News24

Rescue package saves Otago

2012-03-15 07:34

Dunedin - A last-minute rescue package has saved the debt-stricken Otago Rugby Football Union from liquidation, New Zealand Rugby Union chief executive Steve Tew said Thursday.

The 131-year-old union, once one of the pillars of the sport in New Zealand, faced being wound up this week as it struggled with debts of NZ$2.35 million.

Tew said key debtors, including Bank of New Zealand, the Dunedin City Council and NZRU thrashed out a deal on Wednesday that would save the troubled union, which is not linked to the Highlanders Super Rugby team.

"There is now some confidence in a long-term sustainable plan.... I'm not sure a win-win was possible in these circumstances but we've still got the Otago union in operation," he told Radio New Zealand.

Under the deal, the NZRU will make an NZ$500 000 loan to the ORFU and write off a previous loan worth NZ$250 000.

The Dunedin council and its events management arm, which runs the main rugby stadium in the South island city, has agreed to write off further debts worth almost NZ$500 000.

In return, the NZRU demanded the ORFU board resign and insisted on tight financial restrictions over the union, including a NZ$290 000 reduction in payments to Otago players in the domestic ITM Cup for 2012.

Dunedin's new indoor stadium will also host All Blacks Test matches for the next two years as part of a rescue package.

Several other provincial rugby unions in New Zealand are also wrestling with debt problems as they face rising player salaries at the same time as diluted revenues from ticket sales and sponsorship.

Reuters