“Follow the money” is a line made famous in the movie, “All the President’s Men”. The movie tells the story of the corruption of Watergate and the Nixon presidency. “Follow the Money” is the advice given by an informant helping the Washington Post journalists investigating Nixon. No one would compare Swimming New Zealand to the excesses of Watergate. However the advice to follow the money may be no less pertinent.

I should point out that I am writing this from a hotel room in Jeddah, Saudi Arabia, and am therefore somewhat detached from the events that produced these accounts.  

However, with that qualification, here is a summary of what the SNZ’s 2016 financial accounts tell us about the financial health of the organisation.

Income – Grants and Donations

Income from grants and donations is down by $K374 from $K2,850 to $K2,476. That is bad and has been caused by a $K500 reduction in Government funding from $2.2 million down to $1.7 million.

The government’s reduction has been offset to some extent by an increase in other grants, up by $K122, from $K651 to $K773. This income is mainly charity type donations, so someone at SNZ has been burning the midnight oil filling out grant application forms. My take on what has happened is that SNZ has responded to loosing Miskimmin’s money by doubling their efforts to obtain money from other charities. And in this SNZ has been partially successful. But it is a strategy that has risks. Private charities tend to spread their support and therefore are an unreliable source of long term income.

Now that Miskimmin has reduced his 2017 funding by another $K600 SNZ are going to have to double their efforts again with private charities this year. But beware!    

Income – From the Business

Income from grants and donations is all well and good but the real measure of the health of an organisation is what it earns from its normal business activities. And in this area the SNZ 2016 accounts have good news and bad news. Membership fees are down by $K4 (1%) from $K293 to $K289.  I suspect the drop in membership income is because the number of competitive swimmers paying fees has gone down from 5909 in 2015 to 5605 in 2016 (5%) – and that is very bad. It means the business is contracting.

Income from other fees however has gone up: primarily because SNZ has charged fewer swimmers and their families much higher fees. Meet entry fees have risen by $K47 (16%), program fees are up by $K15 (8%) and merchandise sales have increased by $K14 (100%). Not good at all is the huge increase SNZ has charged in user pays contributions, up by $K220 (116%). It is an accolade to be chosen to represent New Zealand but if your sport is swimming you are going to have to pay and pay and pay for the honour.

The net effect of the reduced swimming membership combined with the much higher fees is that the income from the core business has increased by $K328 (33%) from $K1,004 to $K1,332.

But that good news on income is offset by the fact that the business has shrunk. SNZ’s response has been to charge those involved a whole lot more. Growing the business membership plus some modest increase in fees is a healthier means of improving income.       

Expenses –

It looks like expenses have been controlled well in 2016. It was an Olympic year when cost tend to be higher but SNZ managed to hold overall expenses at $K3,873, only $K128 (3%) higher than 2015. Hidden within that good result there are several questions that should be answered by the Board.

1. The cost of running the high performance centre, excluding the cost of the Rio Olympic team, was still a huge $K1,024. A million dollars for what? Every year SNZ spend a million dollars on some American, Australian or Englishman coaching a pampered few in the Millennium Pool; and for no result. Or certainly no result that could not have been the same or better by leaving swimmers with the coach who nurtured their talent in the first place. And SNZ would have been a million dollars a year better off. Over 20 years that’s $20 million in the bank. No need for any user pays with $20 million to spend. SNZ has spent $20 million for what result? Absolutely zero.
2. Legal expenses went up by $K23 from $K10 to $K33. This is explained in the notes to the accounts as being the cost of fighting and losing Kane Radford’s Olympic selection appeal. Why on earth did SNZ chose that fight? It was a dumb and costly decision.
3. Motor lease costs have come down by $K6 per year, but are still a huge $K30. No wonder Mazda are listed as a principle sponsor. The core activity of the business is supposed to be swimming, not leasing fancy motor cars.
4. It appears that the Award Function cost SNZ $K24. That’s a lot of money for an embarrassingly “try-hard” occasion.
5. It is a shame that some of SNZ’s positive spending on items such as the PEGS / PM Scholarship Expenses and the Rewards Incentive Scheme has been savagely cut from a combined $K234 to $K132 (44%). Savings should come from unnecessary costs like motor cars, legal bills and failed high performance spending before client incentives are cut to ribbons.
6. However, overall SNZ appear to have kept their costs well controlled – except, of course, for the elephant in the room. Why on earth spend a million dollars a year on a high performance coaching program that has never worked?          

Profit and Loss

When an organisation is subsidised by the government to the extent of SNZ the concept of profit and loss does not mean a lot. However for the record SNZ in 2016 made a loss of $K64 compared to a profit of $K110 in 2015. In an Olympic year that’s a good result.

The worth of the business is also pretty meaningless. Swimming is worth what Miskimmin decides he wants it to be worth. In 2016 equity fell from from $K425 to $K361. Five more years of those losses and the business will be broke; suggesting it might be time to restructure. A million dollars of wasted Millennium coaching spending might be a good place to start.