New multi-million dollar offer could change the face of the game in New Zealand as tech investors seek piece of All Blacks pie
New Zealand Rugby has received a $465 million offer from US technology investment giants Silver Lake for a 15 per cent share of commercial rights valued at $3.1 billion, the Herald can reveal.
The deal, should it be signed off by New Zealand Rugby’s provincial unions in the coming months, would be the biggest seachange since the game turned professional 25 years ago, and the largest transaction of this nature in NZ sports history.
New Zealand Rugby and Silver Lake have been in talks for over nine months, with the Herald first revealing their shared interests last May.
While Silver Lake’s minority stake remains under negotiation and could be anywhere from 10 to 15 per cent, with terms yet to be finalised, the Herald understands they have tabled a $465 million offer for 15 per cent of a new, separate NZ Rugby entity.
The deal is conditional on acceptance from the majority of the provincial unions, with a decision not expected before NZ Rugby’s annual general meeting in April. Provincial union and Super Rugby bosses canvassed by the Herald cautiously welcomed the move, but selling a stake in the national game is expected to evoke polarising reactions.
On Wednesday afternoon, NZ Rugby executives began a series of three-hour roadshow pitches to the provincial unions, starting in Dunedin, to outline the landmark offer and explain how the game-changing funds would be distributed.
The NZ Rugby Players’ Association, as well as former All Blacks players, coaches and Black Ferns are also being courted as part of the nationwide consultation period.
NZ Rugby’s plans involve setting up a new subsidiary company, dubbed CommercialCo, which will be responsible for maximising commercial rights, including broadcast, sponsorship, merchandising and growing future revenue streams such as streaming, Esports and global coaching clinics.
Silver Lake’s $465m offer is to purchase a 15 per cent stake in this entity which has been valued at $3.1 billion by the private equity giants who have a history of long-term growth investments in the likes of global mix martial arts phenomenon UFC, Madison Square Garden Company, which owns blue chip NBA franchise the New York Knicks and the NHL’s New York Rangers, and City Football Group, whose flagship team is Manchester City.
Silver Lake has US$40 billion (NZ$60b) in assets, while its portfolio generates more than $200b revenue annually.
NZ Rugby’s commercial rights valuation compares favourably on a global scale, with the LA Lakers valued at US$4.4b (NZ $6.1b) and Manchester United, the world’s third most valuable football brand, worth US$3.8b (NZ $5.3b).
"It was the most vicious and dog-pack-mentality act I've seen in any game."
Absolutely vile.https://t.co/NDsdzOc216
— RugbyPass (@RugbyPass) February 3, 2021
Senior NZ Rugby executives spoken to by the Herald stressed the All Blacks, nor any other teams, were being sold and described the deal as an “incredible offer” that reflects the appeal of New Zealand’s 130-year rugby legacy.
NZ Rugby’s pitch to the provincial unions details the benefits the cash influx will have on all levels of the game, particularly in propping up the under-resourced grassroots, while outlining the need to manage expectations, form a war chest and be disciplined with future spending.
The Herald understands Silver Lake’s investment would be paid in three tranches over three successive years to help ensure it is carefully managed.
Plans for the funds include immediate and significant investment into the provincial unions; shoring up NZ Rugby’s cash reserves that took a $40m hit due to the reduction of All Blacks tests and Covid-19 shutdown last year, future proofing the community and women’s game through the creation of a legacy fund, initiatives to tackle the sharp decline in teenage participation rates and covering ongoing costs of CommercialCo.
The funds will also assist in the ongoing fight to retain players, who through the Players’ Association have an agreement that ringfences 36.5 per cent of NZ Rugby’s annual revenue.
NZ Rugby executives believe they have addressed concerns around losing control by ensuring the CommercialCo board will comprise five NZR members, two Silver Lake representatives and an independent chair.
Future commercial rights profits will be split along the proposed 85/15 shareholding lines.
