Two years of false starts give way to Silver Lake's promised dawn. Photo / Photosport
Two years of false starts give way to Silver Lake's promised dawn. Photo / Photosport
Two years on from the first tabled Silver Lake offer and New Zealand Rugby has reached the start line on a $200 million private equity deal that will usher in the biggest seachange since the game turned professional.
False starts and promised dawns consistently stalled the Silver Lake deal untilNew Zealand's 26 provincial unions on Thursday voted 89-1 via a secret ballot in favour of the largest transaction of this nature in New Zealand sports history.
With unions all holding at least two votes, and those able to be split, the sole dissenting voice remains the final mystery in a saga to match any soap opera.
"It might be the great answered rugby question of all time," NZ Rugby chief executive Mark Robinson said following the green light of support. "For us this is a monumental step for the game and one that provides great opportunity."
After painstaking, and at times bitter, 11-month negotiations with the Players' Assocation, followed by three months of trade-offs with the provincial unions, NZ Rugby belatedly secured approval to sell a significantly reshaped 5.7 to 8.6 per cent stake in its commercial rights to the US investment firm.
"If you'd asked me two years ago I would've thought it might've been wrapped up sooner but it's a sign of the passion and care for the game," Robinson reflected. "There has been compromise through this and that's because we've got a complex ownership structure we work within. We deal with that every day, it's part of our normal operating environment.
"When you add in the mix something that is so different and recognises the need for such fundamental transformation of course it's going to draw debate, emotion and speculation.
"It's taken longer than we might've hoped but at the same time we are delighted with today. Relief is one emotion, but there's excitement about the next steps and making the most of it.
"There were always going to be things people wanted to look at or want advice on. We think we've done a good job balancing all of that, listening, learning and developing a proposal that works for everyone."
NZ Rugby boss Mark Robinson. Photo / Photosport
The deal will see $37 million distributed through the New Zealand game, with the 14 NPC teams receiving $1m each; the 12 Heartland unions banking $500k each ($6m total), Māori rugby $2m, community clubs $7.5m, the Players' Association $5m and the five Super Rugby teams $1.25m between them.
A contestable $60 million legacy fund, aimed at future-proofing the grassroots game, will also be established.
In addition to the initial $200m deal, there will be an opportunity for NZ institutional investors to raise between $62.5m and $100m. If there is insufficient institutional demand, Silver Lake will increase its position to ensure a minimum capital raise of $62.5m.
While the major hurdles have been cleared the deal will not be officially ratified until long form legal documents are completed at the next NZ Rugby board meeting on June 13.
"We see this as a start point. It's no way a magic bullet," Robinson said. "We know there's a lot of hard work to come across the board. This will take many years to develop the revenue growth and reinvestment into the game but we remain excited."
Robinson confirmed an interim board will steer the new commercial entity, NZR CommercialCo, through the next four-to-five months until a chairperson and full board appointments are made. Former All Blacks captain Richie McCaw is understood to be the players' representative on that board.
NZ Rugby chairman Stewart Mitchell was in full charm offensive mode in recent weeks to sway wavering union support. He admitted significant concessions, including an additional $40m in annual provincial funding, helped broker the deal.
"There was a change a couple of months ago where we made changes to what was being put forward and they're happy with that," Mitchell said.
"My view is they've always been pretty supportive and they've just asked for a few i's to be dotted and t's to be crossed which we managed to do."
Signing off the deal came with the caveat of agreeing to a governance review requested by the Players' Association.
"I'm not expecting any blood on the floor," Mitchell said. "We've had three governance reviews in the last 10 years. I'm reasonably happy with where we're at but we continue to need to look at ourselves. The players are going to do their own review of where they're at too."
NZ Rugby chairman Stewart Mitchell. Photo / Photosport
With the deal agreed the spotlight will shift to whether Silver Lake can deliver their projected revenue increases by attempting to leverage and maximise the All Blacks brand – valued at $3.5 billion – by monetising largely untapped offshore fans.
Additional revenue should help retain players, coaches, as well as supercharge the women's game, in particular the budding Super Rugby Aupiki competition, and bolster the grassroots.
Major challenges remain, though. Not least in attempting to address the distressing drop off of male teenage participation and the continued threat posed by concussion.
Manawatū rugby chairman Tyn Myers welcomed the deal and its benefits but made it clear funding is only one part of the pressing equation.
"We're ecstatic about this," Myers said. "We'll take 99 per cent as being unanimous and everybody out there feels the same. This has never been about the money. We see today as the start of the journey where we can start to address some of the things that have been in decline in the community game. We need to focus on participation and building strength back into the community game.
"There is absolutely no way it's the silver bullet. The degree of alignment and collaboration gives me a tremendous amount of encouragement that things that have been systemically wrong in our game are going to be fixed."
