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Amateur rugby clubs endangered?

MEDIA RELEASE

2 August  2013

Amateur rugby clubs endangered?

Almost half the rugby clubs in Wellington are losing money each year, according to research carried out at Victoria University.

Calculations by undergraduate accounting student Andrew Milne show it costs clubs, on average, $982 to provide services to each of their players but the average membership subscription is just $120. The figure of $982 was reached by dividing the number of club members by the expenses of the club.

“The losses being experienced by the rugby clubs in Wellington are unsustainable over time,” says Mr Milne, who conducted his research through Victoria University’s Summer Scholarship programme, with sponsorship from Sport New Zealand.

“Prudent financial management is needed to ensure the survival of these clubs. My research also suggests the need to find funding from a diverse range of sources, as well as—like it or not—increased subscription fees.”

Mr Milne says club treasurers are reluctant to increase subscription fees because of a perceived threat of players transferring to rival clubs or other sports.

“This could perhaps be overcome if the Wellington Rugby Football Union (WRFU) applied a uniform membership fee structure—current fees are extremely low compared to those charged to belong to clubs for other team sports.”

For his research, Mr Milne analysed the annual reports of 18 rugby clubs in the WRFU over a five-year period (2008-2012) and conducted interviews and held a focus group to gain a deeper understanding of the types of expenditure incurred by various clubs.

Mr Milne found that only around seven percent of the clubs’ funding came from subscription revenue, with approximately 50 percent derived from external sources such as gaming trusts and sponsorship, and the remaining funding coming from sources such as club bars.

“However, with the changing social attitudes to gambling and alcohol, these revenue streams can’t necessarily be relied upon—clubs need to be exploring other options.”

Mr Milne says around 80 percent of all expenses were considered to be essential, such as competition fees, cleaning and maintenance. However, he says, it is in these areas that savings need to be made.

As an outcome of his research, Mr Milne created a framework and tool for analysing expenditure.

“My hope is that clubs will use it to manage their expenditure and future costs.”

Mr Milne’s research was supervised by Dr Carolyn Cordery and Professor John Davies from Victoria Business School.

Mr Milne’s research follows on from previous Sport New Zealand-commissioned research by Dr Cordery in 2011 which explored the financial issues facing grassroots sport, specifically golf and football clubs. This study built on a 2008 study, which looked at six sports (golf, squash, hockey, rugby, cricket and netball). By zoning in on two sports, football and golf, the 2011 study aimed to help sports clubs detect and avoid financial stress. The study also highlighted the need for sports to plan (especially to ensure the availability and quality of facilities) and manage volunteers to ensure they are supported and recognised.

Victoria has scholarships available for businesses or agencies wanting to get involved in its Summer Scholarship scheme. In this scheme, businesses pay half the scholarship, or $3,000, with the funds matched by the University. Businesses or organisations interested in hosting a student researcher this summer should email summer-research@vuw.ac.nz by 15 August.

ENDS

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