NZ Rugby has gained a 5 per cent stake in Sky as part of a "revolutionary" new rugby deal running through until 2026.

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NZ Rugby's stake in Sky will spread even more treacle on rugby's syrupy coverage

The sporting body was given the shares in kind as part of the package rather than paying cash, a Sky spokeswoman confirms. The share element of the deal is pitched as a world-first.

Still, I would call the stake questionable rather than "revolutionary".

In financial terms, it probably makes good sense for NZ Rugby to accept a chunk of Sky stock as part of its payment (which is thought to be around $400m over five years, or $10m a year more than the current deal).

At Sky TV's 89c closing price on Friday - which was scraping its record low - NZ Rugby's 5 per cent stake would be worth just over $19m.

Today's news has already seen Sky shares rebound 20 per cent and one analyst saw the pay TV provider's stock rebounding to $2 if it kept Sanzaar rights (update: Sky's shares surged 20 per cent as the market opened).

But it also puts NZ Rugby in a completely conflicted position.

The next time Sanzaar or Rugby World Cup rights come up for grabs, it will diminish its investment in Sky if NZ Rugby punts for Spark (or a new contender, like Amazon).

This morning Adrian Allbon, a senior analyst at Craigs Investment Partners, said the deal would make it harder for rivals to take the rugby rights off Sky in the future.

He went as far as saying, "Spark Spor.t is effectively locked out of rugby."

Then there's the matter of Sky's coverage itself. Dylan Cleaver sees the pay-TV provider's already-syrupy embrace of the ABs hitting new heights of sugary sycophancy under the share deal.

NZ Rugby chairman Brent Impey denied there was any conflict of interest now that the organisation had acquired a 5 per cent stake in Sky.

He said NZR would not stand in the way of Sky bidding for other rugby rights and that his organisation remained committed to doing what was best for the game and for viewers.

I would have preferred to see NZ Rugby stay neutral.

Rather, Spark says it did not place a bid. The Herald understands it was not even allowed to get to the negotiating table, with everything wrapped up during Sky's exclusive negotiating period.

And in terms of the deal itself, I think NZ Rugby has missed a trick by not splitting broadcast and online rights, as has been done by top sporting codes in other markets - or at least carving off mobile rights.

The new Sanzaar deal is subject to Sky shareholder approval at the pay-TV provider's annual meeting on October 17 (a requirement, given that the deal will be easily cross the threshold of being more than half of Sky's market cap).

It's a done deal that shareholders will vote yes. Sky without rugby would have no future.

But competition lawyer Michael Wigley sees potential problems from the Commerce Commission if Sky does not wholesale rugby to online platforms on fair terms (that is, for example allowing Vodafone TV to offer Sky Sport without a condition that it not carry Spark Sport).

Rugby secured, but other challenges ahead

Lastly, although Sky investors will be - quite rightly - relieved that the new Sanzaar deal is almost over the line, the company still faces plenty of challenges.

Spark will almost certainly follow-up its domestic cricket win with plays for netball and league rights.

And on the entertainment side of things, Sky is already having to pull its Disney channels because of the arrival of the Disney+ streaming service in NZ next month.

And although it has the insulation of a multi-year exclusive deal with HBO, it will also have a nervous eye on the new HBO Max streaming service, set to launch next year.

Like Disney, HBO is looking to cut out the middleman, from old-school pay-TV providers to new-school online aggregators. Why does it need them, in the age of broadband?

The point has been made that people could get subscription-fatigue as they are asked to pay for more and more services per month.

But at Sky's recent annual results briefing, new CEO Martin Stewart explained a huge goodwill write-down, in part, by pointing to new online competition.

And, in particular, he mentioned how Disney was set to bundle three streaming services - Disney+, ESPN+ and Hulu (a Netflix competitor in which Disney owns a 50 per cent stake) for just US$12.99 per month.

That's a deal to send a chill down a Sky shareholder's spine. And of course, NZ Rugby is now just such a shareholder.