Monday, 27 February 2012

ORFU to be liquidated - is rugby in trouble?

This today from the NZ Herald: The Otago Rugby Football Union is to be liquidated, with the union facing a massive loss after years of poor financial results. The New Zealand Rugby Union (NZRU) has decided enough is enough, and will not bail the union out.

This puts rugby in a somewhat uncertain state in the deep South. Not too long ago the Southland union needed NZRU assistance with meeting financial shortfalls, and now Otago is to cease trading. Let's not mention the Christchurch temporary stadium arrangement - it's been an unfortunate sequence of events for southern rugby.

This has implications for the recently built Forsyth Barr Stadium in Dunedin. Sure, the Highlanders Super Rugby franchise will continue to play there (the ORFU is a separate entity to the Highlanders), but they were counting on an Otago NPC/ITM Cup team playing to fill in some dates and draw in some crowds to make the economic impact figures stack up. Admittedly nobody saw this coming, but it does make things even tougher on the Stadium to break even. Longer term, if there is no Otago ITM Cup team, does this mean that the Highlanders franchise might be 'up for grabs' with only the Southland union playing? Taranaki were known to be keen on a Super franchise - does the growing uncertainty in Otago open the door?
Some have wondered whether sports are recession-proof - here's a little bit of evidence that our national game, alongside many Australasian sports leagues including the A-League, the NBL, and even the NRL if you go back to the late 1990's with expansion and then the Super League war and contraction - is just as susceptible as any business in a period of downturn. A rugby fan hopes that this is an isolated incident, but an economist wonders whether it is merely the tip of the iceberg. Teams generally don't make profits - if they do, they tend to be small. Ironically, this might have been the ORFU's best chance at recouping some of their losses, with a likely increase in attendances in the form of the new stadium's honeymoon effect, where people come along to see the new facility as much as the game. Unfortunately they don't appear likely to get that chance.


  1. What sort of rent was the new stadium charging Otago relative to what they were previously paying?

  2. The ORFU previously owned Carisbrook, which they sold to the Dunedin City Council to offset some of their debt. The old facility was outdated and thus the union was suffering from poor crowds as a result (although there were several upgrades to the facility over the past couple of decades). The construction of the FB Stadium was predicated on Carisbrook being 'retired' as a ground, as it would make next to no sense having three outdoor/large area facilities for individual franchises/sports (University Oval for cricket, Carisbrook for Otago provincial rugby, and FB Stadium for Super Rugby and a few other things). I am not sure how much they would be paying in the new facility (that information was blacked out in the economic impact analysis done some years ago), but it wouldn't be a small sum. The new stadium has to be seen to pay its way - although I understand at least one concert has been held there rent-free.