Silver Lake buying a stake in the ABs?
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A third sale option for NZ Rugby to consider
New Zealand Rugby is being urged to consider a third option, before it signs away a stake of its commercial rights with US private equity firm Silver Lake. A group led by former NZR chief executive David Moffett is proposing a co-operative ownership model similar to European football giants Barcelona, Real Madrid and Bayern Munich and NFL side the Green Bay Packers. Under the Silver Lake deal NZR would set up a company called Commercial Co which would own NZR's commercial rights. Silver Lake would take a 12.5 stake in this for $390 million. The Players Association (NZRPA) is opposed to deal, saying the numbers don't add up and that selling off 12.5 percent in perpetuity doesn't make financial sense, leading to a bitter dispute between the two parties. The NZRPA agrees the game needs a substantial cash injection and along with investment company Forysth Barr are proposing a public share float which it estimates could raise $190 million. NZR has rejected a public share float believing it would only appeal to 'mum and dad' investors and doesn't meet other criteria the Silver Lake deal does. Moffett, who was chief executive of the NZR between 1996-2000 and has also held the same role with the Australian NRL and Welsh Rugby Union, believes a co-operative model is the way forward. "Both (the Silver Lake and NZRPA share float proposals) have merit but neither of them really satisfies the aspirations of rugby fans or the wider public who would like to see the full control of rugby and especially the All Blacks stay in New Zealand ownership. "There are many questions to be answered about the Silver Lake offer... (we) request of the NZR a full and frank disclosure of the proposed deal, so that the fans and people of New Zealand can be better informed. "In respect of the proposed IPO by the NZRPA, we are concerned that if the listing were to go ahead, what if any safeguards can be put in place to stop Silver Lake, Rugby Australia or any other non-invited entity from accumulating the bulk of shares in the public company," said Moffett. Co-operatives are familiar to the New Zealand business community said Moffett citing the likes of Fonterra, Southern Cross and Farmlands. "This common form of corporate ownership in New Zealand does not carry the listed public company requirements of compliance and share price and market risk," he said. Moffett suggests a co-op could raise similar levels of funding to the Forsyth Barr share float proposal. "Indeed, it is entirely possible....the capital raise suggested in an IPO could be exceeded. But equally as important, the cost of sourcing and servicing the capital and repayments will be substantially less than the other options -which will mean more finds available to NZR." The fundamental difference with a co-operative said Moffett is that the organisation can develops its own rules and regulations to meet the needs of their members - a key objective when dealing with the unique nature of sports. It is based on a vote per member not the number of shares held - therefore no one group can acquire a controlling interest A co-operative doesn't require cash dividends but rather provides members benefits and there can be different classes of shares-membership that allows a differentiation of the type of investment meaning their there could be a range of classes including Super Rugby Franchises, Provincial Unions, Player Associations, and Public for example. "The motivation for putting forward this option is that, given the significance and relative permanence of the decision and its subsequent consequences, we believe it is imperative that all options are on the table and given appropriate consideration, to ensure that there is no doubt in anyone's mind that the final decision is made with full consideration of all options available, along with their relative benefits and risks." -
The bit about Silverlake that no other option offers is the so called expertise available to grow the game and open other markets. That's the bit that detractors should be targeting/questioning.
I totally get that growing the market and revenue is a big thing for NZR but the SL deal seems to sell off revenue to possibly gain more of it.
That, to me, is the bit that they haven't sold properly to stakeholders. We have seen that an injection of $ is possibly available other ways. Where are the concrete proposals about the growth factors? -
@crucial said in Silver Lake buying a stake in the ABs?:
The bit about Silverlake that no other option offers is the so called expertise available to grow the game and open other markets. That's the bit that detractors should be targeting/questioning.
I totally get that growing the market and revenue is a big thing for NZR but the SL deal seems to sell off revenue to possibly gain more of it.
That, to me, is the bit that they haven't sold properly to stakeholders. We have seen that an injection of $ is possibly available other ways. Where are the concrete proposals about the growth factors?Stakeholder
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@booboo said in Silver Lake buying a stake in the ABs?:
@crucial said in Silver Lake buying a stake in the ABs?:
The bit about Silverlake that no other option offers is the so called expertise available to grow the game and open other markets. That's the bit that detractors should be targeting/questioning.
I totally get that growing the market and revenue is a big thing for NZR but the SL deal seems to sell off revenue to possibly gain more of it.
That, to me, is the bit that they haven't sold properly to stakeholders. We have seen that an injection of $ is possibly available other ways. Where are the concrete proposals about the growth factors?Stakeholder
Nah, I used plural as I don't think much of the rugby public is fully behind them either.
I just think that they really underestimated the resistance to selling the ABs to an overseas company and could have done a much better job on communicating the deal.
