Huge investment for New Zealand rugby

This article was last updated on April 16, 2022

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New Zealand Rugby’s (NZR) long-mooted deal with Silver Lake has been agreed, which will see the private equity firm invest NZ$200 million (US$134 million) in the national governing body’s new commercial entity.

NZR said the global financier will provide capital to invest in rugby union at all levels and support ‘the development of new capabilities’ and ‘the pursuit of new global opportunities enabled by digital technologies’.

The new entity, NZR CommercialCo, will house all revenue-generating assets of NZR. Later in 2022, an additional co-investment of up to NZ$100 million (US$67 million) will be offered to domestic institutional investors, giving local capital the chance to participate in the deal.

At the end of that additional co-investment drive, Silver Lake will own between 5.71 per cent and 8.58 per cent of NZR CommercialCo, rather than the ten per cent to 15 per cent stake that been previously proposed.

In addition, Silver Lake, NZR and the New Zealand Rugby Players Association (NZPA) will establish ‘Global Rugby Opportunities’ (GRO) to invest together in rugby-related businesses outside of New Zealand. This particular arrangement will see NZR and the NZRPA earn a 15 per cent share of the profits of GRO, representing a 50-50 spilt.

The investment values NZR CommercialCo at NZ$3.5 billion (US$2.3 billion). The agreement remains subject to ratification by the provincial unions and Māori Rugby Board. NZR will retain full control over rugby operations, as well as commercial strategy. The NZR CommercialCo entity board will also be controlled by NZR and will comprise a new independent chair and other independent directors. The NZRPA will have a seat on the new commercial entity’s board.

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In addition, NZR and the NZRPA have agreed terms for a new collective agreement which continues the current revenue sharing arrangement and governs the new relationship between the governing body, the players and NZR CommercialCo. This remains subject to ratification.

NZR added that it will undertake an independent review of its governance structures and processes to ensure it is fit-for-purpose as the domestic game enters this new chapter. The NZRPA will also be reviewing its constitution and governance structures this year as part of a strategic and business planning process.

Talks between Silver Lake and NZR initially began as far back as May 2020, according to the New Zealand Herald. A major stumbling block that prevented the deal from getting over the line until now was the NZRPA, which had expressed its opposition to the deal and threatened to block the investment. Players were concerned about the safety of the Māori and Pasifika game, as well as the pact potentially damaging the relationship between rugby union and the New Zealand public.

But, with the protracted negotiations now concluded, NZR will look to further leverage the commercial heft of the All Blacks national team, which remains the sport’s biggest draw.

“This partnership presents rugby with an extraordinary opportunity to secure its future and unleash its true potential,” said NZR chief executive Mark Robinson.

“We are truly excited by what we can achieve together with Silver Lake’s world class capabilities: from fostering and growing our grassroots, to enhancing the experiences we can create for New Zealanders, and truly maximising our potential on the global stage.”

Simon Patterson, Silver Lake managing director, added: “New Zealand has a phenomenal track record in rugby, with a great history and culture of leadership, inclusion and teamwork. Silver Lake is fully committed to rugby in New Zealand, to help build on all these past successes at a key moment in the development of the game globally.”