15 Mar 2012

BNZ writes off over a million owed by Otago rugby

8:55 pm on 15 March 2012

The Otago Rugby Union's largest creditor has confirmed it has written off a $1 million debt as part of a rescue package.

The Dunedin City Council and events management company is also forgiving debt of $480,000 and the New Zealand Rugby Union is writing off a $270,000 loan, in return for a three-year deal with the city's stadium and wide-ranging changes to the union.

The BNZ bank confirmed on Thursday it has written off the $1.2 million it is owed.

The bank says it has been able to obtain some value from an alternative arrangement with the New Zealand Rugby Union.

It will not confirm suggestions it has agreed a multi-year sponsorship deal with the New Zealand Maori team in return for wiping the debt.

Meanwhile, the head of a Dunedin ratepayers association says he fears a rescue deal for the Otago rugby union means its financial problems will soon return.

Dunedin mayor Dave Cull said that without the package locking in professional rugby, the council might have had to compensate for the stadium failing with a large rates rise.

But the chair of the Dunedin's Householders' and Ratepayers Association, Lyndon Weggery, says the council may be throwing good money after bad, and could find itself having to bail out the union again in six months or a year.

Mr Weggery says he knows the council felt it had no choice, but the problems will keep happening until the city separates itself from professional rugby.

Mr Weggery says the city has many important infrastructure projects that should have more priority than rugby.