California-based investment company Silver Lake Partners has agreed to buy a stake in the commercial operations of New Zealand’s governing rugby body, which includes the famous All Blacks national team.
New Zealand Rugby said Silver Lake will invest NZ$200 million (A$186m) to set up a new commercial entity “that will house all revenue generating assets” of NZR.
The deal has been given approval by the New Zealand Rugby Players Association, which had initially opposed the partnership fearing excessive influence of the American firm over the three-time world champion All Blacks.
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In a concession to the players body, New Zealand institutional investors will also be able to take a stake of up to A$93m in the new company later this year.
The players association had encouraged NZR to consider local investment as an alternative to the Silver Lake deal.
NZR said the partnership with Silver Lake will provide “capital to invest in the game at all levels and supporting the development of new capabilities and the pursuit of new global opportunities enabled by digital technologies.
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“This partnership marks the beginning of a transformational phase for the entire game in New Zealand and will allow us to pursue exciting new opportunities for rugby.”
NZR is likely still to face public concern that the deal hands a substantial share in the All Blacks to an overseas corporation and that the team, which forms a major part of New Zealand’s national identity, no longer belongs wholly to New Zealanders.
Silver Lake is expected to seek to maximise the value of its investment by increasing the commercial value of the All Blacks.
That might see the team playing overseas more often and there are fears ticket prices to the team’s matches in New Zealand might increase.
Menlo Park-based Silver Lake has around $A122 billion under management and its mainly tech holdings include companies such as Airbnb, Alibaba and Skype.
Since 2019 it has held a $A695m interest in the City Football Group which controls the Manchester City football club and other teams in the United States, Australia and elsewhere.
The partnership between NZR and Silver Lake now requires ratification by New Zealand’s 26 provincial unions and the Maori Rugby Board.
That approval is thought to be assured because NZR has promised the unions a financial windfall of up to $A1.07m each if the deal proceeds.
The pandemic has shut down some parts of New Zealand rugby over the last two years, including the second-tier Heartland Championship, and has left some unions in a precarious financial position.
A special meeting of the provincial unions to ratify the deal is expected around the end of March.
The entity created under the partnership with Silver Lake will be called NZR CommercialCo and will control all revenue-generating parts of rugby in New Zealand.
Silver Lake and NZR also will establish Global Rugby Opportunities to invest in rugby-related businesses outside New Zealand.
The Silver Lake stake in CommercialCo will be between 5.71 and 8.58 per cent, valuing the commercial interests of New Zealand rugby at around $A3.25b.
In a statement designed to reassure some unions, NZR said CommercialCo “will be controlled by NZR and will comprise a new independent chair and other independent directors to assure high governance standards.”
The Rugby Players Association will have a seat on the board of the new company.
The current revenue-sharing arrangement between NZR and professional players will continue.
“Further, NZR will undertake an independent review of its governance structures and processes to ensure it is fit-for-purpose for this new chapter,” NZR said in a statement.
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