In going to market NZ Rugby engaged several private equity companies, including CVC Capital Partners and Bruin Sports Capital, in a competitive bidding process run by investment bank Jefferies. NZ Rugby executives told the Herald Silver Lake’s offer was compelling on multiple fronts.
Aside from the monetary value, Silver Lake’s technology expertise, having a base in Silicon Valley, access to global networks and track record breaking into emerging markets were major lures in attempting to leverage the All Blacks’ reach.
This is a big blow for one of the surprise packages of 2020.https://t.co/TcmNTZ1OID
— RugbyPass (@RugbyPass) February 2, 2021
NZ Rugby executives suggest Silver Lake do not adopt a smash-and-grab mentality but, rather, intend to form a decade-long partnership, though acknowledge risks are involved when the firm wants to exit in time.
Appetite for investment in rugby has reached fever pitch in the past year as equity firms scrap for shares in a sport they believe is undervalued and underexposed on a global scale.
With CVC Capital Partners buying stakes in England’s Premiership Rugby, the Pro14 and Six Nations competitions, it was only a matter of time before NZ Rugby struck a similar arrangement.
In recent years NZ Rugby realised its financial model, as costs continued to exceeded revenue, was unstainable. The national body recognised this model, which relied on the All Blacks funding all levels of the game and 12-yearly British and Irish Lions tours, bailing out balance sheets had to change.
When Covid-19 hit last year NZ Rugby was forced to strip widespread costs from the business, laying off 40 staff to leave a leaner operation.
Compared to rest of the rugby world New Zealand is now considered to have a relatively stable financial position. It still faces significant losses, but vastly improved from the initially forecasted 70 per cent decline in revenue.
Should the investment deal proceed as planned, Silver Lake’s capital injection promises to immediately supercharge New Zealand rugby’s financial landscape but the risk and reward trade-offs will only be clear in time.
Comments on RugbyPass
I certainly don’t miss drinking beers at 8am in the morning watching rugby games being played in NZ.
1 Go to commentsThis looks like a damage limitation exercise for Wales, keeping back some of their more effective players for the last 20/25 minutes to try and counter England’s fresh legs so the Red Roses don’t rack up a big score.
1 Go to commentsVery unlikely the Bulls will beat Leinster in Dublin. It would be different in Pretoria.
1 Go to commentsI think it is a dangerous path to go down to ban a player for the same period that a player they injured takes to recover. Players would be afraid to tackle anyone. I once tackled my best friend at school in a practice match and sprained his ankle. I paid for it by having to play fly-half instead of full-back for the rest of that season’s fixtures.
5 Go to commentsJust such a genuine good bloke…and probably the best all round player in his generation. Good guys do come first sometimes and he handled the W.Cup loss with great attitude.
2 Go to commentsWord in France is that he’s on the radar of a few Top14 clubs.
2 Go to commentsGet blocking Travis, this guy has styles and he’s gonna make a swift impact…!
1 Go to commentsWhat remorse? She claimed that her dangerous tackle wasn’t worthy of a red! She should be compensating the injured player for loss of earnings at the minimum. Her ban should include the recovery time of the injured player as well as the paltry 3 match ban.
5 Go to commentsArdie is a legend. Finished and klaar. Two things: “Yeah, yeah, I have had a few conversations with Razor just around feedback on my game and what I am doing well, what I need to improve on or work-ons. It’s kind of been minimal, mate, but it’s all that I need over here in terms of how to be better, how to get better and what I am doing well.” I hope he’s downplaying it - and that it’s not that “minimal”. The amount of communication and behind the scenes preparation the Bok coaches put into players - Rassie and co would be all over Ardie and being clear on what is expected of him. This stands out for me as something teams should really be looking at in terms of the boks success from a coaching point of view. And was surprised by the comment - “minimal”. In terms of the “debate” around Ireland and South Africa. Nice one Ardie. Indeed. There’s no debate.
