Gregor Paul: Long Covid impact on rugby's short-term thinking

The All Blacks perform the haka ahead of a test earlier this year. Photosport

OPINION

It's been said there's nothing as bleak as a Charles Dickens novel – and then along comes Covid-19, and you'd think Oliver Twist had it pretty good.

Not that it's a tragedy in a global context with people dying alone, businesses collapsing and kids seeking education at the end of a Zoom connection, but rugby has been kicked in the nether regions so hard by Covid-19 it can barely draw breath.

The pandemic, with its sharp eye for attacking the vulnerable, has wreaked financial havoc upon rugby unions across the world – cancelling tests, killing competitions as we knew them and pitting administrators against broadcasters in a scrap to rescope contracts and quibble over amounts that are way less than the boozy lunches they used to enjoy every other week.

For New Zealand Rugby (NZR) chief executive Mark Robinson, these past two years have been the boardroom equivalent of facing a rampant Springboks team at Ellis Park – Covid-19 being a relentless wave of monstrous force smashing through the balance sheet with no intention of stopping until there is only dust, memories and angry bank managers.

His organisation had $100m in cash reserves when Robinson started in early 2020, but $34m was lost last year, and when the accounts are made for 2021 still more will disappear.

But as 2021 draws to a close, it is becoming clear that Covid-19 is no longer the only enemy. What may end up killing the sport is not the virus, but a new-found obsession with short-term thinking to patch up the damage caused by the pandemic.

Covid-19 has been a handy fall guy – the dumb stooge to blame for everything and equally a foundation from which to justify this new cult of short-termism.

Covid-19 and its likely devastating impact was used to justify NZR's decision to present the provincial unions earlier this year with a private equity investment proposition that was potentially ruinous.

Short-term, the original, tabled deal with US fund manager Silver Lake to buy a 12.5 per cent stake in NZR's commercial revenue for $387m would have flooded the game with cash and seemed like the panacea to the balance sheet ills. But longer term, it would have seen capital drain out of the business until 10 years down the track there was nothing left but regret and circling vultures.

The Herald was leaked a report which showed that had NZR taken that deal with Silver Lake as it stood in April, they would most likely be running at an operating loss by 2025 and living off the investment returns of their cash reserves.

It was a deal that screamed short-term fix, which was underlined when the greatest advocates of short-termism, the provincial unions, voted unanimously to jump into bed with Silver Lake and cuddle up one hand each on the family silver between them.

The unions were promised a windfall when the deal went through and – with their pokies money drying up, sponsorships shrinking and crowds dwindling – of course they said yes to Silver Lake's cash, deaf to the dissenting voice of the Rugby Players' Association (RPA) which was asking pertinent questions about the longer-term implications of a deal that had no performance measures nor a defined exit strategy and no detail on how the US firm was going to double the revenue as it was forecasting.

Former NZR chairman Brent Impey famously said the professional players would be scoring an own goal if they didn't support the transaction, saying the $3.1bn valuation placed on the business was unprecedented in the field of private equity investment in sport and an unbeatable deal.

It appeared to be all part of a narrative pushed by NZR to paint the RPA as greedy and self-interested in blocking the original deal, because that's what happens in the post Trump-era – those who perceive they hold absolute power rely on a suite of tricks such as pejorative and bombastic statements and accentuating the fear of missing out to wield it.

Four months on and Silver Lake, who have since July been communicating directly with the RPA, have radically reshaped the deal from a smash-and-grab raid to one that could potentially have significant long-term benefits. They have upped their evaluation – believed now to be $3.6bn – are willing to take just a 7.5 per cent stake, with a timeline and mechanism to trigger their exit having been discussed.

The greatest own goal in the history of sport would in fact have been agreeing to the supposed deal of a lifetime that NZR were pushing back in April.

Short-termism is such a powerful movement, however, that the provincial union chairs were in Wellington this week, pitchforks in hand and burning effigies of RPA boss Rob Nichol, demanding to know from the NZR where their Silver Lake deal (cash) is.

The questions they should be asking are why this new, better deal wasn't on the table back in April and what sort of advice are NZR receiving from their investment bank advisers, Jefferies, who, it is believed, stand to make $6m if agreement is reached with Silver Lake.

But short-termism is so rife, endemic almost, that most of its followers are oblivious they are even in the cult and none have any sense of the trouble they are storing up for later.

Did NZR pause to think in 2020 what the full extent of unilaterally blowing up Super Rugby would be?

There was NZR last year lording it over the Australians that they might be allowed three teams in a New Zealand-run Super Rugby competition, but they would need to mount a compelling case to get that many.

The reality turned out a little different, as Australia will have five teams and a greater share of revenue than they were anticipating. They also managed to foist most of the costs of Moana Pasifika on to NZR.

NZR, driven by short-term thinking, made a power play to gain control of Super Rugby, but all they did was damage relationships with key partners.

How much damage has been done to NZR's relationship with South Africa will be tested in the coming months as the latter are exploring the possibility of joining the Six Nations in 2025.

This would be short-termism at a catastrophic level as South Africa heading North would destroy the Six Nations, the Rugby Championship and any hope of a global calendar. They would be leaving for one reason only – an immediate influx of cash but given NZR walked out of Super Rugby because it suited them, what moral case can they make to stop the South Africans walking out of the Rugby Championship when it suits them?

Short-termism led the NZR commercial team to Ineos, the British petrochemical company who will have their name on the All Blacks shorts next year.

At an estimated $8m a year it seems like a smart deal. But what has it cost the All Blacks longer-term as a potential world-leading environmental, social and governance brand at a time when environmentally conscious corporations are looking for high-profile champions to push their cause?

And certain parts of the media, along with the majority of the rugby public, can't say they are not afflicted by short-termism as it took just two consecutive test defeats for them to want a perfectly good head All Blacks coach to be axed.

New Zealanders pride themselves on their rugby intellect and yet the only ever solution proffered to fix any sticky patch the All Blacks find themselves in is to fire the coach and start again.

The inability to see beyond the now, to have a plan that isn't essentially about stuffing cash into pandemic-made financial black holes, is the real virus affecting rugby.

It's imperative that 2022 be the year of strategic, longer-term thinking, or the sport could well destroy itself chasing instant gratification.