Silver Lake buying a stake in the ABs?
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@berniescorner said in Silver Lake buying a stake in the ABs?:
I hope this deal doesn't go through. They are introducing a foreign middle man for short term gain. Crazy. Just wrong.
By all means raise money but dont sell equity. NZ rugby will regret it forever.
They need passionate, capable NZ business managers to run this. So obvious.If done well, this is a 'ports of Tauranga' situation, where an external makes the business worth more. Clearly NZR think NZ business managers don't have the international clout to get into and drive the deals they think could be made.
looking at their list of investments, they are hooked into a shedload of big tech companies. NZR haven't pushed much fo the deal upside aside from the cash - but that has to be the reason to partner with them
I'm on the fence; done well could be awesome, done poorly could be a millstone. Still, Silver Lake seem massively preferable to CVC
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@steven-harris said in Silver Lake buying a stake in the ABs?:
Players will come and go, the RPA had the audacity to try and use intellectual material as a negotiating tool ..my spies tell me they were asking for 40% of 390 million , no mention from Rob Nichol on the state of the game at grassroots level of the game , it’s almost like they are tone deaf ..just a reminder to all of our professional players , ‘you are only guardians of jerseys throughout your pro career ‘.until someone else fills that jersey.
If your foundation structure is strong ,new players will always come through ..It’s so hard to comment on this. When the players talk publicly they talk about guardianship, and the letter they put up was certainly about that. However, the NZRU have painted them into a corner labelled greedy money grabbers - could be?
I note that the amount of money proposed for provinces up front wasn’t a lot so it’s also hard to know who gets what, over what time and whether there is a NZRFU long term plan for change...or just a bunch of money just goes into the kitty.
Apart from owning Twitter, still don’t know what SL will do that someone else couldn’t do? What are their special powers....someone say something that is substantive please apart from trust us, we need the money....
As for money, equity investment is always more expensive than debt....but less risky yes. At this point debt has never been cheaper. So it’s about or should be about what SL will bring to the table - from outside it’s so hard to say but still don’t like ownership being sold.
In terms of saving NZ Rugby, I think the NZRU comments are a bit self serving. They throw the line about saving clubs but they have masterminded the progressive decline in clubs and provinces with their elite pathways. It used to be Club, Province, All Blacks.
Now it’s elite Schools, Academy Rugby, S15, and All Blacks with Club Rugby and Provincial rugby all down graded in importance. They did that. That’s were their money and effort goes. They told the players and the fans that those competitions don’t matter with their actions. Year on year they put zero effort into marketing Provincial rugby. Honestly it’s like they don’t care. It should be a major asset but Super Rugby gets all the love. And even now it is still a heartless manufactured competition that serves players more than rugby communities. How many times have the Blues played up North? Pricks.Then they throw the line, we need the money to save the game. Well stop undermining the game by narrowing the pathways. You will lose a few primadonna’s to league ( the guys that don’t want to do the work ) but let them go.
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@kev said in Silver Lake buying a stake in the ABs?:
@steven-harris said in Silver Lake buying a stake in the ABs?:
Players will come and go, the RPA had the audacity to try and use intellectual material as a negotiating tool ..my spies tell me they were asking for 40% of 390 million , no mention from Rob Nichol on the state of the game at grassroots level of the game , it’s almost like they are tone deaf ..just a reminder to all of our professional players , ‘you are only guardians of jerseys throughout your pro career ‘.until someone else fills that jersey.
If your foundation structure is strong ,new players will always come through ..It’s so hard to comment on this. When the players talk publicly they talk about guardianship, and the letter they put up was certainly about that. However, the NZRU have painted them into a corner labelled greedy money grabbers - could be?
I note that the amount of money proposed for provinces up front wasn’t a lot so it’s also hard to know who gets what, over what time and whether there is a NZRFU long term plan for change...or just a bunch of money just goes into the kitty.
Apart from owning Twitter, still don’t know what SL will do that someone else couldn’t do? What are their special powers....someone say something that is substantive please apart from trust us, we need the money....
As for money, equity investment is always more expensive than debt....but less risky yes. At this point debt has never been cheaper. So it’s about or should be about what SL will bring to the table - from outside it’s so hard to say but still don’t like ownership being sold.
