Silver Lake makes deal with cash-strapped New Zealand rugby

Stakeholders at the body that runs New Zealand’s legendary All Blacks have voted to sell a 12.5% ​​stake in its trading rights to an American private equity firm despite opposition from the powerful players’ association rugby.

The Pacific nation’s 26 provincial rugby unions voted unanimously on Thursday to support a proposed NZ $ 387.5 million (US $ 281 million) investment in New Zealand Rugby by Silver Lake, a company California buyout of $ 75 billion known for its betting on technology groups.

The contentious decision paved the way for high-stakes negotiations between the game’s administrators and the New Zealand Rugby Players Association, whose approval is required for the private equity transaction to proceed.

The deal, if approved by the association, would spark a battle for influence in one of the most popular sports in the world between Silver Lake and rival CVC Capital Partners at a time when the Covid pandemic- 19 broke the revenue stream of rugby.

The Luxembourg-based CVC already has minority stakes in the English Premiership, Pro14 club competitions and the Six Nations. He also had talks with reigning world champions South Africa about buying a 15-20% stake in the sport’s commercial arm in the country.

“What you just did was incredibly meaningful,” said Brent Impey, president of New Zealand Rugby at the organization’s annual meeting after the vote.

“The game has to change, and Silver Lake’s capital injection would allow us to reinvent rugby and invest in the areas of community play that need it most, particularly teenage and women’s rugby.

New Zealand rugby lost NZ $ 34.6 million in 2020 on a NZ $ 55 million drop in revenue caused by the coronavirus pandemic, which disrupted fixtures.

Under the draft deal, dubbed “Project Future” by its promoters, Silver Lake would pay NZ $ 387.5 million for a 12.5% ​​stake in a company holding the business interests of New Zealand Rugby, including including the All Blacks, one of the most famous brands. in world sport.

The deal would value New Zealand Rugby’s business interests at over NZ $ 3 billion and allow it to channel NZ $ 39 million to stakeholders, including provincial unions who voted for the deal. .

New Zealand Rugby said the deal will transform the game and provide investment in grassroots rugby, technology and other initiatives that will grow the sport.

Basically, it would also provide more money to retain talented local players, who are increasingly targeted by European and Japanese clubs, according to supporters of the deal.

But Silver Lake’s proposal proved controversial. Critics have warned he risks repeating mistakes that have rocked football, where elite clubs have attempted to establish a breakaway European Super League.

In January, the players’ association told New Zealand Rugby it would not approve the deal over concerns over the loss of control and threats to the financial viability and cultural values ​​of rugby in New Zealand. .

“There is an inherent risk of real or perceived cultural misappropriation given that Silver Lake is an Anglo-American private equity firm,” said the letter, viewed by the Financial Times.

Silver Lake, who also owns a stake in Manchester City football club, has sought to allay fears among players and fans of over-marketing the sport. He highlighted the structure of the deal, in which the business enterprise would still be majority owned and controlled by New Zealand Rugby.

But several mediation sessions between the board of directors and the players’ association failed to agree on Silver Lake’s offer.

Rob Nichol, chief executive of the players’ association, told the FT that mediation efforts were on hold while the body consulted with its members.

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