Shining Lights State of the Unions: Deloitte Sports Review August 2017 State of the Unions: Deloitte Sports Review | Introduction
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Shining lights State of the Unions: Deloitte sports review August 2017 State of the Unions: Deloitte sports review | Introduction Introduction 1 Executive summary 2 Introduction Financial performance 8 Financial position 14 An outstanding financial performance shines the light on Heartland Championship unions 17 the improvements made by the country’s leading rugby unions over the past five years. New Zealand Rugby 18 Rewriting the playbook 20 A financial review finds rugby’s stewards have overseen Supporter and community engagement 22 the recovery of the unions’ poor financial condition to the level of being match fit. Consolidated financial information 26 About this publication 32 The unions are now in a position to take advantage of their hard work to develop and implement refreshed game plans to secure a viable future for the nation’s favourite game. 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 1 State of the Unions: Deloitte sports review |Executive summary State of the Unions: Deloitte sports review | Executive summary Executive summary Welcome to the 6th 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 accounts This year’s annual review also marks of the 14 Mitre 10 Cup unions finds that analysis of 10 years of the unions’ financial This year’s annual the improvements made by the unions’ statements. Throughout the report we administrators have placed the game in shine the light on a number of the major review also marks overall good financial health. The result transformations over the past decade. of the 2016 season was an exceptional analysis of 10 years outcome with all unions achieving Financial highlights financial surpluses, but sets a new The financial performances and positions of the unions’ benchmark with the anticipation that such of the Mitre 10 Cup unions have been results will become the ‘new normal’. consolidated and the highlights of their financial statements. consolidated financial results are set out A key element to the result is the below. At the back of this publication are Throughout the substantial increase in grants being summaries of the consolidated financial provided by NZR as a consequence of performance and financial position results report we shine the its significant increase in broadcasting for the last five years, as well as individual revenue. It is expected that the union accounts for the last two years. light on a number increased grants, to be used to invest in the development of the game at Due to new reporting standards issued of the major the grassroots, will continue in the for not-for-profit entities, the majority of foreseeable future. This allows the unions the unions have changed the way they transformations to safely invest in strategic projects and present their annual reports. In some developments to further improve their cases, the unions have restated their 2015 over the past engagement in the community and future comparative figures in their 2016 annual benefits without deteriorating their report. This re-presentation of accounts decade. financial positions. has resulted in the re-categorisation of our analysis from previous reviews. Nevertheless, the unions will need to remain vigilant with their spending. After all, they are the current caretakers of the game and with that comes the responsibility to ensure that funds are spent purposefully, and are aligned to the strategy of growing the game in the community. 2 3 Highlights Mitre p Unions onsolidate esults 4.0 Highlights 3.0 Mitre p Unions onsolidate esults 2.0 4.0 1.0 $ 3.0 - 2.0 (1.0) 1.0 $ (2.0) - F Y12 FY13 FY14 F Y15 FY1 (1.0) (2.0) F Y12 FY13 FY14 F Y15 FY1 Mitre p Unions otal evenue State of the Unions: Deloitte sports review |Executive summary State of the Unions: Deloitte sports review | Executive summary 100.0 Highlights Mitre p Unions otal evenue 80.0 Highlights100.0 Mitre p Unions onsolidate esults 0.0 80.0 $ 4.0 40.0 Financial performance Mitre p Unions onsolidate esults • With the increased revenue, unions team and match related costs were 0.03.0 have taken the opportunity to invest 46.4% of total expenses, growing The working capital • The unions posted a combined surplus 20.0 4.0 in their communities and meet their the game expenses was 27.3% and of $3.5m for the 2016 financial year. $ 40.02.0 operating expenses. In FY16, overall administration expenses was 26.3%. position for the This result turns around the $1.4m 3.0 expenditure - increased to $73.4m from combined loss that occurred in FY15. 