Hockey: Hockey NZ faces insolvency if it has another bad year

An audit report prepared for Hockey New Zealand has warned that another loss like last year could lead to insolvency, or at the very least a firesale of its assets.

The report, compiled by BDO, included a section headed "fundamental uncertainty". It talks about the $234,400 lost in the six months to December 31, 2009, which reduced HNZ's reserves to $276,230.

"If the Federation's [HNZ] actual results are not sufficiently close to its budgets it may be unable to continue in operational existence for the foreseeable future and adjustments may have to be made to reflect the situation that assets may need to be realised other than in the amounts at which they are currently recorded ...

"In addition, the entity may have to provide for further liabilities that may arise, and to reclassify fixed assets as current assets."

In layman's terms, should HNZ have a budget blow-out or deficit period like last year, they would move towards insolvency and receivership. HNZ could be forced to sell its assets to cover costs.

It makes for grim reading for an organisation that, like so many "minor" sports, tends to operate hand-to-mouth on an annual basis.

Chief executive Hilary Poole, who came into the job in August, was bullish about the future, saying the loss was "strategic", that there were mitigating factors behind the six-month deficit and that their financial position should "normalise" in 2010.

A statement prepared for the annual general meeting in March will point out that the $234,400 was actually $8000 less than forecast.

The reasons behind the loss were "the relatively high number of international competitions the Blacks Stick Men and Black Sticks Women competed in ... and the reduction of Sparc funding for the women's programme, which has required Hockey New Zealand to fund the international programme from other revenue and reserves". Monies paid through affiliation fees were also not included in the result because they had largely been collected before the audit period.

The AGM statement does not make light of the financial situation, however, stating: "The Board is aware that this expected deficit has reduced reserves to $276,230. This means that Hockey New Zealand is not in a position to incur further significant deficits."

After a miserable Olympic campaign, the Government high-performance funding agency cut its funding to the women's hockey programme by close to $400,000. However the board of HNZ strategically decided to continue the high-performance aspect of the programme, knowing it would cause the deficit but that it would be a one-off hit.

Poole said a small surplus ($7900) was expected for the 2010 financial year against revenue of $4.89 million. He is looking ahead to better times.

Sparc has showed renewed interest in the women's programme since the appointment of coach Mark Hager.

"We've got our Sparc money back and we're building our commercial revenues. that was my brief, to increase our sponsorship and the likes.

"We're really in a period of transition where we're moving from a hand-to-mouth financial model where more than 80 per cent of our income is year-on-year through Sparc and gaming trusts," Poole said. "What we're looking to do is build our own commercial revenue streams."

That will be achieved, Poole said, through sponsorship, the licensing of the Black Sticks brand, selling more tickets to matches and "the Holy Grail of a broadcasting deal".