The provincial unions and New Zealand Rugby can’t find common ground on how best to change the current governance structure. Illustration / Paul Slater
Rugby administration stories don’t fire the imagination. They are characterised as abstract, boring even, as if the decisions made in the boardroom have no bearing or impact on what happens on the field.
But New Zealand is in the midst of what is turning into an epic boardroom saga that is threatening to damage the financial wellbeing, credibility and stability of the game.
The provincial unions and New Zealand Rugby (NZR), after five months of protracted negotiations, can’t find common ground on how best to change the current governance structure – which is universally accepted to be broken.
They have the most comprehensive blueprint: A 134-page document produced by governance experts, detailing how and why things must change – that the current system should be scrapped in favour of operating with nine independent directors, appointed by an independent panel.
They have been told and they agree that the current system is not fit for purpose and yet there is a refusal to adopt in their entirety the recommendations of what is known as the Pilkington Review.
Instead, the unions have spent five months drafting their own compromised version of the review to create a compromised governance structure.
But even that proposal, which as recently as 8 March was thought to be unanimously supported as the right way forward, has collapsed and now there is confusion about how such a critical issue is going to resolve itself. There are also big questions to be asked about the leadership of the game and why the unions continue to push their own ideas about change that appear to be thinly veiled attempts to retain control and power.
What’s happening is far from abstract. NZR is not making the sort of money it thought it would when it brought fund manager Silver Lake on as an equity partner and its costs are also significantly higher than forecast.
The net result of this weaker financial picture is that the unions may not receive their full whack of NZR funding this year and there continue to be concerns about the future of the National Provincial Championship (NPC), particularly as last year the national body’s chief executive Mark Robinson said he didn’t feel the current set-up was fit for purpose.
So too is the national body in dispute with its member unions about $3 million of Covid wage subsidy payments owed to the Ministry of Social Development – and the chaos reigning in the NZR boardroom is not a symptom of rugby’s current ills, but the direct cause of them.
The inability of the current set-up to put the right people in the right positions to make the right decisions is hurting rugby from grassroots to the All Blacks – with impacts from the number of people who want to play the game to the ability of New Zealand’s teams to win on the world stage.
Like all good sagas, what lies at the heart of it is a culture of distrust, a lack of faith in the abilities of key people, a fear of change and a natural inclination by the main characters to support policies of self-preservation.
This one has a double twist though – in that against all requests and recommendations, it is playing out behind closed doors, in almost total secrecy.
This was never meant to happen and nor were the unions ever meant to go down the rabbit hole of building their own blueprints of how the governance structure should be set up.
Rugby in this country is facing multiple challenges around participation, financial viability, audience growth and retaining its relevance to Gen Z.
Many, if not all, of the problems relate to not having the right people in the boardroom to govern a game that is both sport and business with a level of complexity, given the arrival of a private equity investor and the at times conflicting needs of the professional and amateur games.
The men and women who sit on the boards of provincial unions, and indeed the nine directors of NZR, must pick which side of history they want to be on.
What follows is an attempt to make sense of how rugby has got itself in such a mess. It comes with a plea for all those who care about the sport and New Zealand’s ability to use it to showcase the best of itself to the rest of the world to pay attention and start realising that this boardroom saga is hurting everyone.
New Zealand Rugby was heading dangerously close to self-destruction back in 2021.
The board had tried to push through what would have been a disastrous deal to sell 15 per cent of the game’s commercial assets to fund manager Silver Lake.
It had unilaterally blown up Super Rugby and then tried to build a new competition without a mandate to do so – decisions which infuriated Sanzaar partners Australia and South Africa.
By September, NZR was at war with its own professional playing cohort, who had lost faith entirely in the national body’s executive and governance teams.
Rugby was in chaos and the New Zealand Rugby Players’ Association (NZRPA) felt it had not only the power to initiate a reset, but a moral obligation to do so on behalf of the wider rugby fraternity. The NZRPA felt the sport was being endangered by an inexperienced executive team operating without the requisite scrutiny being applied by the board.
The NZRPA’s reset plan was built on two key foundations. The first was that they agreed to come back to the table to negotiate a new deal with Silver Lake on the condition that whatever they agreed met their criteria of being a true partnership between the new investor and the whole of the rugby community.
Secondly, NZR agreed to commission an independent governance review.
As the NZRPA outlined in correspondence to NZR in September 2021: “We need governance arrangements that will work for all of New Zealand rugby in the new world we are entering. As we agreed last time, this is a fork in the road.
“There is no going back. Ever. Rugby in New Zealand will never be the same again. The current governance arrangements are, in our opinion, manifestly not fit for purpose and we need to deal with this. This is largely an issue for New Zealand Rugby administration, the provinces and ourselves, not you.
“But any commercial entity managing income-generating assets that you might be involved with would need to reflect the changed governance arrangements across New Zealand rugby.”
NZR agreed to instigate a review and on December 12, 2022 announced that it would be conducted by a four-person panel of former Fonterra executive David Pilkington, former All Blacks captain Graham Mourie and experienced directors Anne Urlwin and Whaimutu Dewes.
The terms of reference were set on February 4, 2022 and stated: “The purpose of this review is to answer a simple question: is the constitution and governance structure of the New Zealand Rugby Union fit for purpose – to ensure the appointment of a board that has the required matrix of skills, experience and qualifications to govern effectively; and to confront the challenges, and maximise the opportunities, that will present themselves (including the establishment of a new commercial entity)?
“If not, what are the changes that should be made to allow it to be so?”
It was agreed that the findings of the review would be non-binding, but that NZR would look to instigate its recommendations where feasible and all member unions and stakeholders were encouraged by former chair Stewart Mitchell to “engage with this process to help the panel build a comprehensive view of the current state of the sport”.
