- Video
-
Club Roar
Captured a great grassroots sporting moment? We want to see it!Content Collections
The Roar Community
- Join
- Login
New Zealand Rugby finally has its much-craved cash injection after reaching a deal with the players union to sell a minority stake in the governing body.
The NZ Rugby (NZR) board announced a deal on Thursday morning, which will see private equity firm Silver Lake invest an initial $NZ200 million ($A186 million) to own 5.71 per cent of NZR’s commercial arms.
The deal comes after months of tense debate, with players blocking previous efforts for any private ownership of the All Blacks, which have always been wholly publicly owned.
NZR chairman Stewart Mitchell said the funding “marks the beginning of a transformational phase for the entire game” in New Zealand.
“The journey to get here hasn’t been easy at times,” Mitchell said.
“There was healthy debate and some adjustments by all parties, but always with the good of the game at the heart of this process … We are proud of where we have landed with this partnership.”
NZR insists it will retain “full control” of its rugby and commerical strategies, with Silver Lake to stay a minority investor.
(Photo by Chris Hyde/Getty Images)
The talks between NZR and the players union (NZRPA) have also yielded a new collective agreement, details of which are yet to be shared.
The deal consolidates all of NZR’s “revenue-generating assets” into a new commercial entity that Silver Lake will invest in.
Our experts Brett McKay and Geoff Parkes are off to a cracking start on The Roar Rugby Podcast as they tackle the state of play in the Six Nations and look ahead to the launch of Super Rugby Pacific. Click below to play or follow on Spotify.
The American firm’s 5.71 per cent stake is a smaller share than proposals mooted earlier in the process, but has the potential to grow to 8.58 per cent with another $NZ100 million ($A93 million) investment.
NZR, NZRPA and Silver Lake will also create an international rugby investment vehicle called “Global Rugby Opportunities” as part of the deal.
The deal must be signed off by the provincial unions and Maori rugby board, with Mitchell anticipating ratification within weeks.
Sam Cane, NZRPA board member and All Blacks captain said: “We are excited about this agreement and have confidence that it is a great outcome for rugby on all levels. We are impressed by Silver Lake’s thoughtful approach and what they can contribute to help us become better at what we do off the pitch. This partnership is a great step forward for the game.”
In summary, the partnership agreement comprises the following components subject to necessary approvals:
– Establishes NZR CommercialCo under the control of NZR that will contain all the revenue-generating activities of NZR.
– Silver Lake invests NZD $200 million into NZR CommercialCo at an NZD $3.5 billion valuation in the form of a perpetual convertible security at a low interest rate, which can convert into ordinary equity after three years.
– Later in 2022, an additional co-investment will be offered to New Zealand-based institutional investors so that domestic capital can have the opportunity to also participate in the investment. A minimum of NZD $62.5 million will be offered, with the potential to seek up to NZD $100 million if parties agree. Silver Lake will underwrite this institutional syndication if it is not fully subscribed.
– At the conclusion of the additional co-investment, Silver Lake will own between 5.71-8.58% of NZR CommercialCo (representing NZD $200-300 million investment, depending on capital needs and the uptake of New Zealand-based institutional investors) vs. the 10-15% stake that had been previously proposed.
ADVERTISEMENT
Advertise with NZME.
– An increase in valuation compared with the prior proposal driven by the improved future financial outlook from broadcasting and sponsorship, resulting in NZR raising a substantial amount of money whilst selling a smaller share of the entity, allowing NZR to fund all its investment needs and putting the game on a sound financial footing for the future.
– Silver Lake, NZR and NZRPA will through “Global Rugby Opportunities” (GRO) together invest in global rugby and rugby-related technology businesses, earning NZR and NZRPA a 15% share of the profits of GRO (split 50/50) in return for their contribution of sports expertise, know-how and relationships.
© AAP
Join The Roar rugby editor Christy Doran, former Wallaby Matt Toomua and a cast of regular and special guests as they look at the biggest issues in the game on The Roar Rugby Podcast. If you’re looking for great odds on the next game check out Aussie bookmaker PlayUp. Chances are you’re about to lose. Set a deposit limit.