Otago Rugby Union - A warning that must be heeded

[Shaggy]

Hi all, it's been a while since I put pen to paper (figuratively speaking) and wrote a blog.

The recent financial crisis involving New Zealand's 131 year old union, Otago, has motivated me to jot down a few thoughts, and hopefully, provoke a little discussion on the state of Rugby union at lower level, in the professional era, and what can be done about avoiding potential financial problems in the future.

I'm particularly interested to hear from members a little bit closer to ground zero (in the Otago area), but I guess the topic applies to clubs all around the world too, that all face similar issues.

As a little background information, the Otago rugby union fields a side in New Zealand's ITM cup domestic competition, which is a key component in the development of players for Super Rugby and higher honours.

The union revealed in the last week or so, that it has debts of $2.35 million New Zealand dollars that it cannot pay, with the prospect of that figure being pushed past the $3 million mark (http://www.stuff.co.nz/sport/rugby/p...dation-delayed).

New Zealand unions facing deficits are nothing new, with Southland having to be bailed out less than 12 months ago, with loans from the New Zealand Rugby union for $500,000, and the Invercargill Licensing trust for a similar amount (www.stuff.co.nz/sport/rugby/provincial/4799990/1-5million-bailout-for-rugby-southland)

The difference is that this time, the New Zealand Rugby Union won't be coming to the rescue, with their CEO, Steve Tew, stating on Sky New Zealand's Rugby show, Re-Union, that if they bail out Otago, there are a number of other unions that would expect similar help, and they can't afford to help all of the unions.

The crisis forced the Otago chairman, Wayne Graham, to announce that the union would be put into liquidation, with the date of liquidation being last Friday, but the date has been moved as interested parties try to coordinate a rescue package.
The players association are trying to organise a North Island versus south Island charity match, and it's also reported that former Otago Rugby stalwarts, Laurie Mains and Marc Ellis may come to the aide of the ailing union.

Ellis in particular, is one capable of solving the union's immediate problems, as he is now a successful businessman and multi-millionaire, but while any help from himself and others would be no doubt, greatly appreciated, if I was in their position, I would be concerned that I was treating the symptoms and not the cause of the problem.

As I alluded to earlier, Otago are not alone in their financial problems, with the New Zealand Herald reporting that 10 out of the 14 unions that make up the ITM cup competition, in Deficit (www.nzherald.co.nz/business/news/article.cfm?c_id=3&bjectd10788984).

Clearly, many of the unions are struggling under the current model , with many unions continually over spending.

There are a number of solutions being touted, with many advocating a more semi-professional model being applied, and some, such as ex All Black, Chris Laidlaw saying that the ITM cup should return to an amateur competition (http://www.pitchcare.com.au/magazine...by-crisis.html).

I personally don't think it needs to go that far – I support the NZRU's tough love approach, and think that Tasman's CEO, Peter Barr has it right in this Nelson Mail article (http://www.shuttersport.co.nz/tasman...wer-salary-cap), where he supports a lowering of the salary cap.

Interestingly enough, Tasman have refused to pay up to the current salary cap for a number of years now, as they simply cannot afford it. This has probably been to their detriment, as they lack quality player depth, and it shows in the results on the field.

Please don't get me wrong, I'm not unsympathetic to the situation that Otago (and other unions) find themselves in, and New Zealand needs a strong, stable, domestic competition, with all 14 sides in it, but there needs to be more discipline shown by the individual unions in financial matters.

Coupled with this, like any other business, there needs to be accountability and consequences for poor choices and living beyond a union's budget.

By Shaggy

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[Zed]

Sad to hear about their plight, hopefully it will all get sorted out..

 

[LittleGuy]

Great blog Shags...I know our mutual friend Gus was talking about this on SuperBru the other day and I was wondering what was going on thankyou for the links and the info.

 

[gingergenius]

How to make money as a rugby club? TV money, sponsorship, attendances.

With the ITM cup a 2nd tier competition, all the above three are reduced. Why would TV, sponsors and casual spectators bother with Otago when they could get a better product with the Highlanders?

It's a shame because I find the provincial unions far more interesting than the Super franchises. But it's the cold, hard facts of professionalism... and since income is low and the NZRU can't prop them up, then I see two options.

One is for a semi-professional approach, with pros taking wage cuts. Yes it may cause players to look elsewhere, yes results will suffer, but that's free-market economics for you.

The other is the encouragement of sugar daddies. Look at the EPL, the Aviva, the Top14... the need to be competitive means that huge sums of money are spent on wages of large, fully professional squads. Most of these clubs make a financial loss, yet because that's coming from the pocket of the owner and not the club, they're able to stay afloat.

