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Saturday, June 19, 2021

Explained: Why are All Blacks up for sale to private equity

Why are the All Blacks so valuable? Are ABs the only entity private equity is angling for? Why do some in New Zealand think this is a bright idea?

Written by Shivani Naik | Mumbai |
Updated: May 11, 2021 7:48:23 am
FILE - In this Nov. 1, 2019, file photo, New Zealand players perform the haka before the Rugby World Cup bronze final game at Tokyo Stadium in Tokyo, Japan. (AP)

There’s a bit of grey stonewashing going on of the iconic rugby monolith – the All Blacks (ABs). Recently, New Zealand Rugby inched closer to selling off a stake in All Blacks after provincial unions gave the nod to a US investment firm to pick a minor stake in the country’s most famous sporting symbol.

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What are the financial considerations?

California-based Silver Lake offer a NZ$387.5 million injection of funds into New Zealand Rugby which posted operating losses of NZ$18.7m (including a write-down of Sky TV shares) from a year battered by the coronavirus pandemic. The 12.5 per cent stake to the private equity firm could be the first time in 115 years of ABs that rugby’s most identifiable national team could be non-wholly publicly owned. A total of 26 unions and the Maori Rugby Board voted in favour of offering this slice of NZ Rugby cake, commercially valued at $2.23bn.

Why are ABs so valuable?

The national treasure – a globally revered team – has the reputation of being the sport’s most successful side, winning more than 75 per cent of their games. Besides being officially ranked the No.1 team for a decade, it has also won two of the last three World Cups. Besides the 115-year-old heritage, ABs are also the exclusive repositories of rugby’s most spine-tingling opening act, Haka, performed before every international.

Who are the sharks of Silver Lake?

Primarily technology investors, Silver Lake is sitting on more than $79bn in assets under management. The Silicon Valley investor boasts mammoth tech deals with Airbnb, Dell and Twitter. In sport, it holds 10 per cent (paid $500m) stake in the City Football Group, which owns English Premier League club Manchester City and other teams around the world. Its portfolio of stakes in sporting clubs around the world, ruthlessly assembled, is eclectic: the UFC, A-League’s Melbourne City, NBA’s New York Knicks besides Man City. As investment bankers, they are naturally viewed warily when chomping into a national team this time, as their primary consideration is considered to be Return on Investment.

FILE – In this Oct. 31, 2015, file photo, New Zealand’s captain Richie McCaw holds the trophy aloft after the Rugby World Cup final between New Zealand and Australia at Twickenham Stadium in London. (AP)

Why do some in NZ think this is a bright idea?

Covid has wreaked financial havoc on grassroots rugby, seeing declining participation numbers at the community level. New Zealanders aren’t investing as much as before too. The Guardian quoted NZR chair Brent Impey as saying, “the game has to change” and “we have to look at what is right across all levels of the game, our whole ecosystem.” While the women’s game needs a financial leg-up, the suits are projecting this as a transformational move, though the tentacles of private equity can bind the game into its controlling clasp. The pandemic year saw NZR cut 1/4th of its staff, and struggling clubs could do with support, just as Silver Lake have conveniently fetched up.

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What’s the pushback?

Players including ABs captain Sam Cane are mildly aghast that some of the most hallowed symbols of the game – mainly Haka – could be commercialised by the Americans. Endless exhibition games in the US for brand amplification are another daunting proposition. “We believe that this special bond and the nature of what rugby means to New Zealanders, players and spectators alike, is at risk in the proposed transaction,” the New Zealand Rugby Players Association wrote, harping on how the move would open up the Maori and Pacific cultures to foreign exploitation. The shadow of the European Super League and the predatory hands of greed trying to ensnare football just last month has left top ABs players viewing Silver Lake with scepticism. That English fans successfully torpedoed the ESL boat has strengthened the pushback as players withhold consent.

“I can see (pointless exhibition games) diluting the brand and the aura around the All Blacks,” David Moffett, a former NZR chief executive, told the country’s state broadcaster.

Why is Haka being safeguarded?

Fears of cultural misappropriation are thick in the air. Recently, NZ Rugby requested a South African university rugby team to refrain from performing the iconic dance after heightened concern about the use of the haka being turned into a marketing tool. Though it annoys many opponents with its multiplying myths, players are not quite ready for it to be used as a marketing weapon. The Guardian said the ‘seven words that perhaps encapsulate the dystopian weirdness of 2021: The All Blacks are up for sale’.

Are ABs the only entity private equity is angling for?

No. As private equity sidles in to own leagues wholesale and not just be satisfied with profit from jersey sales, sport is following F1’s lucrative tie-up with CVC from 2006-17. The game-changers also sunk their teeth into Premiership Rugby, Pro 14 and the Six Nations. The Guardian quotes three of Europe’s big five football leagues – the Bundesliga, Serie A and La Liga – being in discussions with private equity firms over selling fractions of their pie. The same CVC Capital Partners has been in negotiations with SA Rugby for the other century-old icon of the Southern Hemisphere – the Springboks for over a year, eyeing a 20 per cent stake. While the pandemic has nudged national parks into selling stake and got museums to sell art to private corporations, national rugby teams might well be the next waters where the sharks dare.

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