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Silver Lake closes in on deal with cash-strapped New Zealand Rugby

Stakeholders in the body that runs New Zealand’s legendary All Blacks have voted to sell a 12.5 per cent stake in its commercial rights to a US private equity firm despite opposition from the powerful rugby players’ association.

The Pacific nation’s 26 provincial rugby unions voted unanimously on Thursday to back a proposed NZ$387.5m (US$281m) investment in New Zealand Rugby by Silver Lake, a $75bn California buyout firm known for its bets 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 initiate a battle for influence in one of the world’s most popular sports between Silver Lake and rival CVC Capital Partners at a time when the Covid-19 pandemic has smashed the rugby revenue stream.

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

“What you just did was incredibly significant,” Brent Impey, New Zealand Rugby chair told the body’s annual meeting following the vote.

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

New Zealand Rugby made a loss of NZ$34.6m in 2020 on a NZ$55m revenue fall caused by the coronavirus pandemic, which has disrupted fixtures.

Under the draft agreement, dubbed “Project Future” by its proponents, Silver Lake would pay NZ$387.5m for a 12.5 per cent stake in a company holding the commercial interests of New Zealand Rugby, including the All Blacks, one of the most recognisable brands in global sport.

The deal would value the commercial interests of New Zealand Rugby at more than NZ$3bn and enable it to funnel NZ$39m to stakeholders, including the provincial unions that voted for the agreement.

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

Crucially, it would also provide more cash to retain talented local players, who are increasingly targeted by European and Japanese clubs, according to the deal’s backers.

But the Silver Lake proposal has proved controversial. Critics have warned it risks repeating the mistakes that shook football, where elite clubs attempted to establish a breakaway European Super League.

In January, the players’ association told New Zealand Rugby that it would not approve the deal because of 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 Silver Lake is an Anglo-American private equity firm,” said the letter, seen by the Financial Times.

Silver Lake, which also owns a stake in Manchester City football club, has sought to allay players’ and fans’ fears that it would overly commercialise the sport. It pointed to the structure of the deal, in which the business venture would still be majority-owned and controlled by New Zealand Rugby.

But several mediation sessions between the board and the players’ association have failed to come to agreement on Silver Lake’s offer.

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

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