Those recommendations landed in late-August last year and found the current set-up to be not fit for purpose.
The panel recommended scrapping the current system of governance where NZR populates its board by appointing three directors, electing three and with another three nominated, in favour of having nine independent appointments chosen by an independent panel.
The proposal was radical in that it was recommending dramatic change that would depower the role of the provincial unions to better recognise that the game had new, more powerful stakeholders and different imperatives and challenges, given the size of the business and commercial assets in play.
But as much as it was radical, it was also agreed to be entirely sensible – a supremely well-considered body of work that was comprehensive and indisputably proposing the right path for governance change.
NZR’s new chair Dame Patsy Reddy welcomed the report by saying: “As a board, we unanimously agree with the review panel that structural reform is needed to facilitate clarity, alignment, and mutual accountability for rugby in New Zealand.”
Her response led many to believe that NZR would then work with the provincial unions to firm up the resolutions so they could be agreed by vote to be incorporated into the constitution.
But that wasn’t what happened at all.
No one ever envisaged that the unions would be indulged in their efforts to amend the recommendations to suit their needs, but that is precisely what has happened.
In November last year, the unions put forward their own version of how they wanted the new governance system to look.
The review said the panel to appoint the board should consist of two people independently appointed by the Institute of Directors (IOD), one independent member – not a current NZR director – chosen by the board and two members picked by the new stakeholder council that it has been suggested be formed.
But the unions proposed having three of their own people on that panel.
It was a plan, however, that didn’t have unanimous support. Only some unions agreed, highlighting that there was a difference in views about whether they should control or influence the process of appointing directors.
In February this year, another plan emerged whereby the union proposed forming an eight-person stakeholder council that would comprise four provincial members, one from the Māori Rugby Board, one from the NZRPA, one from Super Rugby and a representative from the Pasifika Advisory Council and which would select three representatives to sit on the appointments panel.
The salient point that the NZRPA feared would be lost in the detail is that the provincial unions would retain significant control over who ends up on the NZR board and the process would lack the independence that the Pilkington Review has recommended as being key to a better future.
The greater concern, though, is why the unions have continued to say they accept the report is right, but its recommendations are not.
Some unions who have spoken to the Herald say they fear that if they endorsed the report fully, that it would be possible for none of the nine directors to have any affinity, experience or understanding of the community game.
They hold this view despite reassurances that the new system would work from a skills matrix to ensure that the NZR board ended up with directors who had knowledge and connections to the grassroots.
“The whole game agreed to it and said yes, let’s do this and we all agreed the panel and everyone participated and gave their feedback,” NZRPA boss Rob Nichol says.
“They produced a compelling report and answered the questions we asked them and the same expert panel have produced recommendations about how we need to move forward, so why would we do everything up until that point and then decide we were in a position to decide a better set of recommendations. It is crazy.”
However crazy, Reddy thought in early March that she had corralled the provincial unions into a consensus and an announcement was expected to be made in the week commencing March 11, confirming that a special general meeting would be held, at which the provincial unions would be presented with two proposals.
The first option would be to adopt the findings of the Pilkington Review.
Reddy released a statement to the Herald on 8 March explaining that if this proposal did not receive the required two-thirds majority, the unions would then be asked to approve the compromised version of the report put forward by themselves.
“NZR is imminently looking to call our voting members to an SGM to vote on the recommendations made in the governance review,” the statement confirmed.
“Should that not be successful, NZR will ask members to vote on an alternative governance proposal which we believe still meets the underlying principles of the governance review.
“As a board, our focus is on ensuring that reform has the best possible chance of success and secures the necessary two-thirds majority of the votes.
“Our intention is to make both governance proposals publicly available as soon as they [are] finalised in the coming days.”
But no announcement has come about an SGM and the Herald understands that’s because the provincial unions have indicated they would not support either of the two proposals on the ballot.
A straw poll, conducted by the unions in the wake of the Herald’s story published on 8 March which outlined Reddy’s intentions, is understood to have indicated that the unions were by no means unanimously in agreement about even the proposal they themselves had recommended.
Auckland Rugby chair Brent Metsen is acting as the union’s co-ordinator and he told the Herald on 15 March that he couldn’t provide any detail about where things sat in relation to the various proposals under consideration, but did say “the provincial unions’ position is surprisingly progressive”, later clarifying that he would interpret “progressive” as being open to change as outlined in the Pilkington Review.
Metsen also said that the unions are no longer operating under urgency to get an agreement in time for the Annual General Meeting in early May but are instead working on the principle that it is better to get the right outcome rather than a quick outcome.
The confusion around what they are thinking and how divided they are has been amplified by suggestions that the Pasifika Advisory Group has pushed a proposal in the last few days for there to be a Pasifika representative on the NZR board.
But despite the unions being of the belief that they can continue to deliberate, there is an NZR board meeting this Thursday where it is understood Reddy will seek permission to push for a resolution to this saga.
And it may be that her plan is to present a plan whereby the recommendations of the Pilkington Review are adopted in their entirety, but in a transitional way.
This is certainly what Nichol hinted at when he appeared on Sky Sport’s The Breakdown show last Sunday.
“Is there a hard line to adopt the recommendations or a way where you step towards it? Quite possibly and maybe that is where the solution lies. But we must commit to the recommendations in full,” he said.
The only universal truth about the current situation is that it illustrates the endemic lack of trust between the unions and NZR and that their indecisiveness hints at how fearful the former is of losing its ability to control and govern the game.
Gregor Paul is one of New Zealand’s most respected rugby writers and columnists. He has won multiple awards for journalism and has written several books about sport.
The former All Blacks coach has been made a companion of the NZOM.