Why RA have opted to borrow $60m instead of pursuing private equity sugar hit - for now

Huh, you do have limits BNH but I do wonder, if you still have any finger-prints.

The 6Ns holds the rights to the Women’s 6Ns, each union gets 2-3 home games per year and each of the Unions are getting record crowds for those home games and are getting games shown in prime tv while the rugby public is still on the 6N bandwagon. 6N women has a title sponsor in Tiktok that also has put our a massive amount of content. All but Italy have a professional squad of players (France and England have Professional leagues). Compare that to the Pacific 4s that is played in one country every 4 years so teams like Oz and NZ will share one game between them each year when they don’t hold it. Any money brought in by the Women 6Ns goes to the 6Ns while the money (if any) come in from the P4 it goes to WR. We only need look at the Pacific Cup in the mens to see how well that worked out. NZ can’t play any T1 nation outside of the test window other than Oz. They could play SA during the 6Ns but then that effects SRP. We are seeing Crusaders going to Europe during the 6Ns to play Munster and Bristol. If it doesn’t go well for the Saders that is not good for the brand. If Saders are willing to do a 37k km round trip a week or two before SRP starts to play against weak teams tells you were SL see money. It will not be long before we see the Jags back in SRP which bring far less than SA ever did both in time zone and money plus we are going to see NZ SRP teams going to Europe for the preseason NH games from Aug-Sept in the next few years. And Yes SL will be getting paid back money by NZR which is 5-8% of the NZR income (not the cost of generating that income). So far all I have seen is one off games v Japan but not bringing them and their money into RC. We heard lots about the streaming service but will fan pay for it if it doesn’t have the rights to the World League. Will fans play to see NZ play Fiji out of the test window and without all their European players. We have heard lots of talk about all this money SL is going to make but still waiting to see what it will be. SL is talking about games between NZ 7s and Japan 7s, that isn’t exactly a money maker when 7s is only viable because WR are taking the massive losses. NH rugby is all about building competitions that make money. The Champions Cup is the richest club competition in the World followed by the T14 and URC. IF NPC & SRP ARE BOTH LOSING MONEY FOR NZR BUT SL ARE STILL TAKING THEIR SHARE OF THE INCOME WHAT WILL MAKE NZR MONEY. SL think there are 150m AB fans in the World. New Zealand have about 1m diaspora outside of New Zealand so are they saying there are 140+m people who only love the ABs but are not NZers. SL invested $200m for 5+% of $270m, that is a 6.7+% return each year that is why SL did it. NZR only make money playing AB games which is why going forward ABs will become the harlem globetrotters of Rugby as the look to sell tickets.

You just can't bring yourself to see opportunities there for NZR to expand its rugby footprint but, that's ok. Who cares what WR takes - what's important is that your own product is in a position, to take advantage of what WR does not get.....you can only meet that challenge by investing, in that product. Doesn't England and France throw their bank accounts at the women's game?? And yet, who won the last WRWC?? Neither of them so, it's a beginning to promote what is, in terms of pursuing an overseas view, a winning team mentality. And just for your limited perception - NZR isn't paying anything back to PE investment but your limits, just cannot fathom that.

NZR is going the same way. $25m more going to their women's game but WR own the competitions in which they play meaning that NZR will get the same income as RA for the women but are spending alot more. NZR are giving RA $8m for staying in SR which covers a SRP team for RA but was an added cost for NZR. Then you have the $13-20m that NZR will be given to SL and the NZ coffers will start to look fairly small. Its only a matter of time before RA follow the IRFU model and give each SRP team (less the Force) and tell them they can spend as much as they want above that if they can raise the funds which would allow teams like the Tahs to raise 1-2m a years to bring in better players. The Force will get no money but will have no wage cap so will start filling the team with lots of players from around the world. World League is meant to be the massive money earner for the Unions so Oz will get more from this then NZ as they have no PE to pay back.

