Provincial unions back NZR-Silver Lake deal but players not yet on board
New Zealand Rugby, the governing body for rugby union in the country, has received unanimous support from the provincial unions for a proposed deal with US private equity firm Silver Lake.
However, the NZ$387 million ($280 million) agreement, under which the company would acquire a 12.5 per cent stake in a new commercial subsidiary, still requires the support of the New Zealand Rugby Players’ Association, which has so far been resistant.
At today’s NZR annual general meeting, all 26 provincial unions and the Maori Rugby Board approved the investment plan, which values the commercial rights at NZ$2.23 billion, with only 50 per cent backing having been required.
Rugby union is the dominant sport in New Zealand, a country of just 5 million people, with the All Blacks, the national team, which has won three Rugby World Cups, renowned across the globe.
However, NZR is insistent the domestic sport, including the professional game and grassroots, is in need of fresh investment, with the coronavirus pandemic having exerted further pressure on its finances.
The governing body today posted an operating loss of NZ$34.6 million for the last financial year, a figure that included a NZ$16 million writedown on shares in pay-television operator Sky.
NZR is planning to create a new entity called Commercial LP to oversee its commercial interests, including broadcasting rights and sponsorship, which would be one-eighth-owned by Silver Lake.
NZR chief executive Mark Robinson has previously described it as a “transformational opportunity”.
However, there has been pushback from the NZRPA, which includes various prominent All Blacks players, amid concerns that the sport would be overcommercialised, and the national team forced to play too many matches.
Negotiations with the players are to continue in the coming weeks.
Brent Impey, the outgoing chairman of NZR, said on Thursday: “Through swift action, good governance and hard work of our people we are fortunate to be one of the best placed national unions in the world. However, we are at a critical juncture and need our players’ support if we are to make the most of the opportunity in front of us.
“The game has to change, and Silver Lake’s capital injection would allow us to re-imagine rugby and invest in the areas of the community game that need it most, particularly teenage and women’s rugby, and to create better and more engaging experiences for our fans."
He added: “The players are a critical part of this journey, but we have to look at what is right across all levels of the game, our whole ecosystem. We hope the NZRPA will realise the significance of the opportunity in front of us and will continue to work toward an agreement in coming weeks.”
Rob Nicholl, the head of the NZRPA, told New Zealand website Stuff: “We have agreed to put collective bargaining/mediation meetings on hold for a few weeks to allow us to reconnect with our respective stakeholders.
“Between us, we need to resolve what the collective will look like beyond this year in order for the players to respond to NZR’s request for approval of the proposed Silver Lake transaction.”
One of the main stumbling blocks is said to be the NZR proposal to reduce the share of revenue for the players going forward.
Under the proposed deal, up to NZ$43.75 million would be committed to working capital for Commercial LP, with Silver Lake contributing a similar amount. A further NZ$39 million would go stakeholders such as provincial unions, while a legacy fund would be established to support rugby at all levels.
Silver Lake has been a leading player in the drive by private equity firms to invest in sport around the world, acquiring stakes in properties including mixed martial arts’ UFC, City Football Group, the portfolio of soccer clubs headed up by England’s Manchester City, and the NBA’s New York Knicks.