Richie Mo'unga's continued success in Japan, an anti-Silver Lake note, Warriors standout performer Mitchell Barnett and the head of the South Island Kea NRL bid David Moffett. Photos / Photosport, Getty Images
Whatever happens at its SGM showdown, New Zealand Rugby faces a future handicapped by a Silver Lake anchor; Kiwi rival takes Warriors boss Cameron George to task over “BS” self-interest; and what happens next in Auckland’s Stadium Wars
ANALYSIS
Whichever group emerges with control from the smouldering ashes following Thursday’s Great Rugby Governance Showdown faces a vexed first challenge – what the bloody hell to do with the lemon that is Silver Lake.
Can you remember the hard sell?
Private equity would save our game, we were told by New Zealand Rugby (NZR).
Silver Lake were connected. They moved with the Silicon Valley bros. They owned a slice of Manchester City. They’d even managed the impossible and made cage fighting (aka the UFC) sexy.
Imagine what they could do with rugby! (Cue flashing lights and dancing girls).
And so, in 2019, NZR met with the shiny suits from European-based CVC Capital Partners and ultimately favoured dance partner Silver Lake.
But for its now infamous negotiation strategy in alienating its players’ association, the deal to sell a slice of the All Blacks would have been done and dusted a year later.
Instead, it turned into a messy, almost two-year long s***fight before pens were finally put to paper.
In the meantime, CVC became the first private equity (PE) player to complete a meaningful rugby deal, signing up to buy 27 per cent of the English Premiership club competition and 14 per cent of the annual Six Nations tournament.
That was five years ago – long enough now to weigh the merits of CVC’s “contribution”. So this headline and following claims in the Times of London caught my eye this week.
The Times hardly painted a glowing picture of CVC’s impact.
All talk, no walk. No plan B in the face of unexpected diminishing value in rugby broadcast rights. Happy to sit on their hands and take the easy money from their investment.
It made me instantly think of Silver Lake and its controversial $265 million deal with NZR.
We are now closing in on the third year of that agreement and worryingly, we are starting to see eerie echoes of what is happening in the north.
During the making of BusinessDesk’s Pieces of Silver podcast last year, one insider told me it was actually NZR’s aggressive pursuit of PE five years ago that spooked the northern unions and English clubs into doing the same with CVC.
Neither CVC nor Silver Lake really had a plan for rugby, the insider insisted. But a war for global sporting assets was being waged and private equity simply wanted to divvy up the spoils in case rugby did take off.
If Fomo (fear of missing out) did play a part in driving New Zealand Rugby, the Six Nations unions and English clubs into the so-called loving arms of PE, we are now seeing the unmitigated disaster for rugby that the move has been.
The Times tore the scab off the wound with its scathing conclusions, noting three proud clubs had folded during CVC’s tenure and that the league had slipped behind its French, Japanese and Irish rivals in player appeal and commercial value.
(Important side note here: France’s Top 14, Japan’s League One and Irish club performances in European competitions all continue to thrive – and none of them have sought private equity investors.)
Following the demise of Wasps, London Irish and Worcester, the Times wrote “many in the English club game were getting pretty crabby with the fact that they had sold off 27 per cent of their income stream to CVC and that rather than helping to grow the pot, CVC seemed to have just taken to extracting over a quarter of their income”.
CVC can’t be blamed for all the woes around the English club game of course. It had to navigate two years of Covid impact and does not hold a controlling interest in the Premiership or the Six Nations.
But the central charge that CVC talked a big game about taking European rugby to a new level and has then failed to deliver is one that can also increasingly be levelled at Silver Lake as well.
The politics both encountered (CVC with bone-headed English club owners and Silver Lake with internecine internal battles for power) don’t excuse either from the inactivity we’ve seen in the face of overwhelming promises of what they would do for the game.
With CVC failing to deliver on its pre-purchase promises of increasing revenue, the Times drew a blunt picture.
“The numbers look like this: before CVC, the clubs were getting £40 million in TV money per season; soon they will be on £33 million and giving 27 per cent away. So the pot is only just over half of what it was seven years ago,” its columnist Owen Slot concluded.
Some growth.
In telling the Times that CVC’s failure to help any clubs “hasn’t gone unnoticed”, Exeter Chiefs CEO Tony Rowe recalled the initial glitzy presentations by the PE company in the London Hilton five years ago.
“We were told this lovely story of what they were going to do for the game and how they were going to increase our revenue. But I’ve not seen it”.
Sound familiar?
The growing criticism of CVC is laying bare the hocus pocus element of private equity investment into sport.
Silver Lake has been accused of similar inactivity since finally getting a signed deal two years ago, leaving New Zealand exposed to a jarringly similar scenario to the one the English clubs find themselves in.
The likes of CVC and Silver Lake have banked on a belief that broadcasting rights in rugby are still grossly undervalued.
They figured they would not need to do much to reap a good return on their investment. It would happen anyway and they might even be able to super-charge the dollars and pounds further by using their connections and networks.
But increasingly we are seeing the emperor has no clothes.
