Silver Lake buying a stake in the ABs?
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Is it fair that a handful of people in the NZR can have such a large effect on the future of NZ Rugby. Best team of any sport? in the world over the last 20 years and selling equity. OMG
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@Tim said in Silver Lake buying a stake in the ABs?:
Lets tell a story of a rugby body that had about $200M of revenue each year, but struggled to make a profit on it. It was so up and down every year, but they generally broke even. Then they got a new boss who had an IQ of about 100, but he had suffered a lot of shots to the brain. He had a degree from one of the worst univeristies in NZ, and he got to go to a good one in the UK just to play rugby!
Luckily for this king, he had a really good friend who ran the private equity division of a really crappy "boutique" investment bank. He trusted his friend so much, because he was a subnormal retard. His friend told him that they could get so much money and all they had to do was give a fraction of raw revenue - not like a normal investor who buys a share of a company and gets a share of their profits.
Don't worry though, this company was from AMERICA - it's a magical kingdom where even irrelevant sports can get huge deals to make money.
It didn't happen though, they put their money into an app and there was no additional revenue. Now they owed $13M per year to this company who did nothing for them. But still they wanted more, despite how money they were losing. They put $20M into women's rugby because it was the right thing to do, but never made any money.
What to do?
Eventually they went bankrupt and all the good players were based overseas. Australia should have been a warning sign. The UK Premiership should have been a warning sign, but they were governed by the stupidest people in NZ. The rest were overseas.
Have you mentioned this story previously? Did I miss it? Put's things in an interesting perspective if true. Do you know the friend?
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Did anyone think Silver Lake deal would increase income of NZ rugby in a year or 2?
I would bet the money was invested (like most biggish investments) to increase income over the long term. You have to wait until most tv deals, tour agreements etc run their course before plugging into new markets. I think you will find that there are enough people involved in NZR not to sign a deal without pretty sound info and basis behind scenes.
To be honest to pretend or hint that it was all Mark Robinson who did deal and that he is some kind of a patsy as @Tim seems to hint is just crazy. But hey it's the Fern (I should remember) and we all know better, and if Gregor Paul says it so well we are all doomed. -
@Nepia Mark Robinson's rugby captain at Cambridge was the head of a division of a "boutique" investment bank, where he was in charge of their private equity finance placement division. So he got paid based upon how big the deal would be.
Moron Mark Robinson tried to sell a lot of NZ Rugby's future for revenue, not profit. Thank god that Rugby Players Association stepped in and stopped that. Their intervention meant that the sale was about 60% of what it was, for about 50% more per revenue share.
Selling anything for a revenue share is fucking retarded. Shame on anyone involved.
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No it wasn’t going to and the plan wasn’t about generating short term revenue but putting long term revenue streams in place.
It does seem strange that they are paying interest to Silverlake?
I also find it hard to believe that they couldn’t get additional funding from financial institutions.
A sporting organisation like NZR is a low risk organisation as they are not in danger of collapsing and going out of existence.
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@Dan54 said in Silver Lake buying a stake in the ABs?:
.... You have to wait until most tv deals, tour agreements etc run their course before plugging into new markets.
why would you have to wait for old agreement to end before entering new markets? surely if there are NEW markets you can start whenever you like....and that would probably be preferable so you dont have all your agreement ending and being renegotiated at the same time
@Tim said in Silver Lake buying a stake in the ABs?:
.....Then they got a new boss who had an IQ of about 100,
...isn't 100 the definition of the Average IQ?....so yes, if true no genius but hardly "subnormal"
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@DaGrubster said in Silver Lake buying a stake in the ABs?:
No it wasn’t going to and the plan wasn’t about generating short term revenue but putting long term revenue streams in place.
It does seem strange that they are paying interest to Silverlake?
I also find it hard to believe that they couldn’t get additional funding from financial institutions.
A sporting organisation like NZR is a low risk organisation as they are not in danger of collapsing and going out of existence.
From what I understand they not are they, and a good proportion $60 mill of the money is invested anyway, so not all spent. Depend if Mt Paul is correct or not, but for all I know they could be paying 2% a year , but I keep saying anyone thinking that Mark Robinson is the one who has done all the deal is living in a fantasy world. David Kirk etc all went over it with pretty fine toothcomb from memory before players assoc agreed to it.