For what it's worth, NZR just may be better off without RA now that the debt level over there, has just gone ballistic. Their international program in both genders for 7s and 15s rugby, looks absolutely shot. The only shining light seems to be the age group rugby cos they've got no successful provincial brand per se' and they seem to be convinced, that buying player(s) from the other code or club rugby in NSW, is the road to success, that they need. Oh, and hiring a new head coach, a new CEO and a new President to lead their game, over the next - how many years?? I would suggest that in the corporate business world, any company with this sort of history, would be bought, stripped and sold to pay-back the buyer, for his purchase outlay. I doubt if any part of the company, could even be salvaged, such is its present demise. And you ask, how is SL going to maximise NZR's income without RA being there somewhere - my guess is RA or more specifically Hamster, will be scrapping to hold onto NZR's coat-tails just so he can needle some more funding from them, to pay the debts.

It is interesting to see that the PE model has not been working overseas.

50% of profits? Only if you believe they made $8m. There was a $1m cash surplus on operations and an increase of prepayments of $7m. Until RA makes some better disclosures, I am betting on a sponsor contra deal where the income is booked today and the expense amortised over next year (or years?). I do believe they need to borrow to invest in pathways and development which has to be run on a national basis. Devolving responsibility to the states means cost duplication, five different strategies, and probably none of them optimal. The whole joint needs to be swept clean. A real shame they did no appoint a VA in 2019 and start again to build a whole new structure. A fully functional NRC has to be built from scratch as well, with the goals of invigorating further the main metropolitan rugby competitions, getting decent crowds to NRC games which in turn will drive TV subscriptions. That will cost a fair bit as well. I would be running a full home and away competition played on Sundays through the club season. Larger squads are needed to accommodate players rotating between NRC and playing games for their club. Tickets need to be cheaper and rugby clubs should keep a decent % of the tickets they sell. They also need to invest heavily in the lead up to the RWC. The failure in 2003, and the recent football world cup, is that interest has not been built in participation and 'funnels' built to start pulling kids and parents through before the cup finishes. Instead both administrations enjoyed the attention, claimed they were now the no 1 sport, and waited until next winter to see what happens. The timing of the BIL tour in 2025is perfect to build interest. We should also be concerned about future pandemics and an economic downturn which could impact BIL and RWC and those bums will need to be replaced with local crowds and lower ticket prices. I guess you can insure that, but it will be expensive if you cover all the loopholes.

I Guess, nobody stops that titan of the business corporate world, making decisions....

Not really disagreeing 20% is a huge chunk to sell, and would of been pretty disappointed if NZR had sold that big of a chunk.

Brendan with all due respect mate, how the hell do you expect me to know what NZR+ will show? I suppose some asked the same when Stan got rugby? I would guess even if they didn’t do all rights locally they could sell tests in USA, Asia and maybe NPC . Although you appear to think the boffins at NZR and Silver Lake have no idea how , I would imagine they have plans in place. Anyone who thinks that Silver Lake bought 5-6% or whatever for $200m or whatever, I sure haven’t done it without proper investigation. We won’t know what to expect for 4-5 years I imagine. And how do WR holdrights or control Ferns etc games? WR holds rights to tournament they run, but nothing else, and like Stan wouldn’t NZR+ be able to buy rights etc if they chose anyway?

You need to study your maps again. There is a difference between NZ and Australia. The $90m I mention was NZR's cash reserve which had been growing long before the 2017 Lions tour through hedge investments in the greenback currency and the like. You also seem to overlook the fact that SL paid less for a small stake in NZR's commercial arm (not in NZ R itself) which I take to mean there is a divergent income stream; I'm not sure about that. As for SL's take of new income, that is about 8%, down from their original 10-12%. If SL can help generate extra income for NZR CommCo, they will make more money themselves. That is what I call an incentive. The players union understands that they can't get more money if more money is not coming into the game (something Premiership clubs should have heeded) but's its issues like image rights that stuck in their craw. From what I know about the recent reports, it was the behaviour of some of these provincial unions that was a problem so presto! out comes a warts-and-all review. Even if nothing comes out of that review (unlikely), that was a warning shot. The problem with small markets like NZ is that they can get easily overwhelmed by larger markets. NZ has already been drawn into Australia thanks to the underwhelming performance of RA administrators. It can't afford to get sucked in again but still needs to leverage greater financial access hence the MoU with Japan. You can call NZR idiots for taking SL money but the bigger idiocy would be relying heavily on WR like Australia is doing; RA is mortgaging itself to its eyeballs in debt and not even PE firms want a piece of that action. It is worth noting that it was first RA, then NZ, who took steps to ensure the Fiji Drua, for one, are exposed to competitive games at a lower level and the RWC is seeing the benefits of that right now. Given how much CVC has wrapped up 6N teams' rights, there is also the possibility that SL can leverage some of that CVC money through games and tours. The money spent on NZ women, as I understand it, has been paid for, or topped up by, SL money. NZ R has a good eye for controlling costs unlike their counterparts across the Tasman Sea. NZ is looking to raise an extra $100m from local investors; I don't know enough about the NZ scene to say if that is a realistic target but they would seem to be trying more than the RA is at the moment (not hard, granted).

