New deal for New Zealand’s All Blacks overcomes resistance

Photo: Mint 
Photo: Mint 

Summary

  • U.S. private-equity firm Silver Lake agrees to smaller stake in iconic national team

U.S. private-equity group Silver Lake has agreed to a scaled-down investment in commercial rights of the All Blacks, which values the New Zealand rugby team at about $2.3 billion.

Months of negotiations between Silver Lake, the governing body of New Zealand rugby and elite players have produced a deal that would still inject substantial cash into the sport in the country and give local financial institutions an opportunity to invest.

Depending on the extent of involvement from New Zealand investors, Silver Lake’s investment of 200 million New Zealand dollars—equivalent to $134 million—will give it a stake of between 5.7% and 8.6% in a new company that will own the revenue-generating assets of New Zealand rugby, such as broadcast rights. The original proposal would have given Silver Lake about a 12.5% stake. New Zealand institutions will be able to invest up to NZ$100 million.

Silver Lake’s investment, initially agreed in early 2021, was unanimously backed by more than two dozen regional rugby unions and the Māori Rugby Board, but met resistance from the rugby players association, which said it feared a loss of control of the sport within New Zealand. The regional associations and the Māori Rugby Board will need to approve the revised agreement.

The new deal provides capital on a sound economic basis, said David Kirk, chairman of the players association.

Mr. Kirk, who captained the All Blacks to their first Rugby World Cup victory in 1987, said the involvement of local financial institutions will provide a way for New Zealanders to share in the sport’s growth over time.

Provincial rugby unions, large and small, have been enthusiastic about the possible Silver Lake investment as it would inject money into local clubs.

“It’s exciting that we have progressed further," said Bridget Belsham, chief executive of Wanganui Rugby Football Union, an umbrella organization for a dozen local clubs in a region of about 50,000 people.

Still, the deal is different to what was originally agreed and rugby unions will need time to digest it, she said. The original proposal was for Silver Lake to invest about NZ$387 million.

“I am optimistic. Rugby needs investment and our community base needs investment, that’s where it all starts," Ms. Belsham said.

Although New Zealand rugby has an aura of global success, the sport has struggled domestically with a patchwork of cash-strapped grass-roots clubs, dwindling numbers of volunteers, and an aspiration to promote women’s rugby that lacks sufficient funds. The pandemic also took a toll. New Zealand Rugby had an operating loss of NZ$18.7 million in 2020 on top of losses in 2019 and 2018.

Those challenges led New Zealand Rugby, the governing body locally, to seek investment in a sport that lacks the profile of soccer and basketball in major markets such as the U.S. and China. But it also unleashed a debate over whether the best way to accomplish that was by bringing in a deep-pocketed outside investor.

New Zealand Rugby believes that Silver Lake, which in 2019 invested in the owner of England’s Manchester City soccer club, has the technology expertise and global connections to boost revenue—which New Zealand Rugby can’t afford to create by itself.

The investment will foster grass-roots rugby, enhance the experience for fans and maximize the sport’s global reach, said Mark Robinson, the chief executive of New Zealand Rugby.

“Digital technologies are transforming all sports," said Silver Lake Managing Director Stephen Evans.

This story has been published from a wire agency feed without modifications to the text

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