Harbour Northland Otago Southland Taranaki Tasman Waikato Wellington 47 147 106 602 72 146 53 418 TOTAL 1,238 - 394 7,509 97 177 870 6,692 Current assets Cash Receivables and prepayments - 83 - 41 16 11 21 11 141 - 23 - 3 - 350 Other current assets Inventories 2,803 134 - (7) - - - 19 622 - - - - 6 3,577 Total 6,798 1,777 2,484 123 1,132 420 203 149 1,056 160 1,043 1,335 180 1,271 18,128 106 313 111 444 1,812 11,936 Non-current assets Investments 3,217 317 5,186 316 1 - 57 55 - Property, plant and equipment 950 158 8,756 3,772 428 244 165 2,085 12 79 105 246 917 1,730 19,646 Other non-current assets 407 - - - 52 - 474 - - 863 - - 538 26 2,360 4,574 475 13,941 4,088 481 244 696 2,140 12 1,048 419 357 1,899 3,568 33,942 11,372 2,252 16,426 4,210 1,613 664 899 2,289 1,068 1,208 1,461 1,692 2,079 4,838 52,071 - - - 115 - - - 91 - - - - 175 - 382 9,323 Total Total assets Current liabilities Overdrafts Payables and accrued expenses 611 953 3,321 119 561 228 448 77 362 333 391 318 334 1,265 Short-term borrowings - - - 202 - - 28 44 - 83 - - 331 - 689 Other current liabilities 841 - - 137 6 52 - 69 - 121 294 - 521 100 2,141 1,452 953 3,321 573 567 279 476 282 362 537 686 318 1,362 1,365 12,534 Long-term borrowings - - 5,095 - 80 - 132 96 - 208 - 33 1,578 - 7,222 Other non-current liabilities - - 675 - - - - - - - - - - 400 1,075 Total - - 5,770 - 80 - 132 96 - 208 - 33 1,578 400 8,297 9,920 1,299 7,335 3,637 966 384 290 1,911 705 462 776 1,341 (860) 3,073 31,239 11,372 2,252 16,426 4,210 1,613 664 899 2,289 1,068 1,208 1,461 1,692 2,079 4,838 52,071 5,346 824 (837) (451) 565 140 (273) (133) 693 (378) 357 1,017 (1,182) (95) 5,594 Total Non-current liabilities Equity Accumulated funds Total liabilities and equity Net working capital 28 State of the Unions: Deloitte sports review About this publication About this publication Information The financial data presented in this report is compiled from data contained in the annual financial statements of each rugby union for the financial years ended 2010 to 2015. The annual reports for each union were obtained from either the register of incorporated societies and/or directly from the rugby union. The financial years for each union differ, ending at the close of October, November or December. Despite the timing difference, reported results have been added together to produce consolidated information. This timing difference is not expected to cause materially misleading results or conclusions. The financial statements of each union classify elements of revenues, operating expenses, assets, liabilities and equity differently. The information presented in this analysis has been reclassified and grouped to provide data for a meaningful comparison. The Auckland Rugby Football Union has a controlling interest in the gaming operator The North and South Trust. Expenditure consolidated through its controlling interest in The North and South Trust has been reclassified within revenue to produce a “net gaming” result which is more similar to the net proceeds received by the other unions from similar trusts without a controlling interest. The Tasman Rugby Football Union does not disclose sufficient information to determine a breakdown of operating expenses between team and match related costs and development costs associated with growing the game. In order to avoid any significant distortions, expenditure has been allocated to these two categories based on the average proportion spent on these respective components by other unions. In the 2012 financial year the Otago Rugby Football Union received $2,167,509 of income arising from financial restructure. The numbers used in the financial analysis have been adjusted, taking out this amount to provide a meaningful comparison. In the 2013 financial year the Canterbury Rugby Football Union acquired a 60% shareholding in the company granted the licence to run the Crusaders and their accounts now reflect the combined results of both the Super Rugby and ITM Cup rugby teams. Some income items have been adjusted to reflect the amounts of Canterbury Rugby Football Union income as stated in the annual report. The main components of expenses have been adjusted based on prior year figures or where information has been given in the union’s annual report. The Canterbury Rugby Football Union and Crusaders (GP) Limited detail of revenue and expenditure are not disclosed, therefore the adjustments made by us reflect the amounts stated in the report and our assumptions of expenditure for comparative purposes. This is not a reflection of the individual entities performance. The Group Statement of Financial Position has been used in the report for comparison of balance sheet items. While all due care has been taken to make the data as comparable as possible, some inconsistency may still exist and/or other parties may have presented the data differently. Deloitte Private Deloitte Private is the firm’s private business and not for profit specialist service line. For information regarding the Deloitte Sports Review or any of the Financial Advisory Services that we offer please contact one of our Christchurchbased Private team: Grant Jarrold Partner Tel: +64 3 363 3809 Email: gjarrold@deloitte.co.nz Steven Paul Manager Tel: +64 3 363 3818 Email: stevenpaul@deloitte.co.nz Will Hamilton Consultant Tel: +64 3 363 3839 Email: wihamilton@deloitte.co.nz Wanganui Rugby Football Union Inc. resolved to change its balance date from 31 October to 31 December. The figures used in the report are based on the 31 December 2015 financial year incorporating 14 months of trading. Player registration figures have been provided by New Zealand Rugby. Statistics for social media have been derived from public information and internet searches. Newspaper articles and media searches have been sourced from publically available information. 29 Deloitte refers to one or more of Deloitte Touche Tohmatsu Limited, a UK private company limited by guarantee (“DTTL”), its network of member firms, and their related entities. DTTL and each of its member firms are legally separate and independent entities. DTTL (also referred to as “Deloitte Global”) does not provide services to clients. Please see www.deloitte.com/about for a more detailed description of DTTL and its member firms. Deloitte provides audit, consulting, financial advisory, risk management, tax and related services to public and private clients spanning multiple industries. 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