In terms of saving NZ Rugby, I think the NZRU comments are a bit self serving. They throw the line about saving clubs but they have masterminded the progressive decline in clubs and provinces with their elite pathways. It used to be Club, Province, All Blacks.
Now it’s elite Schools, Academy Rugby, S15, and All Blacks with Club Rugby and Provincial rugby all down graded in importance. They did that. That’s were their money and effort goes. They told the players and the fans that those competitions don’t matter with their actions. Year on year they put zero effort into marketing Provincial rugby. Honestly it’s like they don’t care. It should be a major asset but Super Rugby gets all the love. And even now it is still a heartless manufactured competition that serves players more than rugby communities. How many times have the Blues played up North? Pricks.Then they throw the line, we need the money to save the game. Well stop undermining the game by narrowing the pathways. You will lose a few primadonna’s to league ( the guys that don’t want to do the work ) but let them go.
Think you’re being harsh. That’s modern rugby worldwide. I lived in Ireland for a while. Their most successful club Leinster goes thru the same pathways. If you’re good at school you go into academy. If not you play club rugby. That’s the modern way.
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From the article below (behind a pay-wall):
New Zealand Rugby could be a loss-making venture by 2025 and living off its capital reserves if it takes the deal with Silver Lake.
The national union will, according to an independent report by world renowned accountancy firm BDO, be running at an operational loss of almost $11m in four years if Silver Lake only deliver 50 per cent of their ambitious revenue growth targets.
The Herald has gained access to the BDO report which highlights the true level of risk NZR will be taking by agreeing a deal to sell 12.5 per cent of future commercial income to US fund manager Silver Lake.
NZR questioned the methodology of the BDO report, stating that: "NZR have reviewed the models presented by BDO and believe them to have a number of fundamental flaws."
Specifically, the report highlights that Silver Lake would be entering the partnership with virtually zero risk as they are taking a 12.5 per cent share of net revenue – total income generated by the new company that will be formed, minus the costs of setting up and running that venture - and hence their returns are unaffected by the overall profitability of NZR.
NZR could suffer heavy seven-figure losses year on year and Silver Lake will still pull out millions for its investors.
There are no penalty clauses or punitive outcomes for Silver Lake if they don't achieve their forecasts.(...)
The BDO report formed the basis of a presentation the New Zealand Rugby Players' Association gave to the NZR board, provincial unions chairs and former All Blacks captains last week.
There's much more text, but I don't think I can post it without breaching copy right.
For example, the report also states what happens if all goes to plan. And even that isn't a positive story.
Example:
But that scenario of living off interest payments is questioned by BDO and the NZRPA, who both say it makes little sense to effectively take Silver Lake's money and then pay it back to them at a rate that would be higher than if the national body effectively borrowed the money from a bank or other mainstream financial institutions.
But also:
Earlier this week NZR released a 10-page document to refute the claims made by the BDO report.
NZR stated that: "BDO and NZRPA have selected preferential aspects of the Silver Lake assumptions to support their arguments, blended with alternate models, which we believe demonstrates a misunderstanding of the economic model that underpins rugby."and further comments from NZR.
I have not idea about who is wrong and who is right in this, but one thing is clear: decision-making shouldn't be rushed about something as important as this. -
@billy-tell Ireland’s not NZ. Rugby means something. If you lose that, it just becomes another professional sport.
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@stargazer yep....really interesting about where the risks lie. Hate that. The conversation has been framed that the structure protects us but here we see that that means they have excluded all risks. Sweet for them. It may still be ok if these guys are the Messiahs.
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My thoughts are along the lines that all the parties that are wanting to fund mon-profitable parts of the game, the NZR board and every single Provinicial Union, all with all the independent, and onternal, financial advice, have voted unanimously for the deal suggests that people have scrutinised this up down and sideways, and believe it is favourable.
The only party holding out is the professional players.
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@gt12 blah blah buzzwords... 25 years ... blah ... complicated ... core strength ... partnership ... working through it ... key stakeholder ...
Listen here: https://www.newstalkzb.co.nz/on-demand/week-on-demand/
From 12 through to 1, talks to Brett Impie, then Nicholls (which is as far as I've got), and has apparently given Impie right of reply.
