Rob Morrison, the Wellington Phoenix chairman has warned the country’s top rugby players may ultimately do harm to the game if they prevent a deal between New Zealand Rugby and Silver Lake.
This week Australian Professional Leagues (APL), the company behind the men’s and women’s A-League, signed a deal with Silver Lake that will see the US private equity firm take a 30 per cent stake in return for A$130 million.
The move adds Australia’s professional football to Silver Lake’s portfolio of sports, which includes investments in UFC and the Manchester City Football Club.
So far though, Silver Lake has been unable to reach a deal with New Zealand Rugby.
Initially reaching an agreement for Silver Lake to buy a 12.5 per cent stake in a new commercial company for $387.5m, the country’s provincial unions unanimously supported the deal, but the body that represents the country’s professional players, the New Zealand Rugby Players Association, has refused to back the deal.
In September there were reports that NZ Rugby and the players association was in talks over a deal to sell 7.5 per cent for $300m. This week, New Zealand Rugby committed to exploring alternative deals, which include raising capital from institutional investors, possibly underwritten by Silver Lake.
Previously, NZRPA has raised the possibility of a public float of NZ Rugby’s commercial business. Now, it appears NZRPA chairman David Kirk is favouring targeting institutional investors, such as ACC, the Super Fund or KiwiSaver funds, for the money.
But Morrison, who also chairs Morrison & Co, a specialist investor with more than $20 billion under management, told the Herald that the other options being put forward by the players did not offer the benefits that Silver Lake would bring.
“Personally, I think they’re missing an enormous opportunity if they don’t close that deal,” Morrison said.
“It sounds like the players are saying they want to go down either an IPO route or an institutional fundraise, and I look at it and go ‘most institutions would never get their minds around the valuation that Silver Lake’s prepared to put on a business, but even if they could, where’s the expertise going to come from that’s actually going to drive that product?”
Silver Lake’s investment in Australian football appears to target improving its digital platform in a bid to raise the profile and ultimately, the value, of the game, rather than a cash injection to the clubs.
“I think from the rugby union’s point of view, they know that the New Zealand market is limited, the growth has to come internationally. So if you can partner with someone like Silver Lake to grow your business globally, that’s got to be a big, big plus,” he said.
Morrison pointed to the massive investment CVC, another private equity firm, put into the Six Nations Championship as a risk to what could happen if no deal was done locally.
“I think this is the irony of the players wanting to stop the Silver Lake deal, is that if you look at the 6 Nations, CVC put £365 million into it to grow it. That’s what you’re competing against.
“If New Zealand continues to lose players to the wealth that’s so transparent in the UK and France, it’s ultimately only going to diminish our game here which will ultimately result in lower wages and less being invested in terms of growing the game here.
“So it’s sort of counterintuitive from a player point of view that they would argue against this sort of investment coming in.”
A-League clubs were kept informed of progress towards the Silver Lake deal.
Morrison said he understood about 30 private equity (PE) and venture capital (VC) firms had sought presentations about investing in the A League, and a number of firms submitted bids close to that of Silver Lake.
Silver Lake offered value to the league beyond just money.
“I think the thing that Silver Lake’s going to bring is its ability to generate more eyeballs, generate more revenue out of streaming products, differentiating, I guess the product that is the A League.”
The A-League had suffered from a lack of investment in the 15 years that it was part of Football Australia, with the separation completed at the end of 2020.
“Silver Lake looks at it and they go, you’ve got all the establishment there, you’ve got the club there, you’ve got a product there, you’ve got a huge potential player base and supporter base in terms of football in Australia, and obviously the links into the global game, but no one’s investing, and we can help with that.”
Reports from across the Tasman have suggested that the clubs could have cash distributed to them from the deal, or that it could provide funds to support the recruitment of “marquee players”.
Morrison said he was aware of the reports, but did not think it would be the case.
“It certainly won’t be distributed to clubs. It is very much about technology build. The marquee player thing? I’ve seen it reported … [but] nothing’s come to the clubs that would be the case. Personally I don’t think it’s the way we should run on it,” he said.
“I don’t look at this deal and go ‘this is about the clubs getting a cheque tomorrow’, it’s definitely not that, this is about investing in the future.”
The benefits of the deal have been touted as investment in technology to help monetise the rights to the A-League in the future.
“The league is looking at it as money that the league will invest into their technology platform which will be built around streaming content and aggregation of content that we can distribute to the football community.
“The way sport is evolving is you’ve got a younger audience who are sitting there saying ‘I don’t want to watch a whole game’, but I’m very happy to take streaming product, I’m happy to take smaller clips, and I really want to do it in a way that’s a little bit different.”
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