There looks to be a 'we know best' sniff of arrogance that isn't doing them any favours. -
@crucial said in Silver Lake buying a stake in the ABs?:
The bit about Silverlake that no other option offers is the so called expertise available to grow the game and open other markets. That's the bit that detractors should be targeting/questioning.
I totally get that growing the market and revenue is a big thing for NZR but the SL deal seems to sell off revenue to possibly gain more of it.
That, to me, is the bit that they haven't sold properly to stakeholders. We have seen that an injection of $ is possibly available other ways. Where are the concrete proposals about the growth factors?That is the heart of it. New businesses fail all the time. Especially when they need to create brand new revenue. CRICHQ was the most recent example in this space. Don’t sell the family heirlooms on a promise. Silverwater have structured the deal so they have no downside risk if the business fails.
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@kev said in Silver Lake buying a stake in the ABs?:
@crucial said in Silver Lake buying a stake in the ABs?:
The bit about Silverlake that no other option offers is the so called expertise available to grow the game and open other markets. That's the bit that detractors should be targeting/questioning.
I totally get that growing the market and revenue is a big thing for NZR but the SL deal seems to sell off revenue to possibly gain more of it.
That, to me, is the bit that they haven't sold properly to stakeholders. We have seen that an injection of $ is possibly available other ways. Where are the concrete proposals about the growth factors?That is the heart of it. New businesses fail all the time. Especially when they need to create brand new revenue. CRICHQ was the most recent example in this space. Don’t sell the family heirlooms on a promise. Silverwater have structured the deal so they have no downside risk if the business fails.
If the business fails despite SL's cash injection, then NZR's assets will be sold at deep discounts to cover their debts. SL's 12.5% share of those assets will also be written down, likely to much less than the $387.5m they paid for them. The future revenue growth would also be gone. So I don't see how you can claim SL have no downside risk?
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@tewaio said in Silver Lake buying a stake in the ABs?:
@kev said in Silver Lake buying a stake in the ABs?:
@crucial said in Silver Lake buying a stake in the ABs?:
The bit about Silverlake that no other option offers is the so called expertise available to grow the game and open other markets. That's the bit that detractors should be targeting/questioning.
I totally get that growing the market and revenue is a big thing for NZR but the SL deal seems to sell off revenue to possibly gain more of it.
That, to me, is the bit that they haven't sold properly to stakeholders. We have seen that an injection of $ is possibly available other ways. Where are the concrete proposals about the growth factors?That is the heart of it. New businesses fail all the time. Especially when they need to create brand new revenue. CRICHQ was the most recent example in this space. Don’t sell the family heirlooms on a promise. Silverwater have structured the deal so they have no downside risk if the business fails.
If the business fails despite SL's cash injection, then NZR's assets will be sold at deep discounts to cover their debts. SL's 12.5% share of those assets will also be written down, likely to much less than the $387.5m they paid for them. The future revenue growth would also be gone. So I don't see how you can claim SL have no downside risk?
There's no assets to sell, in real money terms. That's why NZR can't get a decent loan, nothing to secure it against
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@machpants said in Silver Lake buying a stake in the ABs?:
@tewaio said in Silver Lake buying a stake in the ABs?:
@kev said in Silver Lake buying a stake in the ABs?:
@crucial said in Silver Lake buying a stake in the ABs?:
The bit about Silverlake that no other option offers is the so called expertise available to grow the game and open other markets. That's the bit that detractors should be targeting/questioning.
I totally get that growing the market and revenue is a big thing for NZR but the SL deal seems to sell off revenue to possibly gain more of it.
That, to me, is the bit that they haven't sold properly to stakeholders. We have seen that an injection of $ is possibly available other ways. Where are the concrete proposals about the growth factors?That is the heart of it. New businesses fail all the time. Especially when they need to create brand new revenue. CRICHQ was the most recent example in this space. Don’t sell the family heirlooms on a promise. Silverwater have structured the deal so they have no downside risk if the business fails.
If the business fails despite SL's cash injection, then NZR's assets will be sold at deep discounts to cover their debts. SL's 12.5% share of those assets will also be written down, likely to much less than the $387.5m they paid for them. The future revenue growth would also be gone. So I don't see how you can claim SL have no downside risk?
There's no assets to sell, in real money terms. That's why NZR can't get a decent loan, nothing to secure it against
Exactly... the All Blacks "brand" isn't worth much if NZR goes bust and can't pay players anymore. So various posters and commentators saying SL has no downside risk are not correct.
Is the deal definitely for 12.5% of revenue, not net income? I've read both reported in various forms of media.
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as I recall BMW and VW fought over the Rolls Royce name, one company had the staff and factories, the other had rights to the name. The name alone can be worth something...
