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An NZR private equity deal might lead to a pot of gold for RA. But at what cost?
Australia could be final piece in the global rugby puzzle
Wayne Smith, Senior Sport Writer
25 minutes ago November 3, 2020
New Zealand Rugby is reportedly close to announcing a deal with a private equity group that could only result in a win-win position for the game in Australia, Rugby Australia chairman Hamish McLennan said on Tuesday.
It is understood that NZ Rugby has been in negotiations with private equity giant Silverlake for some time and if reports on social media prove correct and they do formalise an arrangement in the coming days, it may work to Australia’s advantage.
Asked by The Australian if a NZ deal would make Australia – which is set to play a limited amount of trans-Tasman Super Rugby-style football next season before embarking on a full-scale, fully integrated competition with NZ in 2022 – a more tantalising target for private equity groups, McLennan replied: “Yes. Absolutely. I think the Australian component is the last piece of the global jigsaw, so we are in a win-win, no matter which way we go.”
Silverlake is manoeuvring to become a major player in global rugby, but at the moment it is CVC Capital that is the ruling private equity giant on the world rugby stage.
It already owns 27 per cent of the English Premiership, worth $365 million, and 28 per cent of the Pro14 competition, worth $219 million, while its $548 million offer for 14 per cent of the Six Nations championship is reportedly in jeopardy because the Home Unions had turned to the British governments for coronavirus bailouts.
It remains the most powerful third-party player in the game and is set to become even more influential if, as seems highly likely, it also strikes a deal with South African Rugby.
There is a possibility, if NZ does proceed with Silverlake, that CVC will then step up its attempts to buy a slice of Australian rugby to head off a Silverlake monopoly of the two neighbouring countries. It would only heighten competition that already exists. Both firms and indeed others – Providence, for example – are believed to have already come knocking on Rugby Australia’s door.
New Zealand’s private equity deal appears to be happening against a backdrop of trans-Tasman negotiations to turn a loose alliance into a powerful ANZAC bloc in world rugby. The All Blacks and the Wallabies are the two strongest, most marketable southern hemisphere touring sides in Europe and it is understood that NZ and Australia are investigating how that can translate into global influence and ultimately dollars.
“The massive opportunity for us is working in concert with NZ to create an ANZAC bloc which would have massive leverage globally,” McLennan said.
While NZ has already completed its broadcast deal, Australia cannot proceed down the private equity line until it finalises its negotiations with rival media groups, Foxtel and Nine. Although there have been reports that a deal could be announced as early as this week – with Nine reportedly offering $30m annually but with a considerable free-to-air component while long-term partner Foxtel is believed to have put forward an offer of between $35-40m – RA is downplaying that suggestion.
But until RA knows precisely how much money it has at its disposal – news that the Super Rugby clubs are desperately waiting for – it will have no real idea how much of a stake it would need to offer a private equity buyer. Even then, the RA board would need to reset RA’s cost base and look at all its commercial partnerships, possibly including sponsorships, before it entered into any talks.
“I’m very interested in private equity as a way of putting cash back into the game as well as bringing additional IP, which would be useful,” McLennan said.
Any private equity deal would involve selling a piece of Australian rugby’s soul, and there is no question that RA would need to go into any deal with its eyes wide open.
But if the slice was the equivalent of no more than 15-20 per cent, a minority interest, then it would allow RA to gain access not just to much-needed cash but to some of the best and brightest financial minds. The goal of the private equity firms, after all, would be to drive up the value of their investment, which would be no bad thing for RA.
But at what cost? That is the question Australian rugby must keep permanently in mind.
Wayne Smith
Senior Sport Writer
https://www.theaustralian.com.au/spo...11d7b6f276441f