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@kiwiwomble said in Silver Lake buying a stake in the ABs?:
i think i should add something that might explain my "casualness" too this all
I follow Wimbledon in UK football. We had out club stolen, ground sold off team moved 70 miles away, badge and colours changed etc, the only thing left was the legal entity that use to own the club and even that they changed the name of
....so we started a new club back in wimbledon...and its better than the old one was...the fans ultimately make sports clubs
If they do too much that we as fans dont like...someone will form a break away comp...or we'll all go back to watching club rugby or something and we'll have an invitational team that wears black with a non trademarked silver fern on the front.
They cant kill rugby in NZ, so lets try and take their money and see if we can make things more sustainable....and if not we'll try something else
Where there is a disconnect is that the path to a return for Silver Lake is to grow the OVERSEAS fan base and to milk them for revenue.
Which implicitly means deprioritising the views of the DOMESTIC fan base.
In the end that could mean shooting for an annual round robin of the top ten nations. And a decoupling of ABs from domestic rugby, because fitting that in across the globe will be exceptionally challenging.
Of course the English and French clubs won't like that.
If the teams play all the time, it seems inevitably that the AB's 'edge' will diminish.
Furthermore, IMO the AB 'edge' is in large part because of the rugby played from midgets to ITM, which breeds instincts which simply can't be coached.
For me, the playing schedule of the ABs should be entirely outside the Silver Lake remit. Their skills are most likely to be in optimising viewing revenue and merchandising.
The PE playbook tends to involve price increases, reducing cost of services (in practice lowering quality to enable cost savings), elimination of unprofitable activities and deferral of expenditure wherever possible.
I remain a skeptic.
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@rapido said in Silver Lake buying a stake in the ABs?:
@gt12 said in Silver Lake buying a stake in the ABs?:
At the end of the day, how will this be implemented without the players spending more time on the paddock, likely with more international travel?
The big big money comes from the efforts of about 40 guys a year, so I think it's fair for them to be worried about the effect of what might be expected from them when the NZRU needs to generate more revenue.
Exactly what I am going on about in my posts earlier.
NZ rugby started the slide to unsustainably once the SR franchises became cash drains rather than cash generating assets. In years after 2007.
It's the competitions that needs the investment. Not the top heavy current inverted pyramid.
If Silver Lake can buy into the comp and front load a cash injection to get TT SR off and running, and then Pacific Champions Cup with Japan clubs. Then yes, I'd be for it and could see the vision.
If SL can facilitate a TRC that includes the potential big markets of USA and Japan included, then yes I'd buy into that.
But, they're not.
What's changing? Except the chance for the provinces to piss away NZU equity for the price of meaningless AB exhibition friendlies.
NZR needs to have agreed vision with new investor. I suspect if there is one it's not what you outlined, a view I have a lot of time for.
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@taniwharugby said in Silver Lake buying a stake in the ABs?:
@nostrildamus er they are bringing in cash without losing control, 15% is hardly a controlling share...
@Higgins well the official nzrugby app loading teams and scores in was pretty shit last time I used it, so there's that 😉
The veto means that 15% isn't really reflective.
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@number-10 said in Silver Lake buying a stake in the ABs?:
NZR Press Conference after today's AGM
So this is an evergreen deal with SL getting 12.5% p.a. of $200m a year, which is growing.
Let's just say $25m p.a. with some growth. It's sounding more like a royalty stream than an equity investment. $25m assuming a 4% yield is valued at $625m.
I've said it before. Such deals should be for a time period with mutual right of renewal.
I'd much rather NZR just sold them a ten year 12.5% royalty for $200m.
Would make the situation much less liable to run aground over (NZR) unexpected consequences!
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@taniwharugby in essence, it will leave less revenue for paying players, so they are more likely to play overseas, in which case Silver Lake will demand that overseas players are eligible for AB selection to protect revenue from AB games.
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@godder said in Silver Lake buying a stake in the ABs?:
@taniwharugby in essence, it will leave less revenue for paying players, so they are more likely to play overseas, in which case Silver Lake will demand that overseas players are eligible for AB selection to protect revenue from AB games.
Will SL be in a position to be able make demands like that? And if so, would the NZRFU be forced to bow to those demands?
Silver Lake (investment firm) - Wikipedia
Leaked report reveals risk in Silver Lake deal
