South Africa

New Zealand Rugby asks players to take smaller cut of bigger pie amid $465m private equity standoff

New Zealand Rugby boss Mark Robinson on the Silver Lakes All Blacks deal. Video / Supplied

What continues to separate New Zealand Rugby from the New Zealand Rugby Players’ Association in their respective views about the Silver Lake proposal is their assessment of the potential risks and who carries them.

Under the terms of the Silver Lake deal, NZR is asking NZRPA to agree to take a smaller share of a potentially significantly larger pot of revenue.

The players currently receive 36.5 per cent of NZR’s revenue – known as the Player Payment Pool (PPP) which has averaged about $190m over the past five years.

NZR is pushing for that percentage figure to drop to between 30 and 32 per cent, but is forecasting that total revenue will jump to about $350m by 2025 if Silver Lake comes on board and will potentially rise again to somewhere close to $500m a year after that.

The players will be in line for a massive windfall if they agree to the deal in its current form and Silver Lake is able to make the transformational changes in annual revenue they are promising.

Both NZR and NZRPA agree that it is imperative that there is enough money available to keep salaries for the top New Zealand players competitive and for the country to continue to retain talent.

New Zealand Rugby Players' Association boss Rob Nichol. Photo / Photosport
New Zealand Rugby Players’ Association boss Rob Nichol. Photo / Photosport

But NZRPA holds a different view to NZR about the level of risk attached to the proposal and it is this issue which will need to be resolved in continued mediation discussions planned for this week.

Silver Lake is yet to put detail around its revenue growth plans. It has made ambitious forecasts based on broad concepts that effectively boil down to monetising an offshore All Blacks fan base it believes could be as large as 65 million.

NZRPA is not anti-Silver Lake per se or dismissive of its ability to make the money it says it can but needs to see more detail to have greater confidence.

The players’ body also wants to have greater understanding about how NZR can mitigate against the risk of the deal not generating as much income as has been forecast.

The proposal is for NZR to sell 15 per cent of its future revenue but to continue to be responsible for 100 per cent of the costs of running the game.

If growth is not as high as forecast, NZR could find itself with less, not more money as it will only have an 85 per cent share of future income yet still be responsible to meet the fixed costs of playing players and provincial unions.

The fear is that if the revenue growth comes up short, NZR could be forced to sell more assets to be bailed out.

New Zealand Rugby chief executive Mark Robinson. Photo / Photosport
New Zealand Rugby chief executive Mark Robinson. Photo / Photosport

NZRPA could negotiate to protect the professional players against the downside, by inserting clauses that will require NZR to meet its agreed obligations to the PPP.

But doing so would endanger the funding available to other parts of the game and ultimately prove catastrophic for everyone.

The two bodies, who spent Wednesday locked in mediation talks, are in fact more aligned than has been portrayed.

They are agreed about the need to inject more capital into the game and find a way to utilise it to help grow and nurture the community game.

They need, however, to find a way to mitigate the potential risks in such a way that doesn’t force a larger sell off or assets or endanger future investment in the grassroots.

Show More

Related Articles

Back to top button