Why there’s no rush for Silver Lake’s pot of gold
All parties want to strike a deal with the US private equity company. The provincial unions are holding all the aces.
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ZRugby’s hopes of finally signing-off the Silver Lake deal may hinge on the provincial unions agreeing terms on a capped funding agreement, and getting a seat on the NZ Rugby CommercialCo board.
While parties on both sides of the negotiation table appear confident the agreement with the US private equity company could be ratified in coming months, the 26 provincial unions haven’t wasted the chance to flex theirmuscles to remind NZ Rugby they are no pushover.
Given the provincial unions, along with the NZ Māori Rugby board, are the stakeholders of the game in this country, they are entitled to pick over the Silver Lake proposal to ensure the people they represent – the players and volunteers at club level – get the best deal possible.
When NZ Rugby finally delivered details of the reshaped Silver Lake proposal in February – negotiations with the NZ Rugby Players’ Association had dragged on for over a year – it was clear plenty of leg-work was still required for the proposal to become a reality.
Because without the approval of the provincial unions, who are likely to have to vote 75% in favour, Silver Lake can’t own between 5.71-8.58% of
CommercialCo.
The partnership agreement between Silver Lake, NZ Rugby and the NZRPA, providing it gets approved, would result in Silver Lake investing $200 million in a new commercial entity – CommercialCo – that will house all revenue-gathering assets of NZ Rugby.
An additional co-investment of $100m would be offered to New Zealand-based institutional investors.
Following NZ Rugby’s declaration that it had finally settled on an agreement with the NZRPA, it began delivering the gospel to the provincial unions.
It’s understood NZ Rugby CEO Mark Robinson and chief commercial officer Richard Thomas have been at the forefront of this, with board chairperson Stewart Mitchell also providing input on a limited scale.
The provincial unions have also remained in contact with Silver Lake, having a Zoom with company representatives as recent as last week.
Silver Lake have remained patient throughout the drawn-out saga, and it’s understood they are not putting any deadline onwhen a contract should be signed.
Initially NZ Rugby signalled it hoped stakeholders would vote on the issue at the annual meeting in Wellington this week, but it soon became clear that was too ambitious.
It has not been lost on the provincial unions that the NZRPA, who have now stepped away and have no contact with the provincial unions, took more than a year to pick over the Silver Lake proposal.
They, in turn, believe they have now every right not to be rushed.
It’s understood NZ Rugby has offered the provincial unions a ‘‘capped funding agreement’’ which means if they get 17.5% of the commercial income, funding would be cappedwhen they get to turnover of up to $260m.
The provincial unions want the cap removed.
They also want a representative on the CommercialCo board.
The fact that the NZRPA would have a voice around the table, while the provinces – the game’s stakeholders – have not has stuck in the craw of some provincial representatives.
When NZ Rugby finally found common ground with the NZRPA it agreed to undertake an independent review of its governance structures.
The provinces may want to be provided details of this. The NZRPA must also review its constitution and governance structures.
The players’ collective agreement has added another layer of complexity to the negotiations.
The provincial unions are also well aware there’s a big treat for them if they give the green light: about $37m will be set aside for a short-term investment in the game, with $30m going to the provincial unions.
Some are desperate for the cash, knowing it will provide insurance for a ‘‘rainy day’’ or to upgrade facilities.
‘‘We are losingmomentum and opportunity the longer we take,’’ Robinson said on Thursday.
But the provinces, clearly, won’t be rushed.
Negotiations will continue, with another meeting scheduled for Tuesday.*