That figure was revised following the Covid-enforced Super Rugby revamp, and NZR has banked about $100m in broadcast revenue between 2021 and 2024 (with the same number expected this year).
But the new agreement that will run between 2026-2030, is expected to see Sky significantly reduce its annual payment to around $85m a year – with NZR expecting to make an additional $15m-$20m a year from selling overseas broadcast rights.
Speaking with the Herald in July, NZR chair David Kirk, said: “We are working through the latest media deal with Sky and they have been a good partner for a long time and we are looking forward to getting something concluded with them.
“There is more international content so there will be more in the next cycle with the Nations Cup and the Greatest Rivalry and other things. That gives us more international media revenue but there is a certain pool that in this cycle, is not going to be massive particularly as we come off a very strong cycle. It is not going to be massively built on.”
Preserving the status quo was not the sales pitch Silver Lake made back in 2022 when it came on board as an equity partner.
The Americans supposedly had expertise in selling media rights, of boosting their value through fan engagement strategies, and yet the local quartet of Brent Impey (former NZR chair), Steve Tew (former NZR CEO), Richard Dellabarca (former NZR director) and Ged Mahony (former NZR head of broadcast) – pulled off a domestic deal in 2019 that was considerably better than the one about to be signed on Silver Lake’s watch.
It’s also not clear what direct involvement Silver Lake has had in the soon-to-be completed next broadcast deal, as it appears that negotiations are being handled by former NZR board member Bailey Mackey and current director, Greg Barclay.
It is believed that Silver Lake’s involvement in reshaping the international landscape in the Southern Hemisphere has been more direct.
The US firm has pushed this idea that NZR has to build stronger narratives around test matches and generate greater yield from the same volume of content.
And so, with that brief in mind, early next month NZR will unveil full details of next year’s Greatest Rivalry tour to South Africa – a venture that will be met with widespread fan approval as it will be a nostalgic six-week, four-test voyage to the Republic.
But it is an initiative that has generated concerns – the Springboks will make a reciprocal tour to Aotearoa in 2030 – that New Zealand and South Africa are destroying the Rugby Championship in the process.
The TRC won’t be played in 2026 or 2030 and Silver Lake’s plan appears to be to leave the Southern Hemisphere with ad hoc rugby properties rather than investing in a stable, viable long-term competition structure that has pathways for the likes of Japan, Fiji, Uruguay, Chile, Samoa and Tonga to become powerful entities that grow the geographic footprint and commercial value of the sport.
Silver Lake was approved as an equity partner in 2022 on the basis that its capital injection combined with its expertise in building fan hubs through digital content and better data harvesting, would lead to a transformational shift in NZR’s revenue profile.
But it’s taken a swing and a miss at the broadcast rights and chased short-term gains in South Africa at the expense of potentially killing the long-term value of the Rugby Championship.
And there is little to no evidence that its fan engagement strategy which is built around the creation of an in-house content hub – NZR+ – has been a cost-effective means to grow the All Blacks’ support base and increase the number of people willing to spend money to connect with the team.
NZR’s recently released annual report suggests that close to $20m has been pumped into NZR+ since it launched in 2023, and it has gained 280,000 (free) registrations.
There have been private equity sceptics from day one of the proposed alliance – an educated cohort of savvy operators who questioned whether high-financiers such as Silver Lake had the expertise and understanding to globalise and radically improve the commercial returns of a sport as niche and as complex as rugby.
What’s happened to date weighs in favour of the doubters being right, and that there is no evidential basis on which the private equity acolytes can support their argument that Silver Lake just needs more time to deliver on its investment thesis.
Kirk gave an assurance to the Herald that the national body is fully committed to Silver Lake: “It would potentially be possible to buy some of it [equity stake] back but there is no plan to do that,” he said.
“We are in it for good reason and that is to have reserves that can continue to be invested and to build out a global brand and a global fan base that will make the All Blacks particularly but New Zealand Rugby more generally, a highly valuable sporting brand.”
But perhaps there needs to be a more public and detailed explanation offered by Kirk and the NZR board to justify the continuation of the Silver Lake partnership because the national body has only a short period in which it will be able to present an alternative, more compelling, financial plan.
How could NZR buy out Silver Lake
The reason NZR is facing a now-or-never scenario is because of two things: first, Silver Lake has not yet taken up its option to convert its investment into an equity stake, and second, because NZR has around $175m of cash reserves – a number that is unlikely to ever be higher as the commercial growth strategy requires drawing down this capital to fund new initiatives.
The deal with Silver Lake was that it initially invested $200m in June 2022 (in two $100m tranches). This money was effectively a three-year loan, charged at 4% per annum – with the right to be converted into an equity stake from June 2025.
In January 2024, Silver Lake invested a further $62.5m – money that has been ring-fenced and what is known as a legacy fund which is under the control of the provincial unions.
Therefore, the US firm has the right to convert its (total) $262.5m investment into a 7.6% equity share in New Zealand Rugby Commercial – the vehicle set up to house the game’s revenue-generating assets and which is valued at $3.5 billion.
But Silver Lake, despite having the right to convert, has left its money operating as a loan, and in theory, this means NZR could cut all ties with the US firm if it could come up with $262.5m.
With so much capital sitting in reserve, and the underlying premise of NZR’s business relying on relatively secure assets such as broadcast contracts, sponsorship agreements and match day revenue – all underpinned by the enduring power of the All Blacks brand – most mainstream banks would be willing to lend the national body money.
It’s likely it would have to borrow the money at an interest rate higher than the 4% offered by Silver Lake, but if it was willing to use a combination of existing reserves and a bank loan to pay back the Americans, its overall annual debt payments would likely be less than they currently are.
But more critically, buying out Silver Lake would enable NZR to regain full and instant access to all its commercial revenue, something that may ultimately, in the next 20 years, see more than $1 billion currently destined to be paid out as distributions to the investment house, be instead redirected into grassroots rugby.
And the most compelling reason of all to consider a buy-out now, is that once Silver Lake converts its loan to equity, the cost of buying it out will jump significantly.
A $262.5m loan will become a 7.58% stake in a business that is valued at $3.5b today, but could be worth $500m in 10 years, and if that’s the case, Silver Lake’s share will be worth $379m.
If the business should end up valued at $750m in 20 years, a 7.58% stake would be worth $568m and so no one can see a scenario in which NZR will ever again have the financial means to buy out its equity partner.
Gregor Paul is one of New Zealand’s most respected rugby writers and columnists.He has won multiple awards for journalism and written several books about sport.