Definitely agree it's not a great idea to go with the deliberate debt but I still personally think its a lesser of two evils compared to bank loans as the debt will still be paid off by 2027. The PE is a lifetime of paying 20 percent forever. Personally, I think whatever Rugby Australia do now is too little and too late. If McLennan hadn't been so arrogant I'd have alot of sympathy

It's clearly context: the Wallabies have always got through the pool stage, no? This would be presumably the case if they lose to Wales that they'd be out in the group stage for the first time.

So what have NZR invested in with all that money. Do we believe that the NZR is worth just a little less than Arsenal. The thing is while SL (or CVC) are buying a stake they are getting guaranteed income which will always cost more. Arsenal have an income of 775m v 270m for NZR. If NZR can match Arsenal they would have the same income of the entire T14. 5% of 775 would see SL's investment returned in 5 years but that income will not be reached by the NZR for another 50 years if it even does (not sure even the RFU could get that income). Selling out Twicks 20 times a year would only raise 400m. We know that PE deals are to do two things which is generate income for the PE company (at current rates SL will get 13.5m every year forever) and the value of the asset. The question I have is how do they raise the money as currently team sponsorship, TV revenue, and match day fees are by far the biggest generators of income which SL don't have alot of say over nor does NZR. Wasn't there also issues with NZR raising some of that Extra money and if SL are getting 5% than than 62-100m is more income gone to other investors.

What will the NZR+ show. Will you pay to see NZ play the RC games and T2 nations but non of the WL games. Will you pay to watch a non-professional NPC with no SR players in the teams because they will all be away with NZ XV or SR sides playing teams in Japan or Europe and having 6 month travel plans. Ferns and 7s income is fully controlled by WR who are rubbish at making money and mean that many years these teams will play 1 weekend a year at home and the rest OS. Will fans stay loyal to the SR teams if they play 7 home games and 10-15 away games a year. Who will buy a playstation game with only NZ teams and players which the NZR hold the rights to (only those with NZ teams). Compare that to a deal done by CVC which would have the rights to all the players in the URC, T14, Prem, EPCR, 6Ns and Autumn Series. We have already seen Flo moving focus to CVC and away from SRP/NZR, what do SL have to sell that CVC cand give them but with alot mor content.

Here's a bit more about that deal when it was finally cleared. Make of it what you can: "Establishes NZR CommercialCo under the control of NZR that will contain all the revenue-generating activities of NZR. "Silver Lake invests NZ$200 million into NZR CommercialCo at an NZ$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. "An additional co-investment to be offered to New Zealand institutional investors with a minimum of NZ$62.5m to be offered, with the potential to seek up to NZ$100m. Silver Lake will underwrite this institutional syndication if it is not fully subscribed. "At the end of the additional co-investment, Silver Lake will own between 5.71-8.58% of NZR CommercialCo (representing NZD $200-300m investment, depending on capital needs and the uptake of New Zealand investors) vs. the 10-15% stake that was previously proposed. "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. "Under this partnership, the protections and controls for NZR remain in place as previously agreed. Silver Lake would be a minority investor and NZR will retain full control over rugby as well as the commercial strategy. "The new NZR CommercialCo entity board will be controlled by NZR and will comprise a new independent chair, and other independent directors, to assure high governance standards and at the same time business acumen to make NZR CommercialCo a success for everyone interested in rugby in New Zealand. The NZRPA will have a seat on the NZR CommercialCo board."

