In Part III of the Business of Rugby series, Gregor Paul looks at the All Blacks' new attempts to squeeze more income out of the game.
It has never sat well with New Zealand Rugby that the All Blacks have the same brand recognition in their sport as the likes of Manchester United and Ferrari but only a fraction of the income.
The All Blacks are a sporting phenomenon, a team recognised beyond rugby's small global footprint.
Replica All Blacks jerseys are worn in obscure parts of the globe and streaming rights to tests are often bought in places such as the United Arab Emirates and Uzbekistan in surprisingly high numbers.
And the All Blacks can fill just about any stadium in the world, having done just that in Hong Kong, Tokyo and Chicago in the past decade.
Yet for all the brand appeal, a total return of $187 million in revenue last year is a disappointing financial result.
In the same period, football giants Real Madrid generated $1.3 billion and Manchester United $1.2b, while tennis star Roger Federer earned almost as much as the All Blacks, with his income estimated at $170m.
NZR is looking for a game-changing means to alter their income; to cash in on the power of the brand.
Sponsorship income has steadily grown but there is a limit before the players are overwhelmed trying to fulfil the obligations and demands that come with these deals.
There's a limit, too, on how many products can be sold as official merchandise. The broadcast deal is locked in for the next five years, and while the All Blacks have played additional test matches in recent years for significant payments, these games are fraught with risk.
In 2010, the All Blacks lost the cash-generating game they arranged against the Wallabies in Hong Kong. They lost the most lucrative match - $4.5m - they have ever played when England thumped them at Twickenham in 2012. And they lost the money spinner in 2016 when Ireland beat them for the first time in Chicago.
Every 12 years, the British and Irish Lions come to New Zealand and inject an additional $50m-$60m into the system but that doesn't give them the cashflow or level of capitalisation they need.
The golden ticket is to strike a partnership with one of the many giant private equity groups sniffing around rugby.
CVC Capital, which has close to $250b invested in a diverse range of assets, has taken a significant stake in England's major club competition and is in discussion to buy a share of the Six Nations for $600m.
Infront, a Swiss-based sports marketing group, were prepared to bankroll the Nations Championship concept – create an annual, global test competition – in a deal worth $10b overall and potentially $10m-$15m annually for NZR.
Silver Lake, the $40b United States firm which has taken stakes in Dell, Airbnb and the UFC, is also believed to be looking at rugby as an investment prospect, and another US firm, Kohlberg Kravis Roberts, is in discussion with the Melbourne Rebels and Rugby Australia.
NZR has talked to these groups and hasn't yet decided whether to enter formal discussions.
NZR chief executive Mark Robinson says: "We are not at that stage yet and I don't think that will change any time soon."
He does, however, say that separate talks between Sanzaar and private equity groups – which could lead to investment in Super Rugby and/or the Rugby Championship to buy a share of the marketing rights similar to the Six Nations – are more likely to progress.
It's easy to see the attraction of private equity, especially given the financial carnage caused by Covid-19.
Based on the size of other deals, NZR could be looking at a capital injection of anything between $300m-$600m over five years.
That sort of cash would fund the grassroots for a decade, help build a professional provincial women's competition and allow NZR to retain all the talent they want.
But the harder question to answer is the potential risk. What level of control can NZR retain over the All Blacks should they accept private investment?
"Private equity firms can be brutal," says marketing consultant Kevin Malloy. "These guys want bang for their buck and it's possible their value systems may be the antithesis of everything that has made the All Blacks the All Blacks.
"You really are selling your soul for 10 pieces of silver, and the key to any deal being done will be dependent on how many compromises NZR would have to make."
The value of the All Blacks brand has been built on their consistent success. Tied into that is the ethos of team, the collective being more powerful than the individual.
Private equity investments in other sports have resulted in a greater marketing focus being placed on individuals.
This is the way the NBA in the US has increased its audience and revenue. It has a superstar culture, and that's a concern for NZR - they don't want the All Blacks' culture of humility to be broken and also don't want too many additional demands placed on their players.
New Zealand's best players have highly managed training and playing schedules to protect them from burnout and it has been one of their most significant advantages on the world stage.
An external pay master may not see player welfare as a 'real thing' in their pursuit of making a return on investment.
"You also have to remember that if a team starts losing, their brand can deteriorate quickly," says Malloy. "Look what happened with Manchester United and you would have to ask what would the All Blacks have if they weren't winning?
"Their whole story is based on being from a country with a relatively tiny population that is incredibly successful. If they aren't winning, they don't have a story."
Then there is the mechanics to consider, and the harder-to-answer question of what precisely any private equity firm would be buying - which is why the Herald believes NZR is focusing on two distinct strategies regarding private equity.
One plan would be to use private equity to help fund the capital investment required to build their own digital platform - a global application similar to the NBA.
Such an app requires capital investment in the tens of millions, with burdensome maintenance costs. But if a private equity partner could help meet those costs, it could produce a multi-million-dollar revenue stream.
And the other is to sell the jersey sponsorship rights to all New Zealand's national teams – which is going to happen with or without a private equity investor.
Current jersey sponsor AIG – which has naming rights to the All Blacks, Black Ferns, Sevens, Māori and under-20 teams - is not renewing its deal which expires in 2021.
The Herald understands that one idea floated was for NZR to sell the whole portfolio to one investor - possibly a major US or Japanese advertising agency – which can then on-sell to specific companies that want to put their name on the iconic All Blacks jerseys.
NZR chief commercial officer Richard Thomas says a proposal is ready to take to market.
"Our view is that we need to be flexible about what the audience and potential buyers are looking for," he says.
Private equity comes with a catch, but with income forecast to be down as much as 70 per cent this year, NZR might have no choice but to conclude that the rewards of accepting a cash injection outweigh the risks.