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Home / Sport / Rugby / Super Rugby

Rugby: Rugby corporate sell-off won't mean complete sellout

Gregor Paul
By Gregor Paul
Reporter·Herald on Sunday·
3 May, 2008 05:00 PM4 mins to read

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KEY POINTS:

If private equity is sanctioned in New Zealand rugby, corporate backers will not be handed total control of the game.

The early bloodshed in England and France has served as a warning against going down the road of selling the game in its entirety to individual backers.

Instead,
the New Zealand Rugby Union working party that is looking into private investment will focus on finding ways that corporate money can be injected into the sport while maintaining robust protocols with the national body.

With Southern Hemisphere rugby battling against the financial strength of the European market, Sanzar officials agree that they need to consider a radical restructuring of the Super 14 to make it more compelling to players, sponsors, broadcasters and fans.

As part of the restructuring, executives from Australia, New Zealand and South Africa met last week in Dublin to discuss related issues to the competition restructure, such as player contracting and private investment.

There is a growing awareness among the Sanzar partners that they need to be unified on private investment as the competition will be stronger if there is a consistency of approach.

Rob Nichol, who heads both the New Zealand and International Rugby Players' Associations, believes it would be dangerous for the three nations to adopt vastly different approaches to private investment.

"What we can't have is a situation where, say, the Australians decide to put their franchises up for sale. While, say, in New Zealand there are five franchises and we call for tenders to take up to a 49 per cent stake with a controlling 'rugby' body, for want of a better term, retaining a controlling stake.

"The model needs to be well thought through and there is a need to act collectively.

"It might be that the licences differ slightly between countries. For example, you could say in New Zealand that it is a requirement for every franchise to have 75 per cent All Black-eligible players.

"I think everyone agrees it is crucial that 'rugby' retains control of international rugby.

"If the number of tests is reduced to 10 a season and it features best versus best and the commercial arrangements are right then international rugby can be vibrant.

"We believe the focus on the All Blacks is not the right approach. We believe the Southern Hemisphere has to have the best competitions to attract the best commercial partners. And to be the best we have to be able to compete with the Northern Hemisphere.

"Super Rugby has to be pitched as the core of the game and that's the opportunity for private equity. Rugby still needs to own the competition body. I don't think this should be salary-cap driven.

"There will need to be clear agreements in the licences around how the money from private equity is spent, how it can be used to top-up players' contracts and when players can shift franchises.

"If it was possible to somehow be transported five to 10 years into the future, I suspect there will be some massively wealthy private equity backers in the game.

"People who have travelled might not be aware just how much money there is in places like Shanghai and Hong Kong, even Sydney."

That scenario is as much a threat as it is an opportunity for New Zealand. In Sanzar's Super Rugby vision of franchises scattered across the hemisphere, New Zealand sits as one of the smallest economies.

Japan, USA, Australia, Canada and China are all driven by massive economies and the investment required to take a stake in Super Rugby will be peanuts for many of their entrepreneurs.

That is not so in New Zealand but Nichol hopes the new competition will be set up to be commercially successful and sit as a genuine investment opportunity. That should open the doors to more than just those with big egos in search of vanity products and it might also open the door to off-shore investors.

"If you look at the IPL cricket situation - when they announced the tender process there was a feeling they were asking for too much," Nichol said.

"But within two weeks they had something like 30 bidders for eight teams."

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