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
> It would be best described as an elegant solution to what was potentially going to be a significant problem for new All Blacks coach Scott Robertson. It is a problem the mad population of New Zealand will have to cope with more and more as All Blacks are able to continue their careers in NZ post RWCs. It will not be a problem for coaches, who are always going to start a campaign with the captain for the next WC in mind. > Cane, despite his warrior spirit, his undoubted commitment to every team he played for and unforgettable heroics against Ireland in last year’s World Cup quarter-final, was never unanimously admired or respected within New Zealand while he was in the role. Neither was McCaw, he was considered far too passive a captain and then out of form until his last world cup where everyone opinions changed, just like they would have if Cane had won the WC. > It was never easy to see where Cane, or even if, he would fit into Robertson’s squad given the new coach will want to be building a new-look team with 2027 in mind. > Cane will win his selections on merit and come the end of the year, he’ll sign off, he hopes, with 100 caps and maybe even, at last, universal public appreciation for what was a special career. No, he won’t. Those returning from Japan have already earned the right to retain their jersey, it’s in their contract. Cane would have been playing against England if he was ready, and found it very hard to keep his place. Perform, and they keep it however. Very easy to see where Cane could have fit, very hard to see how he could have accomplished it choosing this year as his sabbatical instead of 2025, and that’s how it played out (though I assume we now know what when NZR said they were allowing him to move his sabbatical forward and return to NZ next year, they had actually agreed to simply select him for the All Blacks from overseas, without any chance he was going to play in NZ again). With a mammoth season of 15 All Black games they might as well get some value out of his years contract, though even with him being of equal character to Richie, I don’t think they should guarantee him his 100 caps. That’s not what the All Blacks should be about. He absolutely has to play winning football.
2 Go to commentswhat’s happening to Ian Peel?
1 Go to commentsAs a Crusaders fan , so disappointed , again.But I think Fergus Burke was all class for the Crusaders in his first game since October last year. Fletcher Newell , was so good at prop. Johnny McNicoll has been gold since returning from Wales. Noah Hotham brilliant , in a coming of age second season for the Crusaders.Jone Rova did really well at centre. The end of the game was tough.Sevu Reece , what a game/season in tough times.
1 Go to commentsFellas a balloon
3 Go to commentsBlues B team on display and made no race of it. By far the best team in SR with the Hurricanes barely getting past the winning post. Up the Blues 💙
6 Go to commentsWould be amazing to have Servette Genève reaching this level
3 Go to commentsThe Crusaders can't buy a win this season. Surely Penney's contract won't be renewed. There's still enough talent in the squad that they oughta be winning more.
1 Go to commentsABs captain for 23 seasons. Decent record. Surely nobody will surpass it. Legend. But alas a typo…
2 Go to commentsJust FYI Rugbypass, I for one am tired of your clickbait titles and thumbnails and will be clicking them no longer. Good day.
1 Go to commentsI think Farrell despite all of the stick he gets in the media is still one of if not the best fly half in the world. He is literally the full package. He can kick one of the best in the world, probably has the best defensive game of a fly half in the world and if he wants to he can run, take contact and find an offload to keep the pace of the attack. I dont know why he isnt spoken more about still being one of the best in the world with the likes of dupont. Farrell is the ultimate captain and team leader and is experienced- he has been in nearly any situation you can think of. I still believe due to these reasons that he is England’s best ever player and is still one of the best players in the world.
48 Go to commentsBlues are dominating up front and that’s been a long time coming. They have won the up front confrontation which is where canes, hilanders and act brumbies are also strong.
6 Go to commentsJust watched brumbies v safas game sadly not a show in he’ll thryr anywhere near quarters or semi contention. Admittedly some issues around new comers bot what stands out for me is coaching management, poor game planning and accuracy.
5 Go to commentsOne tough SOB!
16 Go to commentsI’ve put on 4/5 kilos since the beginning of the season too. Not good kilos. Bad kilos.
6 Go to commentsSurely there’s a ‘no knobheads’ policy ?
3 Go to commentsWallaroos have no chance of beating the Black Ferns unless Canada upsets them in Christchurch tomorrow but I doubt that as well!
1 Go to commentsWhat a joke. Could the victim do a course to reverse the long term CTE damage from the cheapshot?
2 Go to commentsTruely great player. In social media and opinion pieces he was held up and flogged for the results. People wanted someone to crucify, and he was the captain. He was still an immense presence respected by his peers. His battles with Siya Kolisi belong up with with Collins vs Burger in my opinion. Unlucky to be carded in the final, but I don’t agree that his red card was the defining moment. Not when you look at the dominant performances of the Springboks (PSDT in particular.) I think Cane should be remembered for the spirit and physicality that is special to test rugby.
16 Go to commentsSam was the man until he got injured .
16 Go to comments_Crusaders versus Leinster _at the moment might be a rout! But I would like to see the Blues play Toulouse, the Hurricanes front up against Stade Francais, and the Chiefs go against Toulon.
157 Go to comments