eBusiness Weekly
When the All Blacks next take to the rugby field to perform the prematch haka, a ceremonial war dance invoking New Zealand’s ancient Maori culture, they will do so in a battle for sporting glory — while also, perhaps, pursuing profits for one of the world’s most powerful private equity groups.
New Zealand Rugby, the governing body which runs its successful men’s rugby union team and manages competitions, is holding investment talks with Silver Lake, a US$75 billion Californian buyout firm better known for its bets on technology groups from Dell to Airbnb.
The proposed deal is the latest sign of how rugby is following the trajectory of other sports, such as football, baseball, motor racing and basketball.
A decades-long process, with teams once forged as local institutions morphing into major global businesses, is entering a new phase: the entrance of private equity firms seeking financial returns from the emotional highs sport can provide.
While the business of buying sports clubs is long-established, with super-rich individuals snapping up teams as trophy assets, the
difference now is institutional investors not just acquiring individual teams, but stakes in the governing bodies that run the competitions.
In the process, they are taking on the risk of a political and popular backlash in the countries where the tournaments are held.
“There is increasing interest for many different private equity firms . . . and that interest is falling on receptive ears in the world of sport and rugby as well,” says Brett Gosper, the outgoing chief executive of World Rugby, the sport’s global governing body.
“There will be more conversations and more deals that are done.”
Silver Lake, which is seeking a 15 percent stake in a new entity that would hold NZ Rugby’s US$2bn broadcasting, sponsorship and ticketing rights, has been among the quickest to pounce.
It acquired a US$500m stake in the parent company of English Premier League football club Manchester City in 2019 and is an investor in the mixed martial arts league Ultimate Fighting Championship.
But the pioneer in private equity investing in sporting tournaments has been CVC Capital Partners, a Luxembourg-based buyout group that previously owned Formula One and MotoGP, and is in talks alongside fellow buyout group Advent International over a €1,6bn investment in Serie A, Italy’s top football league.
CVC has triggered the recent scrum for rugby deals. It has spent the past two years hoovering up stakes in club contests such as the English Premiership and Pro14, and is in the final stages of acquiring a £300m share in the Six Nations, Europe’s leading national team tournament.
Hamish McLennan, Rugby Australia’s chairman, said he has held exploratory investment talks with CVC and Silver Lake, as well as rival firms Providence of the US and Tattarang, the vehicle of Australian billionaire Andrew Forrest. The body behind world champions South Africa has also held talks with CVC.
Many of these discussions began even before coronavirus wreaked havoc on the finances of rugby’s authorities.
They have looked enviously at the growth of other sports, such as football and basketball, and sought external funding to emulate their success at selling TV and sponsorship deals globally. Rival private equity groups, even those with little previous experience in sport, are now seeking to muscle in on the action. — Financial Times.
