Down to business
Biting the silver bullet
Business plans — especially those involving marketing, media and new revenue streams — are often hopeful things when it comes to predicting how a business will grow.
Those areas can be gravely affected, as witnessed in recent times, by pandemics, acts of God, new technology, legislation and other factors. Reading the future is not easy — and is at the heart of the ongoing impasse between New Zealand Rugby and the NZ Rugby Players’ Association over pocketing Silver Lake’s $465 million in exchange for 15 per cent of NZR’s revenue generation in perpetuity.
It’s also why the players need to get over themselves a bit.
Some years back, I was a partner in a communications company operating in three countries. One of the partners presented a negative growth plan for his country.
The sad reality, he told us, was that the business climate was not conducive to growth. He was right — but the other sad reality was that said partner was not with us very long after that; there is a big difference between reality and a proposal to overcome it.
NZR have their own negative growth and have been open about the fact their traditional business model has to be replaced — and need Silver Lake’s cash to do so.
The problem is one of risk. Silver Lake’s business plan sounds brilliant, transforming NZR’s revenue of $200m a year into $400m-$500m. For the players, that also looks great — 85 per cent of $500m is rather more than 100 per cent of $200m. It revolves around unproven elements such as new markets, new devices (a streaming platform), international All Black centres of excellence, as well as investing in other rugby countries.
But what happens if this predicted growth doesn’t happen? The players worry more NZR assets will be sold off to pay the bills (the largest bill being the 36.5 per cent of NZR revenue which goes to the players) if growth doesn’t turn out to be as glittering as Silver Lake suggest.
There isn’t an answer — or not a concrete one. At some stage, NZR (including the players) have to bite the bullet, hope Silver Lake’s bullet is indeed silver and work together to make it happen. The NZRPA are apparently calling for more detail — and fair enough, although more detail does not necessarily mean more accuracy.
It’s clear the letter from the NZRPA to NZR which made all this public has long been superseded — which is just as well; the RPA made some good checks and balances points, but made some dubious claims as well.
Top of the list — “this is clearly not an emergency situation”, a comment based on the fact NZR will still have something like $60m in reserves this year. Maybe the players at the top of the rugby tree don’t think this is an emergency but everyone else does. Newspapers have been full of dire predictions for years about the health of the grassroots and the potential atrophy of the game.
NZR and Silver Lake “don’t need to control each other with heavily negotiated contracts” if their interests are truly aligned, says the letter. Maybe in the land of unicorns and rainbows, that’s true, but business deals usually have a piece of paper to fall back on if all turns to runny custard.
The NZR management would slowly become distanced from key strategic and commercial relationships, says the RPA’s letter, and they feared for the loss of the special relationship between New Zealanders and their representative rugby teams. It also talked about the risk of “real or perceived cultural misappropriation”, a comment seized on by many in the media to mean Ma¯ ori and Pasifika culture is not for sale.
If NZR let any of those things happen, they not only do not deserve $465m, they will also be the gravediggers for the game they are charged with protecting and growing. The thought that this deal would somehow sell Ma¯ ori and Pasifika culture down the river is risible. Its value and appeal is in its uniqueness — and he who dilutes that uniqueness is very dim indeed.
The letter says a 15 per cent partner having veto over the operations of 100 per cent of NZR’s revenue-generating assets is undesirable. They’re right — and if that is part of Silver Lake’s proposal, it needs to be moved out faster than the babysitter’s boyfriend when the parents’ car pulls up.
There’s also the public relations factor — 36.5 per cent of annual revenue goes to players, the same players who, if NZR struggles even more to meet market rates, will head off to Europe or Japan. They won’t want to be seen as defenders of a status quo that could badly damage the New Zealand game — and the prospects of those not yet elite players and those who never will be but who love the sport.
The two sides will be closer to agreement than most realise but, as with all business plans which deal with the new and untested, the devil is sometimes not in the details — but in the delivery. Time to get to work.