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@tewaio said in Silver Lake buying a stake in the ABs?:
@machpants said in Silver Lake buying a stake in the ABs?:
@tewaio said in Silver Lake buying a stake in the ABs?:
@kev said in Silver Lake buying a stake in the ABs?:
@crucial said in Silver Lake buying a stake in the ABs?:
The bit about Silverlake that no other option offers is the so called expertise available to grow the game and open other markets. That's the bit that detractors should be targeting/questioning.
I totally get that growing the market and revenue is a big thing for NZR but the SL deal seems to sell off revenue to possibly gain more of it.
That, to me, is the bit that they haven't sold properly to stakeholders. We have seen that an injection of $ is possibly available other ways. Where are the concrete proposals about the growth factors?That is the heart of it. New businesses fail all the time. Especially when they need to create brand new revenue. CRICHQ was the most recent example in this space. Don’t sell the family heirlooms on a promise. Silverwater have structured the deal so they have no downside risk if the business fails.
If the business fails despite SL's cash injection, then NZR's assets will be sold at deep discounts to cover their debts. SL's 12.5% share of those assets will also be written down, likely to much less than the $387.5m they paid for them. The future revenue growth would also be gone. So I don't see how you can claim SL have no downside risk?
There's no assets to sell, in real money terms. That's why NZR can't get a decent loan, nothing to secure it against
Exactly... the All Blacks "brand" isn't worth much if NZR goes bust and can't pay players anymore. So various posters and commentators saying SL has no downside risk are not correct.
Is the deal definitely for 12.5% of revenue, not net income? I've read both reported in various forms of media.
Pretty big difference. We have some media/reporters here who might be able to answer that @Steven-Harris etc?
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@tewaio said in Silver Lake buying a stake in the ABs?:
@kev said in Silver Lake buying a stake in the ABs?:
@crucial said in Silver Lake buying a stake in the ABs?:
The bit about Silverlake that no other option offers is the so called expertise available to grow the game and open other markets. That's the bit that detractors should be targeting/questioning.
I totally get that growing the market and revenue is a big thing for NZR but the SL deal seems to sell off revenue to possibly gain more of it.
That, to me, is the bit that they haven't sold properly to stakeholders. We have seen that an injection of $ is possibly available other ways. Where are the concrete proposals about the growth factors?That is the heart of it. New businesses fail all the time. Especially when they need to create brand new revenue. CRICHQ was the most recent example in this space. Don’t sell the family heirlooms on a promise. Silverwater have structured the deal so they have no downside risk if the business fails.
If the business fails despite SL's cash injection, then NZR's assets will be sold at deep discounts to cover their debts. SL's 12.5% share of those assets will also be written down, likely to much less than the $387.5m they paid for them. The future revenue growth would also be gone. So I don't see how you can claim SL have no downside risk?
They still get 12.5% of all revenue. That means all existing and ongoing broadcasting revenue. It’s unlikely that will reduce. So very low risk and at nearly $200m total that’s a good return on the money invested. Of course they want the upside on the new business as well but they don’t lose if it doesn’t happen. It’s a very sweet deal for them. The risk of the new business is it doesn’t create revenue - they won’t run up debts I hope ( that would be another issue ) and if it fails it should have no impact on their current core business. If they don’t have that separation I give up.
I guess there is the risk the business is a money pit and they throw more of their reserve money at it....again I hope not.
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@gt12 said in Silver Lake buying a stake in the ABs?:
@tewaio said in Silver Lake buying a stake in the ABs?:
@machpants said in Silver Lake buying a stake in the ABs?:
@tewaio said in Silver Lake buying a stake in the ABs?:
@kev said in Silver Lake buying a stake in the ABs?:
@crucial said in Silver Lake buying a stake in the ABs?:
The bit about Silverlake that no other option offers is the so called expertise available to grow the game and open other markets. That's the bit that detractors should be targeting/questioning.
I totally get that growing the market and revenue is a big thing for NZR but the SL deal seems to sell off revenue to possibly gain more of it.
That, to me, is the bit that they haven't sold properly to stakeholders. We have seen that an injection of $ is possibly available other ways. Where are the concrete proposals about the growth factors?That is the heart of it. New businesses fail all the time. Especially when they need to create brand new revenue. CRICHQ was the most recent example in this space. Don’t sell the family heirlooms on a promise. Silverwater have structured the deal so they have no downside risk if the business fails.
If the business fails despite SL's cash injection, then NZR's assets will be sold at deep discounts to cover their debts. SL's 12.5% share of those assets will also be written down, likely to much less than the $387.5m they paid for them. The future revenue growth would also be gone. So I don't see how you can claim SL have no downside risk?
There's no assets to sell, in real money terms. That's why NZR can't get a decent loan, nothing to secure it against
Exactly... the All Blacks "brand" isn't worth much if NZR goes bust and can't pay players anymore. So various posters and commentators saying SL has no downside risk are not correct.
