Alarm bells ringing in New Zealand rugby

Alarm bells are ringing in New Zealand as rugby’s power base continues to move towards the northern hemisphere and away from Super Rugby.

The shift was emphasised when CVC Capital partners invested R2.7bn into the European-based Guinness PRO14 European-based tournament.

Even more worrying for New Zealand is that, because of the new investment, PRO14 is looking to expand and lure SA’s Super Rugby giants into their fold.

CVC Capital have made no secret they want SA’s Super Rugby teams to head north and play in Europe.

A club World Cup is now also being touted, and that would further diminish Super Rugby’s influence and cash generating capabilities in a global environment.

Financial experts say the move has heightened the contrast and potential divide between the cash-flush northern hemisphere professional leagues, and the fragile shell of Sanzaar in the south.

The Luxembourg-based CVC Capital Group buyout group paid $400m (R6.9bn) for a 27% stake in English Premiership Rugby two years ago.

Their appetite for further expansion became evident when they added the crossborder PRO14 — a tournament involving clubs from the three Celtic nations (including Northern Ireland), Italy and SA — to their portfolio.

Simon Porter, CEO of Halo Sports, New Zealand’s largest player agency, said he did not believe the cash would spark a northern migration of players, but it did reinforce a status quo that was worrying for the game in his country.

“What this does is reinforce the shift in the sport’s power base away from the Sanzaar unions to the Six Nations,” Porter said.

“When we’re talking about discussions around a club World Cup and the global calendar, the decision making is far more likely to be in the best interests of the Six Nations unions.

“The money is meant to go to the national unions, not the PRO14 clubs, so I expect it will enable them to weather the Covid storm a bit better.

“What it does indicate is that CVC, who don’t like to waste money, see the sport in Europe as in pretty good shape.

“They see it as a growth product and you contrast that with here and all you seem to read or hear is how the game is broken.

“It’s all doom and gloom.” Insiders say SA will likely increase their involvement in the competition from two teams — the Cheetahs and Kings.

This would hasten SA’s exit from Super Rugby, though SA Rugby have expressed a desire to retain a presence in the south also.

It is believed CVC will seek alignment between its investments — its $600m (R10.4bn) deal to buy into the Six Nations is also back on track according to a report in London’s Financial Times — to play a leading role in creating a global club World Cup.

That development is likely to nudge New Zealand Rugby to accelerate their Aratipu programme which will examine Super Rugby’s future.

After the PRO14 deal, it is crucial that NZR has a workable, saleable product to take to market with some urgency.

With huge private money being poured into Europe’s big tournaments, nobody yet knows with any certainty what Super Rugby will look like next year.

It has emerged that NZR had been wooing global equity partners, including multibillion-dollar US firm Silver Lake, a tech specialist that has also successfully invested in mixed martial arts phenomenon UFC, the Madison Square Garden Company (which owns the New York Knicks and New York Rangers), and Manchester City’s parent company.

“You would set up a subsidiary company of NZ Rugby and get investment into that company in some form of partnership,” a NZ Rugby source said.

“You put commercial assets into that company — whether that’s in combination with Sanzaar partners and something like Super Rugby in its reincarnated form, or the Rugby Championship.”

The source also noted the NZR was “miles away” from signing a deal, but the PRO14 deal and continued uncertainty over Sanzaar’s future should rid the national body of any complacency.

CVC’s massive investment in northern hemisphere rugby (and to an extent South African) points to their investment belief that rugby’s reach and commercial opportunities will continue to rise in the wake of the pandemic.