Keep telling yourself that. SL don't own the NZR but they do the income. NZR is still stuck with all the expenses including those created by any new ventures but SL just take a share of the money. We all saw/heard the recent report about the issues with the provincial unions and that did not seem to think that the money had go into money generators and I doubt the Players union will be pumping any of the money back into the NZR. :rugby: How do the PI nations help they are tiny markets which is why NZ and Oz have less games against them in the last 30 years than any of the 6N sides, will they suddenly cover the 5-8% of income (Nz$13.5-21.6m based on last year's income). :rugby: While SL may not be involved in deals done by NZR all the income for the union will be fed through the new entity (means if NZR get into financial trouble SL are not getting any of the risk). NZR should have lookd to sell part of competitions not the union itself. :rugby: The Covid thing comes down to money. Before the Lions they had a sizeable debt which the Lions cleared and the rest was then put into the bank to get them over the following 11 years. NZ is a small market which is true but they don't seem to want to be joining forces with bigger markets. Since Covid NZR have the $8m you mention above plus the $13-20 i mention plus the $25m being put into the women's game, thats $46-53m a year that wasn't planned pre-covid and possibly pre-deal. To cover that extra cost NZR/SL need to find $48-57m to cover those costs. The reason the NZR brought out their recent report is because there are massive cost cutting coming to make ends meet and focusing on the ABs, SRP and Ferns and 7s and everything else will be small.

Then tell me how are SL going to maximize the NZR income without RA being under the SL umbrella as NZ and RA are Siamese twins when it comes to the World Rugby Market. We have already seen that SA and Argentina want the RC moved to 6N time which will have a massive effect on the RC international value. SL can't change anything at WR because they have 3/51 votes. I heard alot about NZ/AB being a great brand that SL are going to sell but to who. World League will control most of the none RC/6N games 2/4 years. So SL will have to either play loads of Oz games or T2 teams to get more games as SA, Argentina and 6N will be busy with their Clubs. SL are taking 5-8% of the income generated by NZR for the World League and Lions. RA figure that the WL income means their value should be more as it will limit the number of games the WBs can play now.

I don't agree. If CVC only had a deal with only URC or Prem their potential would be very small. Because of the Prem BT deal we are seeing how that looks. Because they have URC, Prem and 6N they defacto have the EPCR. I did an article on this and what that means. CVC organized a deal with Flo rugby to sell URC (8 matches per week), T14 (7 matches per week) plus the EPCR games (22 games per week when on). If Flo can find the money they can also get the 6Ns as part of a new deal. If SL tried the same thing they can sell NPC (not much interest to non-NZ), They need RA approval to sell SRP and SA, Oz, Arg approval to sell the RC. If Oz and NZ were both with SL then SL would not have to get approval and you wouldn't see Japan playing RA and NZR off against each other. If you take the WL CVC have partnerships with 7 of the 10 teams. SL has 1. Because of that CVC without any extra investment has become a partner to a new competition and the deals they do will be aligned with the NH competitions because it makes CVC and the 6N+SA the most money. I would not be surprised to see the World League, 6N, EPCR and T14, Prem and URC all be bundled together for a worldwide deal not involving (but also could) the 6N and SA territory. If the World League TV rights are sold to Amazon outside of 6N and SA (they would be sold to the normal people) what can anyone else do, Oz and NZ can't walk away because Samoa, Tonga, Georgia will happily take their place. So yes PE investment is completely linked and OZ have realized it is either CVC or no one but I don't think they put in a bid as they don't need them. CVC has 18 votes via the 6Ns and SA, Georgia and Rugby Europe have another 6 which gives them 24/51. Like all buisness you don't need 100'% just the controlling part. Rest of the shareholders hope that they get some of the profits but can't decide where it goes.

League has advantage of not needing international success