Also, NZ needs to sort out its attendances. Rugby is the main sport, the country is obsessed with it and they've got a winning national team and plenty of stars to give the game a high profile... why are the numbers for even Super rugby so low? The highest 'home' attendance for a NZ team last year? Crusaders at Twickenham, 35k. The Blues got 30k in for one match, low 20s for two more and less than that for all the rest of their home games. Nobody else gets more than 15k.

I know a low population is a factor, but Auckland's a big city - bigger than, for example, Liverpool which gets 40k+ every home game for two professional teams in its favourite sport. It's not like Eden Park or Westpac are small stadia. Why don't people in NZ want to go and watch rugby?

 

[TheRugbyFactory.com]

I must say that I agree with gingergenius - the NZ teams are playing the best brand of rugby. I'm a SA supporter all the way, but the poor turnouts are shocking. It's a very poor reflection on the so called fans who were up in arms after every World Cup year, but now that they've won it, they are in hiding..? Not the "thanks" I think the AB's were expecting. GO WATCH THE GAMES!!!

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[Shaggy]

Yeah, I've got to agree that crowd attendances were low last year for both Super XV and ITM cup, and there was some criticism of the Otago rugby public on the Re-Union TV show I mentioned in the article, along the lines off, that they can complain about the colour of the jersey (when the highlanders were going to wear green), but they won't go along and watch the games.

However, having said that, the crowds for super rugby at least, seem to be up this year, and this may be as a result of the Rugby World Cup having rekindled interest in watching games live in New Zealand this year, and drawing the crowds away from the domestic games last year (if I had limited funds, and I had to choose what I would rather go to, I know I would've chosen the RWC)

GingerGenius (and TheRugbyFactory.com), you make good points ... for me it comes down to those in charge of the policies and administration of the teams in the ITM cup, getting with the economic reality of the situation, and making the necessary adjustments, whether it be a semi-professional tournament, or lowering the salary cap, or both ... if all of the teams spend less, no one is disadvantaged (except maybe the players)

GG, your point about Auckland is valid at Super Rugby level, although it does compete with the NZ Warriors rugby league team, and League is just as popular in Auckland as union.

At ITM cup level however, you have three teams (Auckland, Counties-Manakau, and North Harbour) that are all within "Auckland" so if you are talking about the city population that applies to the Auckland NPC side, it' not as big as you might think ... don't ask me how big it is, maybe some of the Auckland members can provide more detail.

Thanks for the kind words Little Guy, it's not good to see this happen anywhere

 

[smartcooky]

Also, NZ needs to sort out its attendances. Rugby is the main sport, the country is obsessed with it and they've got a winning national team and plenty of stars to give the game a high profile... why are the numbers for even Super rugby so low? The highest 'home' attendance for a NZ team last year? Crusaders at Twickenham, 35k. The Blues got 30k in for one match, low 20s for two more and less than that for all the rest of their home games. Nobody else gets more than 15k.

I know a low population is a factor, but Auckland's a big city - bigger than, for example, Liverpool which gets 40k+ every home game for two professional teams in its favourite sport. It's not like Eden Park or Westpac are small stadia. Why don't people in NZ want to go and watch rugby?

I agree, its a problem. Part of it may well be the TV coverage. The quality and production standards for live rugby broadcast by NZ SkyTV is nothing short of superb. When the Crusaders had home games here in Nelson last year after the earthquakes, I went to all the matches. Quite a few friends of mine, who I know are Tasman and Crusaders fans did not go. What I asked them why, one theme came through; they had two choices;

Option 1. Drive into Nelson for the game; endure the hassle of finding parking; queue for tickets and pay 40 bucks per person (if you haven't pre-paid them) then queue again to get into the ground; sit in the cold/rain/wind with one view from one angle; queue for ages to get food/drink; wade through the crowd-crush at the end of the game; walk to the car; get caught in the traffic jam of vehicles.

Option 2. Sit at home in the warmth within easy reach of the fridge and pantry, and watch it on SkyTV or The Rugby Channel with excellent commentary, replays and in-game analysis.


Its easy to see what the casual fan is likely to choose


Also, unlike the Premiership, EVERY match ios broadcast live. Every ITM Cup match is also broadcast live.

I wonder if the attendaces might not be greater if the match broadcasts were blocked within a specified area like they used to do in Australia for cricket

 

[gingergenius]

they do that with NFL too, maybe that should be enforced everywhere.