Revealed: New Zealand Rugby buys back 40 per cent stake in Blues

A general view of QBE stadium during the round four Super Rugby match between the Blues and the Lions. Photo / Getty Images.

New Zealand Rugby is buying back a 40 per cent private equity stake in the Blues in a bid to bring stability and better executive decision-making to the troubled club which has been shambolic on the field for the last seven seasons.

The Herald understands that NZR began talks with shareholder Murray Bolton some months ago with a view to persuading the Corporate Cabs investor and former Skellerup chief executive to sell his holding in the club which is thought to be valued at around $5 million.

Negotiations were sparked by NZR as they feel the club has a messy governance structure which is crippling its ability to fulfil its potential.

There are also wider fears that the continued under performance by the Blues is impacting on playing numbers within the wider Auckland region and that the sport is losing its popularity in the country's biggest city.

The theory is that if the Blues start performing, interest in the club and rugby will start rising but the prospect of the former happening is limited while Bolton remains a significant shareholder.

Bolton bought a 40 per cent share in May 2013 with a consortium, known as Rugby Holdings which is made up of Auckland Rugby, North Harbour Rugby and Northland Rugby, buying the other 60 per cent.

The original governance structure proved to be unmitigated disaster as Bolton Equities had three representatives on the board and Rugby Holdings had three with Tony Carter serving as an independent, non-voting chairman.

If there was initially a harmonious relationship between the two shareholding factions, it was shattered in 2015 when Auckland Rugby's representatives on the board, Maurice Trapp and former referee Glenn Wahlstrom left to take up positions with NZR and were replaced by Brian Wilsher and Greg Edmonds.

The two new arrivals didn't support the plans to retain Blues coach John Kirwan beyond that season resulting in a board conflict that required NZR mediation.

The governing body were called in to sort out the mess and manage the coaching appointment process.

Agreement was eventually reached that Kirwan would stand down and be replaced by Tana Umaga but the stalemate and friction highlighted to NZR the extent of the issues the Blues had with their governance and executive decision-making.

The structure of the board altered after the Kirwan fracas and instead of having six members split 50:50 split between Bolton Equities and Rugby Holdings, the new set-up has five directors with two from Bolton Equities and three from Rugby Holdings - split two from Auckland Rugby and one jointly representing North Harbour and Northland.

But NZR is keen to instigate further change amid concerns there is not enough specialist rugby knowledge in the executive mix.

Chairman Carter announced earlier this year that he would be stepping down, saying he felt he lacked the specific rugby knowledge and skills that he feels the club needs on the board.

"My personal view is the board needs more rugby expertise on it and for that reason I have told the board it is time for me to step aside and allow the shareholders to consider bringing in someone that can make a greater contribution to the rugby programme," he said in June this year when he announced his plans.

"We all believe we are close to unlocking the playing potential of this club and have the right people in place to do so. I believe someone with different experiences as the new chairman could help take our performance to the next level."

Carter has stayed on to manage the sale process and NZR, it is believed, will not be a long term investor in the club.

They will hold the stake in an interim basis, try to fix a few things and then sell their stake once they have evaluated who the best investors might be.