Kia ora New Zealand,
Rugby is your game and in recent weeks you will have witnessed some robust debate about its future – and the best pathway to ensure it thrives and survives for future generations to enjoy.
We have been inspired and humbled by the passion of our rugby community. It has also provided a reminder to New Zealand Rugby of the privilege and honour we hold as guardians of our national game.
Ten days ago, our Provincial Unions and the Māori Rugby Board voted unanimously for us to proceed to establish a commercial entity, through which we would then partner with Silver Lake. Through this vote, our stakeholders have acknowledged that our game needs transformation. To do nothing is no longer an option as our game faces generational challenges.
Rugby – our national passion – must change and change quickly to ensure its legacy can be passed on to the next generation of New Zealanders.
If we are honest with ourselves rugby has been experiencing major challenges in our communities for some time and our grassroots are in desperate need of watering. In many ways our model is broken. We spend more than we earn and cannot fund the areas of our game that need our assistance most. Covid has only exacerbated this.
Change is hard and there is no doubt we are faced with a huge decision. But we must be brave.
Since rugby became professional in 1995, we have taken giant steps while evolving in a changing environment, but we believe we have always stayed true to our legacy. Now, in 2021 we have an opportunity to shift gears again – to make a change for the next generation. We cannot stand still – we must evolve again, so we can continue to commit to our key strategic goals – putting rugby at the heart of our communities, winning with mana and having loved, global brands, while always being guided by Te Ara Rangatira (The Rugby Way).
So, with that in mind – we asked ourselves, how do we move forward and evolve, while honouring our legacy and everything we have achieved in the past. What is the best thing we can do for all of rugby? Our answer – for New Zealand Rugby to create a new commercial entity – in partnership with Silver Lake.
Silver Lake is a technology investment firm based in the USA with experience in investing in some of the world’s most renowned businesses, including in sport. They have valued the commercial business of New Zealand Rugby at $3.1bn which means that in exchange for a 12.5% stake in a separate commercial entity, which would hold our commercial assets (including broadcast; sponsorship; merchandising and licensing; matchday revenues and new business streams) they will invest $387 million dollars into our organisation – immediately benefiting the rugby community from junior clubs through to our Teams in Black, and everything in between.
What this materially looks like is an immediate injection of funds to help the community game right now and then creating a legacy fund to enable ongoing investment in the areas of our game most in need to protect the long term future – the grassroots, women’s rugby and supporting our Pasifika and Māori programmes and participants.
The money will be there to re-build the base of our pyramid and enable us to continue to be strong at its peak. We are talking about more than 150,000 players in New Zealand who are the beating heart of our game and the place where the dreams of our All Blacks, Black Ferns, Māori All Blacks, All Blacks Sevens and Black Ferns Sevens players begin.
Silver Lake will also add directly to our off-field operations through global connections and capabilities in technology, data and fan engagement. Having them as a partner will help us, as we seek to create global opportunities and the financial ability to keep our coaching and playing talent in New Zealand.
The other 87.5% of this commercial entity will be owned by New Zealand Rugby. Through the creation of this separate entity and partnering through that with Silver Lake, it means Silver Lake will have no presence on the New Zealand Rugby Board and will not make “rugby” decisions. The commercial entity will be governed by a separate Board that will include five New Zealand Rugby representatives (including myself as CEO), two people from Silver Lake and one independent Chair.
It is important to be clear on what this deal is not; We are not selling the All Blacks or any of our other Teams in Black. We are not giving private equity ‘control’ and they are not ‘taking over’ any part of our game. The Māori and Pasifika culture that plays a huge role in our game will be protected and our Māori Rugby Board have stated this partnership will have significant benefits for Māori rugby.
We have spent a considerable amount of time with Silver Lake to make sure their values, culture and approach align with ours and I can assure you they do. Yes, they are an investor and of course they are partnering with us for their own commercial success. But when they succeed, so does Rugby – across the whole game.
There were other options of course – to secure our future and grow our game – and we took time and care to explore these. We considered and then rejected several – a public listing on the NZX, debt funding and a capital raise in New Zealand. All were robustly assessed against our key objectives.
Some of these options would have helped us to meet some of our objectives but none of them would have helped us to meet them all. Debt does not provide capability, and we do not have assets to secure that debt.
A capital raise in New Zealand does not provide the value of the Silver Lake deal either from a financial or capability perspective and an IPO still would involve selling off a stake of our commercial revenue but without adding the precious capability we need to move forward.
None of them would have provided New Zealand Rugby with the strategic benefits we will need to keep pace with the global game and ensure we are not left behind. And, critically, none of them can sufficiently support the long-term investment required for our grassroots.
We turned over every rock, challenged ourselves and alongside our Provincial Unions and Māori Rugby Board we commissioned PWC to conduct an external review of the proposed deal. The PWC review found the Silver Lake proposal to be compelling.
As for our professional players, we value the partnership we have with them and of course they are a critical part of the future of the game. We respect their input and their desire to ensure we have taken due care with this opportunity, and we are confident that together we can come to the right conclusion for the whole game in New Zealand.
With a lifelong love of the game as a former junior club convenor and coach and player at all levels; and today the parent of kids playing rugby at school and New Zealand Rugby’s CEO, I can put my hand on my heart and say that an investor partnership with Silver Lake is the right thing for all of rugby – for the entire ecosystem – and we should welcome it.