Patrick McKendry: Otago bailout puts pressure on NZRU

The Otago Rugby Union's future looks a lot more assured. Photo / Getty Images.

Hasn't Otago Rugby played a blinder!

That's not a phrase usually associated with the southern union in recent times, battling as it is on the pitch and off.

But from being days from liquidation due to a series of financial foul-ups of Carisbrook-sized proportions, they are off the hook, with the the union's future looking a lot more assured.

That is largely due to the goodwill of several organisations, mainly the Dunedin City Council, which will write off a debt of $400,000, and major sponsors BNZ which is about to say goodbye to $1.2 million.

The crisis came to a head recently when it was revealed the union had debts of $2.35 million with a forecast loss this year of more than $750,000.

The New Zealand Rugby Union has played its part too of course. It allowed the union to get into the rather large hole of its own making and then said `enough's enough, we're not bailing you out'.

And yet, that is exactly what they've done. In return for the resignation of the board and chairman Wayne Graham, the NZRU will give the organisation a loan of $400,000.

But that's not all. The NZRU and BNZ are negotiating a deal in which the bank will effectively write off its debt with Otago in return for added benefits. No cash is changing hands of course but the NZRU is handing over valuable commercial space on Otago's behalf.

It has been reported that the New Zealand Maori could have BNZ emblazoned across its jerseys like the Super Rugby teams have in this country, but in reality nothing has been agreed.

NZRU chief executive Steve Tew has warned of precedents, and having bailed out Otago's neighbours Southland last year for their reckless overspending on players, he jolly well wasn't going to do it again. The unions have to get the message, said Tew. There is no more money coming your way if you get yourselves in trouble.

They've got the message all right, Steve. The unions will have noted the deals being frantically stitched up on Otago's behalf. They will have learned that if you play the emotional card when things get really bleak then the cavalry will inevitably arrive.

Can Taranaki expect special treatment if they fail to balance the books? They, like Otago, are a proud union which has produced many memorable All Blacks _ Graham Mourie, Kieran Crowley, Bull Allen, the list goes on. What about King Country, the home union of the mighty Colin Meads? They surely deserve to remain in existence even if they fall foul of "commercial realities''.

No one wants to see any organisation or business go to the wall, much less a sporting organisation which is dear to many people's hearts, and this is undoubtedly good news for Otago rugby.

It was also a difficult line for the NZRU to walk. They would have been damned if they had let Otago fail and criticised for bailing out financial basketcases if they went the other way.

But although he was careful to avoid it, Tew has done the very thing he said he didn't want to do - and that's create a precedent.

Other unions will be watching very closely. And they will have their hands out too.