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@Dan54 i might have really misunderstood, my understanding was they were going to be doing something proactive rather than investing it
so has silverlake come in with money and said they will invest it in the name of NZR...if we pay them a yearly fee (interest) AND then they get a share of profits?
thats seems very strange
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@ARHS said in Silver Lake buying a stake in the ABs?:
Still beats me why you would give so much away in the hope that someone less invested than you can do something you should have been able to do yourself.
I can understand the concept of bringing in expertise to develop additional revenue streams, and then rewarding that external expertise by giving them a percentage. But to simply provide them with a guaranteed return is ridiculously retarded. Any Econ 101 student could tell you why that's a bad idea, let alone people with MBAs.
And so far (admittedly I haven't been following this closely so could be wrong) it seems it's all about streaming. Which is 2020 speak for broadcast deals. Nothing about real diversification of income, developing assets etc.
The more light shed on this, the more thankful everyone should be the players' association appeared to do some due diligence.
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@Kiwiwomble said in Silver Lake buying a stake in the ABs?:
@Dan54 i might have really misunderstood, my understanding was they were going to be doing something proactive rather than investing it
so has silverlake come in with money and said they will invest it in the name of NZR...if we pay them a yearly fee (interest) AND then they get a share of profits?
thats seems very strange
Have no idea what the actual agreement is, just NZR always said $60 mill was going into lagcy fund, said it right from beginning. Have no idea about if they are paying Silver Lake a percentage of anything. But the money was always to go to provinces clubs as well.
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@Dan54 im actually concerned if theyre looking too long term...some clubs and unions and competitions might not be around to see the profit
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@Kiwiwomble mate at a guess there is more chance of clubs sticking around with help with finances to get people in the game. I seriously doubt whether any provincial unions won't be around though. And the whole idea is surely to look long term.
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@ARHS said in Silver Lake buying a stake in the ABs?:
Still beats me why you would give so much away in the hope that someone less invested than you can do something you should have been able to do yourself.
Nailed. I feel sick
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@ARHS said in Silver Lake buying a stake in the ABs?:
Still beats me why you would give so much away in the hope that someone less invested than you can do something you should have been able to do yourself.
Well haven't given it away, but from my uderstanding have sold 7% of profits to use the expertise that Silver Lake has. It's not that unusual in business to sell part of business to people with marketing expertise/contacts in areas that you don't have. Hell the biggest building company that I was contracted to in Aus did same, sold part of business to a company that developed sub-divisions, so they weren't tied up doing it, could concentrate on what they did, which was build. Wasn't unusual. same happened in place I worked in Levin back in 1980s, in fabric business.
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@Tim said in Silver Lake buying a stake in the ABs?:
@Dan54 said in Silver Lake buying a stake in the ABs?:
have sold 7% of profits
Hopelessly wrong.
Wasn't unusual. same happened in place I worked in Levin back in 1980s, in fabric business.
Really great stuff.
Using as an example , you do what you know and team up with companies to get expertise. I only mentioned the Levin one to show I personally have seen ot done twice where I had something to do with companies. It happens quite often.
Hopelessly wrong? This is what was always written about deal.
At the conclusion of the additional co-investment, Silver Lake will own between 5.71-8.58% of NZR CommercialCo (representing NZD $200-300 million investment, depending on capital needs and the uptake of New Zealand-based institutional investors) -
@Machpants said in Silver Lake buying a stake in the ABs?:
@Dan54 Sadly it is not 7% of profits, that would be OK - it is (whatever percentage) of INCOME, regardless of profit
So what is it? I have only seen figure I posted above, and it maybe expanded if Silver Lake take the other $100 mill of shares. From what I am able to work out with my very Ltd knowledge the $10 mill Silver Lake is getting at moment is actually their share of income, and not really interest (though it looks good in paper). NZR has an income of well over $100 mill a year. Broadcast deal alone is $90 mill, and I think sponsorship comes well over $50mill.
As I say, that's my Ltd knowledge, but some on here may have an actual copy of agreement that says different. -
@Dan54 Have you not comprehended any one of the 500 posts of this thread?
Silver Lake have not bought shares in NZ Rugby that pay out a proportionate share of profits, they have purchased a proportion of revenue. This is not a normal investment, nor venture capital, it is a guaranteed payment regardless of profit status.
You are posting like you know more than everyone, and you have no clue as to the nature of the deal.