2 Go to commentsThere’s a bit of depth there but realistically Australian players have a long way to go to now catch up. The game is moving on fast and Australia are falling behind. Australian sides still don’t priories the breakdown like they should, it’s a non-negotiable if you want to compete on the international stage. That goes for forwards and backs. The Australian team could have a back row that could make a difference but the problem is they don’t have a tight five that can do the business. Tupou is limited in defence, overweight and unfit and the locks are a long way from international standard. Frost is soft and Salakai-Loto is too small so that means they need a Valentini at 8 who has to do the hard graft so limits the effectiveness of the backrow. Schmidt really needs to get a hard working, tough tight 5 if he wants to get this team firing.
3 Go to commentsSorry Morgan you must have been the “go to for a quote” ex player this week. Its rnd 6 and there is plenty of time to cement a starting 15 and finishing 8 so I have no such concerns.
2 Go to commentsGreat read. I wish you had done this article on the ROAR.
2 Go to commentsThe current AB coaching team is basically the Crusaders so it smacks of wanting their familiar leaders around. This is not a good look for the future of the ABs or the younger players in Super working their way up the player ladder. Razor is touted as innovative, forward looking but his early moves look like insecurity and insular, provincial thinking. He is the AB's coach not the Golden Oldies.
10 Go to commentsSimple reason for wanting him back. Robertson wants him as captain. Otherwise he wouldn’t be bothering chasing him. Not enough reason to come back just to mentor.
10 Go to commentsI had not considered this topic like this at all, brilliant read. I had been looking at his record at the Waratahs and thought it odd the Crusaders appointed him, then couple that with all that experience and talent departing and boom. They’ve got some great talent developing though, and in all honesty I don’t think anyone would be over confident taking them on in a playoff match, no matter how poor the first half of their season was. I think they can pull a game out of their ass when it counts.
2 Go to commentsNot a bad list but not Porecki and not Donaldson. Not because they are Tahs, or Ex Tahs, they are just not good enough. Edmed should be ahead. Far more potential. Wilson should be 8 and Valentini 6. Wilson needs to be told by his father and his coach, stop bloody running in to brick wall defence. You’re not playing under the genius Thorn any more. He’s a fantastic angle runner. The young new 8 from the Brumbies looks really good too. The Lonegrans are just too small for international rugby as is Paisami, as is Hamish Stewart at 12. Both great at Super Rugby level. Stewart could have been a great 10 if not for Brad Thorn. Uru should be there and so should Tupou. Tupou just needs good Australian coaching which he hasn’t been getting. I don’t think Schmidt will excite him.
3 Go to commentsIf he wants to come back then he should. He will be a major asset to the younger locks and could easily be played as an impact player off the bench coming on in the last 30. He is fit, strong and capable and has all the experience to make up for any loss in physical prowess. He could also be brought back with a view to coaching within the structures one day. Duane Vermeulen played until he was 37 or 38. He is now a roaming coach within the South African coaching structures. He was valuable in the last world cup and has been a major influence on Jasper Wiese and other young players which has helped and accelerated their development and growth. Whitelock could do the exact same thing for NZ
10 Go to commentsBrett Excellent words… finally someone (other than DC) has noted that Hanigan is very hard and very good at doing what Backrow should do… his performance via the Drua sauna was quite daunting for those on the other side… very high tackle count… carries with good end result… constant threat to make a good 20-25 meters with those long legs… providing his mass effectively to crunching the Drua pack… Finally he is returning to quality form… way to much injury time over the last 2 years… smart-strong-competent in his skills… caught every lineout throw aimed at him and delivered clean pass to whoever was down below… and he worked hard for the whole 80 minutes… Ned has to be in the top 5 for backrow honors… He knows what is required as he has been there before…
20 Go to commentsI think Sam Whitelock should not touch a return with a bargepole. He went out on a high, playing in the RWC Final. He would be coming back into a team that will be weaker than last years, and might even be struggling to win games, especially against the Boks. Stay in France, enjoy another year with Pau, playing alongside his brother.
10 Go to commentsRyan Coxon has been very impressive considering he was signed by WF as injury cover whilst Uru has been a standout for QR, surprised neither of those mentioned
3 Go to comments