1.0 F Y12 FY13 FY14• All areas of operatingF Y1 expenditureFY1 $ 20.0 $67.1m in FY15. This represents a 9.4% combined unions 2.0 increased, however the positive trend • This is the first time since FY13 all increase inMatch total operating related expenditure, Sponsorship & grants - is that the largest growing expense the Mitre 10 Cup unions have posted - which is only half of the 17.8% increase has increased 1.0 Other revenue Unions with Super Rugby Franchises $ in percentage and dollar terms was individual surpluses. While it is the first F Y12 FY13 FY14 F Y1 FY1 that the unions had in revenue. (1.0) for growing the game. This reflects time that the Heartland Championship dramatically by - Match related Sponsorship & grants • As part of our analysis, we have that the increase in revenue was unions have achieved the feat. (2.0) Other revenue Unions with Super Rugby Franchises broken down operating expenses reinvested back into grassroots rugby (1.0) 68.4% to $10.2m. • For the FY16 total revenue was $78.2m, F Y12 FY13 FY14 F Y15 FY1 into three major categories; team as spending increased by $2.9m, the up from $66.4m in FY15, constituting and match related costs, growing the largest increase from one year to (2.0) This restores a 17.8% increase in total revenue. game and administration. In FY16, another since we began our analysis. F Y12 FY13 FY14 F Y15 FY1 • We classify revenue into three main the reduction in categories, grants & sponsorship, match Mitre 0 p Unions onsoliated cclated nds related income and other revenue. The working capital that FY16 split shows all three categories Mitre p Unions otal evenue 40.0 Mitre 0 p Unions onsoliated cclated nds remaining consistent. In FY16, grant 35.0 occurred in FY15 100.0 & sponsorship revenue represented 40.0 Mitre p Unions otal evenue 30.0 71.7% of total revenue, match related and increases the 35.0 income represented 10.4% and other 80.0 2.0 100.0 30.0 revenue represented the final 17.9%. 20.0 current ratio of the $ 0.0 2.0 • Match related income, while the 80.0 15.0 combined unions 20.0 $ smallest source of revenue, had the $ 10.0 largest percentage growth (40.2%) as 40.0 15.0 0.0 from 1.5 to 1.7. .0 the revenue increased from $5.8m 10.0 $ in FY15 to $8.1m in FY16. A notable 20.0 - 40.0 .0 element of this increase is the change F Y12 FY13 FY14 F Y15 FY1 - in reporting for not-for-profit entities - 20.0 F Y12 FY13 FY14 F Y15 FY1 Consolidated Accumulated Funds Net Working Capital providing more transparency as some F Y12 FY13 FY14 F Y1 FY1 revenue streams that were previously Consolidated Accumulated Funds Net Working Capital Match related Sponsorship & grants grouped are now reported separately. - Financial Position OtherF Y12 revenue FY13 UnionsFY14 with SuperF Y1Rugby FranchisesFY1 • In terms of dollars, grants & sponsorship • Total assets for the combined unions • Short term borrowings have increased revenue grew the most achieving Match related Sponsorship & grants have increased to $56.8m, which is by 31.2% to $904,000 in FY16 while long $56.1m in FY16 compared to $48.8m Other revenue Unions with Super Rugby Franchises a Mitrelevel not pseen Unions for seven peratin years. This osts term borrowings, which constitutes in FY15, an uplift of 15.1%. As NZR Mitre p Unions peratin osts represents a $5.7m increase in total the majority of non-current liabilities, received an increase in broadcasting assets since FY15. has remained relatively constant as it revenue, its decision to provide increased by a minor 0.8% in FY16. • The largest growing asset was cash, increased grants to the unions’ accounts 26 which increased by approximately $3.1m • The working capital position for the for the majority of the growth in the 26 27 and was accompanied by a $2.3m growth combined unions has increased grants & sponsorship revenue line. Mitre 0 p Unions onsoliated cclated27 nds in receivables and prepayments. dramatically by 68.4%47 to $10.2m. This 47 47 • All the Mitre 10 cup unions achieved 47 restores the reduction in working capital 40.0 • Total liabilities increased by $2.2m from increases in their respective total Mitre 0 p Unions onsoliated cclated nds that occurred in FY15 and increases the $20.0m in FY15 to $22.2m in FY16 with revenues for FY16 from FY15. 35.0 current ratio of the combined unions the mostFY1 significant v Y1 contributor being 26 40.030.0 FY1 v Y1 26 from 1.5 to 1.7, putting working capital to • The revenue from the five the payables and accrued expenses 27 Outer in Y1 27 Outer in Y1 its highest level in 10 years.