By David

I have an uncomfortable feeling that I should offer an apology for this Swimwatch post. Why – because I am going back to the subject of the Swimming New Zealand 2014 Annual Accounts. I imagine there are few readers that find accounts of any sort all that interesting. The reputation of accountants as dull pencil pushers has not been earned because their job has the appeal of Formula One racing. Accounts are usually a dull description of last year’s history – they can be pretty boring.

However accounts also give us a picture of what the management of a business sees as important. How has the organization’s money been spent? What are the priorities of the business? Is the corporation secure? Is its future in good hands? And for all these reasons it is well worthwhile spending (excuse the pun) some additional time on the 2014 Swimming New Zealand accounts. Because the numbers do suggest a change in priorities; an exposure to greater financial risk; perhaps even a suggestion that the sport’s financial future may not be in good hands. The picture painted by this set of accounts is seriously bad – really, really awful, terrible, shocking horrific. I emphasise that point only to stress how abysmal I believe things have become; in the hope that the members of Swimming New Zealand will consider the case put by Swimwatch and will demand a change in the direction currently being followed by the current Board and management. Or perhaps, better still, – may demand a change in the Board and management that set the organization on this new and dissolute course.

In two previous posts Swimwatch has discussed the dramatic reduction in money applied to swimming related costs. The accounts suggest that SNZ’s core business has been neglected. For example in five years PEGS scholarship money has declined from $K298 to $K171 (43%). Athlete Rewards payments have plummeted from $K31 to $K11 (65%). Money spent on athlete/coaching support has dropped from $K721 to $K576 (20%).

At the same time as the spending on swimming has declined, the money spent on administration, salaries, cars, office equipment, and consultants has ballooned beyond belief. The cost of leasing flash cars has risen from $K37 to $K85 (130%). The cost categorized as Administration has climbed from $K365 to $K682 (87%). The cash wasted on consultants and marketing has grown from $K55 to $K112 (104%). To call it profligate could well be justified.

And while all this change of priorities has taken place the sport, at the Olympic level, has won nothing and the competitive swimming membership has declined from 6,510 to 5,498 (18%). I guess all this could be best summarized as ironic. In five years Miskimmin has poured $11,120,748 into swimming and at the two Olympics in that period has won nothing and has serviced 1012 fewer swimming members. You would think, even a hockey player, could figure out that’s not right.

In addition to the comparison figures mentioned above, accountants use a variety of ratios to measure the financial health of an organization. I wonder how Swimming New Zealand, with all its Institute of Directors’ Board members and foreign, well paid executives, measures up.

For example a sound, healthy business ensures there is adequate diversity of revenue sources. Have the leaders of swimming been able to guide the sport into a position where a diverse range of income sources provide financial security and the prospect of long term growth? Not bloody likely is the answer. In fact the business of swimming is as dependant on government money as any welfare beneficiary. An unbelievable 54% of all swimming’s income comes from one source, Peter Miskimmin. The sport is not an independent strong business. It’s as much a government cost centre as any state school or public hospital. Right now the “Lord giveth” but what happens when the “Lord taketh away”?

But, before rushing to judgement, how well have the Institute of Directors and foreign imports done in building income from the core business of swimming? Is swimming all about government hand-outs or is swimming a healthy business with a strong income stream from its staple activity? You probably know the answer already. Membership fees account for 6% of swimming’s income. Work it out. With those figures who do you think will get the majority of Layton and Renford’s time? What relationship do you think Layton and Renford will spend most time cultivating? Who is more important to them? Peter Miskimmin’s 54% or your swimmer’s 6%?

In a sport where 54% of all income comes from the government, profit is a meaningless figure. Miskimmin is able to manipulate his hand-outs to ensure costs are covered but profits are small. And that is exactly what he appears to have done. Any normal business aims to achieve a profit to income ratio of 10%. Miskimmin allows swimming just 0.4%; enough to survive but not nearly enough to build financial independence. Miskimmin wouldn’t like that. It would render him irrelevant.

Over many years the management of Swimming New Zealand has maintained a healthy liquidity ratio. This measures the extent to which the current assets of the organization cover the current liabilities. Most companies look for a ratio of at least 1/1.1. In other words the assets of the company cover all the liabilities with a small surplus. The liquidity ratio of SNZ is a healthy 1/1.3.

Of more concern is the ratio that tells us that it would take almost every cent of the annual membership income to pay for the already incurred liabilities of the organization. In other words, if Miskimmin’s money stopped, the whole place would need to be closed and the members would have to pay their fees for a further year just to pay off the debts already incurred.

And so what do we know about Swimming New Zealand?

1. Membership is constantly declining.

2. Spending on swimming related costs is being cut.

3. Spending on administrators and their fringe benefits is sharply increasing.

4. The business is seriously exposed to the whim of one income stream.

5. The income generated by the core business is so small as to be irrelevant.

6. And, worst of all, SNZ is proving itself useless at running a Millennium swim school.

It’s all there. Just read the SNZ 2014 Annual Report. No matter what SNZ might say, the numbers don’t lie.