New Zealand Rugby Players' Association boss Rob Nichol is urging caution about the national body's $465 million private investment offer from US technology investment giants Silver Lake, warning the devil of any deal will be in the details and that getting it wrong could be catastrophic for the game.
Last week the Herald revealed Silver Lake have tabled the $465m offer for a 15 per cent share of NZ Rugby's commercial rights. Plans are in place to establish a separate NZ Rugby entity responsible for maximising revenue streams such as broadcasting, sponsorship and merchandising, with Silver Lake purchasing a 10 to 15 per cent share in this company.
NZ Rugby last week started nationwide roadshows with many of its 26 provincial unions to outline how the Silver Lake investment would work, where it could be spent to futureproof the game, and steps it believes will mitigate risks around loss of control.
The national body needs provincial union support to accept the offer, which is expected to come to a head at its annual general meeting in April.
Consultation will continue, with NZ Rugby to respond to a series of questions from the provincial unions next week, but plans for immediate investment into all levels of the game, some of which desperately need propping up, and for a multi-million dollar legacy fund have largely been positively received.
The Players' Association is, however, another major party involved in any private investment deal through the collective bargaining process.
NZ Rugby is also canvassing views from former All Blacks players and coaches.
As head of the national players' union, Nichol holds sway and he is wary about the proposal to sell a minority stake in the game, a prospect that would mark the biggest sea change since the turn of professionalism 25 years ago.
While bound by confidentiality agreements, Nichol outlined his view to the Herald in his first public statements on the Silver Lake offer.
"We are in ongoing consultation with NZR, the clubs and provincial unions on this given it is a matter being considered under bargaining, and NZR has acknowledged they would need our agreement to any potential proposal should one eventuate," Nichol said. "It's very much NZR's process and we respect that.
"However we are across the detail of what is being considered and one thing is certain, on matters like these you really do need to be fully informed, including the reasons why such an initiative may be pursued, the short and long-term risks, other options including if and why they would be discounted or pursued, and ultimately have a thorough understanding of the potential consequences, good and bad, before you can truly offer an informed opinion or view.
"And currently given the nature of how these things evolve, very few are in that position at this stage so we caution people to make sure they understand all the detail and potential scenarios. Thorough due diligence is a must and that is something all key stakeholders need to work hard on together.
"Should things progress it will be important that the game is transparent and people really do understand the detail of any potential proposal and what it may or may not mean for rugby in NZ.
"As with all commercial investment and/or private equity arrangements the devil is absolutely in the detail, and getting it wrong on any number of levels can be catastrophic for any business.
"There are no shortage of such stories. Likewise, businesses often need capital and expertise to develop, grow, take advantage of opportunities and achieve their aspirations and goals."
Silver Lake, a company with US$75 billion (NZ$104b) in assets and $180b in annual revenue, is yet to comment on its offer to NZ Rugby.
Nichol says any move to sell off a stake in the game must protect and enhance rugby in NZ and ensure it maintains its place in our heritage and cultural identity.
"That may or may not involve an investor," Nichol said. "In situations like these taking on investment to pursue growth involves a risk reward scenario. Understanding rugby's propensity for risk, rugby's options, and how it chooses to move forward, is all part of the work that NZR is tasked with.
"We are very supportive of NZR's desire to improve its financial performance and position, and to deliver on its strategic goals across community and professional rugby and its vision to unite and inspire.
"Understanding if a potential investor is truly aligned with this vision and these goals, or if their motivations are complementary and can be managed, is another key aspect that decision makers need to interrogate.
"People, and in particular key stakeholders who ultimately will need to take a position if any proposal is formally tabled, need to be incredibly cautious in assessing its merits or otherwise, and what it may really mean to rugby in New Zealand.
"What is it that is being truly given away, and what is being secured in return? And is it the best available option?
"That is the approach we are taking and the basis under which we are working with NZR, the clubs and provincial unions as NZR continues to explore possibilities."