California’s Silver Lake takes $134 stake in NZ’s rugby

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 $134 million 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.

In a concession to the players’ body, New Zealand institutional investors will also be able to take a stake of up to $67 million in the new company later this year. The players’ association had encouraged New Zealand Rugby to consider local investment as an alternative to the Silver Lake deal.

New Zealand Rugby 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.

“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.”

New Zealand Rugby 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 maximize 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 $88 billion under management and its mainly tech holdings include companies such as Airbnb, Alibaba and Skype. Since 2019 it has held a $500 million interest in the City Football Group which controls the Manchester City soccer club and other teams in the United States, Australia and elsewhere.

The partnership between New Zealand Rugby 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 New Zealand Rugby has promised the unions a financial windfall of up to 1 million New Zealand dollars ($670,000) 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 New Zealand Rugby 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 percent, valuing the commercial interests of New Zealand rugby at around 3.5 billion New Zealand dollars.

In a statement designed to reassure some unions, New Zealand Rugby 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 New Zealand Rugby 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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