It turns out the broadcasting pounds for rugby in Europe are going down, not up. Toulouse may have beaten Leinster in a pulsating European Cup final last weekend but, as it stands now, there is no broadcast deal in place for next season’s Champions Trophy.
England play Japan in a test in Tokyo next month en route to New Zealand but no UK broadcaster has shown enough interest in the game to secure coverage, raising the prospect that for the first time in decades, an English test may not screen in the Mother Country.
Six Nations countries are also worried CVC may now try to take the popular tournament off free-to-air TV to sell exclusively to pay TV to boost income, reducing the eyeballs on the event.
Here in New Zealand, NZR faces a significant drop in broadcasting value in its renewed deal with Sky TV.
The maths isn’t as bad for NZR in the face of an under performing Silver Lake as it is for the English clubs. But let’s not forget that NZR’s board was initially advocating selling up to 15 per cent of future revenue.
It could have been a hell of a lot worse than the 6.5 per cent it wound up at.
In selling us the Silver Lake deal, much was made of the American outfit’s plan to create a joint venture, Global Rugby Opportunities (GRO), which NZR and the players’ association were granted equity in.
GRO, we were told, was designed to “explore rugby opportunities outside of New Zealand”. GRO might as well stand for Gone Right (into) Obscurity for all that has happened since.
There has been no Silver Lake-inspired investment into American rugby via GRO – despite the fact the company is headquartered Stateside and the US will host the 2031 men’s World Cup.
Nor have there been any strategic alliances with other national unions.
Silver Lake kicked the tyres of South African and Australian rugby in recent years but decided against investing.
Maybe they’ve seen what CVC is experiencing – that while broadcasting rights may be undervalued in some markets, rugby overall is a basket-case product which they can’t control.
But in doing so, the Silver Lakes and CVCs of this world are increasingly being revealed as emotionless life-sucking leeches who care little about the soul of a sport and are prepared to tear it apart if it means more dollars.
Welcome to your future, rugby.
Has there ever been a bigger 24 hours facing the future of New Zealand sport than today’s final showdown on Eden Park versus the Waterfront Stadium, and the conclusion of the unholy rugby governance battle?
Sports Insider peered inside our crystal ball and came up with the following predictions:
1) Auckland Council will kick for touch and tell Eden Park and its favoured waterfront option to come back in six months with more detailed business plans ahead of a final decision.
Which CBD option? It’s still up in the air. The cost of building a stadium above a railway track is undermining the Quay Street proposal but it is tipped to still prevail in the face of a late run from the Wynyard Point backers.
2) I am told the provincial unions are spoiling for a fight and will vote “overwhelmingly” for their own proposal.
If so, all I can say is “wow!”, and that they will ultimately come to rue that decision.
Cue the separation between the professional and amateur divisions of the game in New Zealand.
But who funds the community game now and how?
If you are a fledgling sporting franchise looking for some time in the sun to spruik your first players signings, Thursday of this week is not the ideal day to do it.
Between the Budget, New Zealand Rugby’s governance showdown and Auckland Council’s stadium decision, what is new A-League franchise Auckland FC thinking in expecting to gain a whole bunch of excited media attention over its announcement?
Unless the plan is to sail under the radar of course...
Make of this what you will, but a reliable source has informed me that All White Sarpreet Singh has been spotted this week in a central Auckland shopping mall...
Rugby isn’t the only game where administrators are throwing bombs at each other.
A skirmish broke out this week when former NZR and NRL boss David Moffett, now the head of the South Island Kea bid for an expansion licence in the Australian competition, took a swipe at Warriors chief executive Cameron George.
Moffett took exception to revelations (slightly beaten up) in Sydney’s Daily Telegraph that George had written “a secret warning letter” to NRL chief executive Andrew Abdo, pushing back against a second New Zealand team.
In what is admittingly a pretty breathtaking but predictable display of self-interest, George informed Abdo that the best chance of the NRL gaining more traction in New Zealand was to retain the Warriors’ monopoly.
Moffett thundered back with a lengthy reply on LinkedIn.
“There is so much more BS in his document but space does not allow a full disection [sic],” Moffett wrote. “Well, the South Island Kea have a simple message for George.
“We’re coming to get you and we will put a stop to [the] Warriors warehousing young players and weakening our local club competition.”
Richie Mo’unga and Todd Blackadder: The Canterbury duo revived some old red-and-black magic in guiding Toshiba Brave Lupus Tokyo home to victory in the Japan League One grand final. The two former All Blacks, one now a coach and the other a playmaker, denied another Crusaders legend in Panasonic Wild Knights coach Robbie Deans, whose men fell 24-20 in a thrilling final.
Aimee Fisher: Does it again with another K1 500m sprint win in Hungary over kayak rival Dame Lisa Carrington, creating what is now the most compelling Kiwi storyline ahead of the Paris Olympics.
Mitch Barnett: Called into the NSW State of Origin squad off the back of his heroics for the Warriors. The former Newcastle enforcer is cut in the mould of other tough-as-teak Aussie imports who have added grit to the Warriors, including Kevin Campion, Jason Death and Micheal Luck. Barnett may yet be the best of the lot.
All the key NRL fixtures for the Warriors.