Otago rugby union heading into liquidation
The Otago Rugby Football Union has been forced into ''point blank reality'' and will cease trading by Friday unless its debt crisis can be resolved, chairman Wayne Graham says.
Graham today fronted a stormy ORFU annual meeting, where delegates were stunned to discover one of the country's oldest and proudest rugby unions could have the pin pulled on it by the end of this week.
Otago rugby has 180 creditors and debts of $2.35 million, and was faced with a significant revenue shortfall for this year. Graham said the board had taken the only responsible action it had available to it by proposing to go in to liquidation.
''The position got to a stage where we had to draw a line in the sand, and that if by 4pm Friday - unless the current situation can be resolved by all the parties involved - we have no option but to apply for liquidation from the High Court,'' Graham said.
''It's very disappointing, it's a very sad day ... unless we take a positive step forward, and we believe by doing this we are taking a positive step forward, it's at the stage where action simply has to be taken.''
New Zealand Rugby Union chief executive Steve Tew said rugby's national body had been working with the ORFU for a month to try and resolve the issue.
''We have worked very hard alongside the Otago board to try and find a solution, but that hasn't been possible. Where we are, that's the reality... there will be some people who feel very poorly affected by this. There are $750,000 of trade creditors in the community, which is one of the reasons why the situation is as bad as it is. That is challenge. I guess what we're saying is we will leave the door open while this community makes a decision about whether it wants to compete in this year's ITM Cup. If they can put together a proposition that looks viable, then we will support it.''
The draw for this year's ITM Cup inter-provincial competition had been held back for a fortnight to buy time while all parties waited to see if Otago was able to field a team this year. If it does go in to liquidation, it will likely be a 13-team competition, as the NZRU does not believe a promoted Heartland competition team would be competitive.
Tew would not put a date on when a decision would be made about this year's ITM Cup: ''Sometimes it's better not to... but time is very urgent.''
A fortnight ago Graham revealed several of the union's creditors could not be paid and said he was unsure if the ORFU could trade on. That sparked an urgent trip south by Tew to assess the lie of the land, and the NZRU appointed former Bay of Plenty CEO Jeremy Curragh to work on a recovery plan.
Long one of New Zealand's most powerful provincial unions, Otago has battled to keep up with the other major provinces on the field, and has also battled off the field. Severe financial pressures were alleviated in recent times when the Dunedin City Council purchased the union's historic Carisbrook playing ground, but three years on Otago rugby has again hit the skids.
Tew said the New Zealand Rugby Benevolent Fund would pay outstanding February wages to Otago's contracted ITM Cup players. The Highlanders Super Rugby franchise, also based in Dunedin, is a separate legal entity and is not affected financially.
NZ Rugby Players Association CEO Rob Nicol is in Dunedin to advise affected players.
ORFU staff are facing redundancy on Friday.
The province's club rugby competitions are due to start within the next few weeks. Tew said the NZRU would appoint people to run community rugby in Otago while the issues with the ORFU were sorted out.
Otago is the second southern rugby union to face financial strife in recent times; last year Rugby Southland revealed it owed around $700,000 and in June its board resigned em masse. Earlier, the NZRU brought in a change manager and also loaned Southland $500,000 as part of a $1.5m rescue package.
Tew said the sum of the ORFU's debt was ''simply too vast'' for the NZRU to consider a similar bail out. It had been ''effectively funding the Otago Union since December'' spending $200,000 it did not expect to see back again on paying staff and essential creditors, but the NZRU could not afford to do so any more.
''We need to face up to the reality that this organisation is debt-laden and cannot trade.''
Graham said the board had considered resignation, but instead opted to stay and try to resolve the issue. He said no one factor had contributed to the crisis, rather a combination of factors over several years. The money the union made from selling Carisbrook had not covered its debts, and it subsequently found it owed more money Graham cited a 30 year lease on floodlights it was no longer using as an example.
''We first were suspicious things weren't right around September last year. As a board it took us two months to identify there was an issue,'' Graham said.
''You can say perhaps we should have reacted earlier or quicker or whatever. In the scheme of things I don't think it was a long time, but it shows you how quick expenses can go up, revenue can go down, and all of a sudden you are in serious trouble.''
Otago were national champions in 1998 and had boasted several All Blacks in its line-up. Pickings have been slim since then, and in 2010 Otago suffered the ignominy of finishing last in the ITM Cup round robin. Last season things improved slightly, with Otago finishing third of seven in the second tier ITM Cup Championship division.