(Reuters) - The New Zealand Rugby Union will take over the running of community rugby in Otago after the South Island region’s board announced it would go into liquidation due to financial difficulties.
Saddled with debts of NZ$2.35 million (1.23 million pound) and facing significant revenue losses this year, the Otago Rugby Football Union will cease trading by Friday.
“We are stepping in to support community rugby and all the amateur players, volunteers, administrators, and others who have a stake in the game,” NZRU chief executive Steve Tew said in Dunedin Monday.
“We fully appreciate how disappointing these events will be for the many people who have worked hard backing rugby in this region.
“This situation also creates considerable financial pain for many including small and large businesses who make up the union’s creditors.”
Tew added that the national rugby board could not resolve the financial issue but would do all it could to help ease the situation.
“We were all prepared to help, but in the end, the financial hole was just too big,” he said.
“The union had debts of $2.35 million and was facing a significant shortfall in revenue this year. Quite simply, it has run out of money and could not trade out of its difficulties.”
The NZRU would assess the option of entering a team from Otago into the domestic ITM Cup competition in 2012, Tew said, adding that the situation would have no impact on the region’s Super Rugby team.
“It is important to also stress that today’s events do not impact on the Highlanders franchise, which operates as a separate legal entity,” Tew said.
“Unlike ITM Cup players, Super Rugby players are contracted by the NZRU and not by a union.”
Writing by Sudipto Ganguly in Mumbai; Editing by John O’Brien
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