Is the deal definitely for 12.5% of revenue, not net income? I've read both reported in various forms of media.
Pretty big difference. We have some media/reporters here who might be able to answer that @Steven-Harris etc?
I saw the term used today in an article was net revenue. That is not really a defined term so who would know.
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@nostrildamus said in Silver Lake buying a stake in the ABs?:
as I recall BMW and VW fought over the Rolls Royce name, one company had the staff and factories, the other had rights to the name. The name alone can be worth something...
Well, BMW bought Rolls Royce Motors, which only owned Bentley name. So VW bought Rolls Royce name for cars and built new factory near Goodwood. Not sure a name is that valuable to a commercial party unless there is something relevant to attach it to.
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@crucial said in Silver Lake buying a stake in the ABs?:
The bit about Silverlake that no other option offers is the so called expertise available to grow the game and open other markets. That's the bit that detractors should be targeting/questioning.
I totally get that growing the market and revenue is a big thing for NZR but the SL deal seems to sell off revenue to possibly gain more of it.
That, to me, is the bit that they haven't sold properly to stakeholders. We have seen that an injection of $ is possibly available other ways. Where are the concrete proposals about the growth factors?Monetising the existing revenue stream is best done via a party which most highly values reliable and low risk revenue streams. That won't be PE. Most likely a pension fund/endowment/sovereign wealth investor. I think 12.5% of existing stream alone would be worth the entire SL price.
Query what NZR does with $350m? If it's not going to invest it it ends up being buffer to pay future royalties. Maybe better to sell a 5% revenue stream for, say, $150m. Can't see NZR burning through that any time soon.
If SL is there to grow market let them shell out for a 25% share in revenue above $200m p.a. . If things work out that will pay for itself. If not the leakage to SL will be small. Full alignment of interests!
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@pakman said in Silver Lake buying a stake in the ABs?:
@nostrildamus said in Silver Lake buying a stake in the ABs?:
as I recall BMW and VW fought over the Rolls Royce name, one company had the staff and factories, the other had rights to the name. The name alone can be worth something...
Well, BMW bought Rolls Royce Motors, which only owned Bentley name. So VW bought Rolls Royce name for cars and built new factory near Goodwood. Not sure a name is that valuable to a commercial party unless there is something relevant to attach it to.
the value of the name surely relates to the value of the product
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but the simpler answer at one stage was 66 million (USD I assume).
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Would be interesting to know the demand for a 4% dividend listed All Black preference shares.
I’d buy some.
Issue $350m and dividend is $14m p.a.. Big saving compared to Silver Lake Version 1 ($25m p.a.).
SL version 2 royalty on revenue OVER $200m. That’s where they really earn their corn!
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Haven't heard about the Silver Lake deal for a while. But NZR has just announced this:
New Zealand Rugby announce six-year partnership with INEOS
New Zealand Rugby (NZR) has announced INEOS as the Official Performance Partner of its seven Teams in Black* in a unique new six-year partnership kicking off in 2022.
The Performance Partnership will see NZR’s Teams in Black including the All Blacks and Black Ferns join INEOS Sport teams; Mercedes-AMG Petronas F1 Team; INEOS Grenadiers cycling team; INEOS TEAM UK sailing team; and football clubs OGC Nice and FC Lausanne-Sport as part of a unique sport performance group.
The INEOS Sport performance group will bring together some of sport’s best people and teams to tackle the greatest sporting challenges, through technology and human performance, and will officially launch later this year.
The teams involved will work together to identify opportunities for performance gains that can be shared and applied across the group, utilising the unique knowledge and skill of the world-leading experts who operate across the full sports performance spectrum.*NZR’s Teams in Black - the All Blacks, Black Ferns, All Blacks Sevens, Black Ferns Sevens, Māori All Blacks, All Blacks XV and All Blacks Under-20, will be part of the INEOS Sport performance group and through which will see all member teams continue to evolve and innovate together.
More about Ineous in the media release and on their website:
We are INEOS | INEOS Group
INEOS is one of the world’s largest chemical producers and a significant player in the oil and gas market. Learn more about who we are, today.
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@stargazer Pfffft to the names the NZRFU are trying to foist upon us. I will never refer to the sevens team by anything other than the NZ 7s, likewise NZ Maori, NZ XV and NZ Under 20s. There is only one team that are the All Blacks and they play (well at least start with) with 15 players and are not restricted with having to meet other criteria like age etc to make the squad. Christ next thing we will see them then offering us the All Black Secondary Schoolboys team and the Maori All Blacks Under 18s for example.
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@higgins this has been a thing for several years now...still feel pretty passionate about it though?
BMW Buys Rolls-Royce Brand Name
