“We are stepping in to support community rugby and all the amateur players, volunteers, administrators, and others who have a stake in the game,” said New Zealand Rugby Union (NZRU) Chief Executive Steve Tew in Dunedin this evening.

“Otago has a long and proud rugby history and the union has played a vital role in the rugby community for 131 years so this is a sad day.

“We fully appreciate how disappointing these events will be for the many people who have worked hard backing rugby in this region.

“This situation also creates considerable financial pain for many including small and large businesses who make up the union’s creditors.

“Today we are taking immediate steps to safeguard community rugby. We will be:

• appointing people to run community rugby in the coming week and we will be paying those salaries;

• urgently meeting with clubs to assess their priorities and discuss how we best work together to maintain and grow community rugby; and

• talking to all contracted players and others who are affected.

“The NZRU has consistently funded the Otago RFU by around $900,000 a year which is used to support rugby across all levels and we remain committed to rugby in this region.

“In addition, we will be immediately assessing the viability of entering an ITM Cup team from the region in the 2012 competition. This will need to be self-funding beyond the normal NZRU contribution if any plan is to be viable. We will be urgently discussing this with players and potential sponsors to see if we can achieve this.

“It is important to also stress that today’s events do not impact on the Highlanders franchise which operates as a separate legal entity. Unlike ITM Cup players, Investec Super Rugby players are contracted by the NZRU and not by a union.

“The situation at Otago is unprecedented in our history. We have been working hard to avoid this outcome. That is why NZRU appointed a specialist late last year to develop a recovery plan and negotiate with affected parties and also why we provided interim finance to ORFU of $200,000 over the last two months.

“We appreciate the collective efforts of many to reach a solution including the current board and major creditors.

“We were all prepared to help, but in the end, the financial hole was just too big. The union had debts of $2.35 million and was facing a significant shortfall in revenue this year. Quite simply, it has run out of money and could not trade out of its difficulties.

“The Otago RFU was a sovereign legal entity, like all unions, managing its own affairs. A number of attempts were made to recover the situation. We will now discuss with all interested parties the way forward from here in terms of future arrangements for delivering rugby across the region.

“There are many factors that contributed to today’s events. Our focus now is not on apportioning blame, but on ensuring that what matters most to fans and players – rugby – continues to flourish in this proud province.”

Otago RFU Questions and Answers



How did this situation happen?

A rugby Provincial Union operates in the same way as any other business and must carefully manage itself to ensure revenues exceed expenses over time. What happened in Otago is that it was unable to bridge the gap between revenue and expenses and over time, debt grew to an unsustainable level.

Who is to blame?

We are not apportioning blame - the situation is far too complex for simple finger pointing and in the end that achieves nothing. Over the last few months our focus has been on finding solutions. Our priority now is supporting community rugby in the region.

Why has the NZRU not bailed out the union?

The sums were just too great. The Otago union was burdened with debts of $2.35 million and was facing a significant revenue shortfall this year which meant its position was no longer sustainable.

We have a responsibility to all our unions to prudently manage New Zealand Rugby funds and the NZRU Board, which must govern in the interests of all 26 unions, decided we had done all we could to achieve a solution.

What support is the NZRU providing to rugby in Otago?

We are committed to supporting community rugby across the region and will be taking the following steps:

• appointing people to run community rugby in the coming week and we will be paying those salaries;

• urgently meeting with clubs to assess their priorities and discuss how we best work together to maintain and grow community rugby; and

• talking to all contracted players and others who are affected.

The NZRU has consistently funded the Otago RFU by around $900,000 a year to be used to support rugby across all levels, as part of the $17 million that is granted every year to all 26 unions. The NZRU remains committed to investing in rugby across the Otago region.

In addition, the NZRU will be immediately assessing the viability of entering an ITM Cup team from the region in the 2012 competition. This would need to be self-funding beyond the normal NZRU contribution if any plan is to be viable. Urgent discussions will be held with players and potential sponsors to see if this can be achieved.

What support has NZRU provided to Otago RFU?

NZRU has provided considerable support in recent months;

• paid in advance the first quarter payment for 2012 at the end of 2011 ($184,000) to assist with cash flow;

• hired respected business consultant and insolvency expert Alan Isaac to assess the union’s situation late last year. This led to the NZRU appointing former Bay of Plenty CEO Jeremy Curragh in early January to work on a recovery plan. Their costs were covered by the NZRU;

• loaned the union a further $200,000 to cover staff and player wages over that period which we do not expect to recover; and

• invested a considerable amount of NZRU management time in trying to reach a solution, including having the NZRU Finance Manager based at the union for two weeks prior to the appointment of Jeremy Curragh.

Will there be a team from Otago in this year’s ITM Cup?

That is certainly our preference and we will be talking urgently to all affected parties to see if this is feasible. The big challenge is funding the team beyond what the NZRU is committed to providing in annual competition funding. However, it is too early to say if we can achieve that.

What are the other options?

There are a range of options including a 13-team competition. We do not believe it is realistic to consider promoting a Heartland team for a variety of reasons including player base, suitability of venues and competitiveness of teams.



Why not ask North Otago to field a team to represent the province?

The NZRU Board has considered and ruled out promoting a Heartland team.

What does this mean for Otago ITM Cup players?

The Otago RFU has ceased trading and there is no money available to pay ITM Cup players. The NZ Rugby Players’ Association has indicated that it will be funding the outstanding February payment to ITM Cup players from its Benevolent and Welfare fund. We will be working hard to assess the options and viability of an Otago team participating in the ITM Cup – and the outcome of this will obviously have a bearing on Otago-based players in the future.

What does this mean for the Highlanders?

This does not impact on the Highlanders’ participation in Investec Super Rugby as the Franchise is a separate legal entity. Highlanders’ players are contracted by the NZRU and not by the Otago union and they continue to be paid under their Super Rugby contracts.



What does this situation mean for Forsyth Barr Stadium?

The Highlanders still intend to play at the stadium and today's events do not impact on that. The Highlanders will host their first home game for the season this weekend. Our desire is for a team from Otago to participate in the ITM Cup, but it is too early to discuss what will happen in that regard. Any issues relating to the financial impact on the stadium should a representative team from Otago not play in the ITM Cup are for the stadium owners to comment on.

What impact does this situation have on season members?

We are aware that some fans who purchased Highlanders season tickets also paid for ITM Cup matches. This is part of the issue we are working through as we assess the options around a team from Otago participating in the ITM Cup. But it certainly won’t be the intention of the Highlanders franchise to penalise season members who have packages for both teams.

What is the position of union staff?

The Otago RFU board today advised the staff in person of the news. They will be paid until the end of this week if they wish to work through. The NZRU is providing employee support services and CV assistance. Some of the staff may also be recruited for the community rugby positions that NZRU will be funding. That will become clearer in the coming week.

What is the position of creditors?

Our understanding is that Otago RFU has few assets to sell; therefore creditors are unfortunately unlikely to recover what is owed. This will be in the hands of whoever is appointed to manage that process.

What is the financial position of other unions?

The situation facing the Otago RFU is unprecedented. No other union is facing a similar set of circumstances. However, these are extremely challenging times for all unions and they are working hard to live within their means.