Public ownership is back on the table: How the Silver Lake deal has taken a dramatic turn
PLUS: The Week That Was (feat. Quinton de Kock) and The Weekend That Will Be
American private equity giants Silver Lake remain committed to taking a stake in New Zealand Rugby, but the deal that emerges could be unrecognisable to that originally proposed - including the potential for a bond issue instead of equity, and public ownership of the All Blacks.
While the deal has stretched into one of the country’s most prolonged (and important) sporting sagas, The Bounce has learned that talks have taken a radical twist in the past month, particularly since the Players’ Association (NZRPA) and Silver Lake have started talking directly.
While the framework of the negotiations remains sensitive, it is understood that rather than have New Zealand Rugby relay the concerns of the NZRPA to Silver Lake, the latter two parties have actively engaged each other to find a way through what was threatening to become an impasse.
These talks are believed to have raised two distinct and intriguing possibilities.
Rather than buy a stake in New Zealand Rugby (via a subsidiary company that would handle all of NZR’s commercial arrangements), they could invest capital valued at five percent of the company through a bond issue, which could mature into equity if certain targets are met.
The other notable conversation is the potential for a public share offering of up to five percent of NZR’s valuation.
This idea was originally nixed by NZR but Silver Lake are thought to be attracted by the idea as it would give them an obvious exit strategy if needed and, also, it increases the branding and marketing potential of the All Blacks as the “people’s team”.
Silver Lake have never made their position public on any potential deal and a source familiar with the thinking of both NZR and NZRPA said there was still a lot to happen before anything was put in front of the board for signoff.
What it does call into question, however, is the merits of the original deal passed at this year’s AGM, which would have seen Silver Lake take a 12.5 percent stake in New Zealand Rugby based on a $3.1 billion valuation - a valuation that is understood to have increased significantly within the terms of the latest proposals.
At the time, the equity stake was sold to the 26 provincial unions and Maori Rugby (and the public) as not only the best, but the only, option.
According to sources, many of rugby’s auxiliary stakeholders, including talent management firms and broadcasters, are increasingly keen on a reshaped Silver Lake deal, believing PE could give the sport here a timely boost.
The negotiations are reaching the pointy end at a time when the world is seemingly awash with money that is looking for a home in sports, with PE firms believing the entire sector is under-capitalised and lacking the sort of capability they can offer.
This week, CVC Capital Partners made another enormous splash in the Sportotainment world. The Luxembourg-based private equity company, who once owned Formula One and are now heavily invested in European rugby and more recently Spanish football’s premier football competition La Liga - although glamour clubs Barcelona and real Madrid opposed the deal and opted out - took a stake in one of two Indian Premier League franchises available.
CVC bid US$692 million (just shy of NZ$1 billion) to place a franchise in Ahmedabad, home to the newly renovated Narendra Modi Stadium, which at 132,000 capacity, is the largest cricket stadium in the world. A second franchise, to be based in Lucknow, went for a whopping US$932 million.
Neither Silver Lake nor CVC started with the intention of using sport as big investment vehicles - Silver Lake started in the midst of the dotcom boom and tech was its focus - but it is a measure of how much growth they see available in the sector that they continue to invest with eye-popping numbers.
It’s also why Silver Lake is not going anywhere. A deal will be done.
THE WEEK THAT WAS
Telford Vice is a veteran South African cricket reporter. Because everything relating to South African cricket at this moment is racialised, it is worth noting he is white. He writes very well on all manner of cricket subjects but this piece on Quinton de Kock refusing to take a knee is right up there.
“De Kock has set himself apart from the majority of the community he purports to represent by playing for the national team. More than 80 percent of South Africans are black. De Kock is indicating, effectively, that he does not play for them. Who beyond overt and covert racists could celebrate that?”
Since publication, de Kock has issued an apology that even the cynic in me has to acknowledge hit all the right notes.
De Kock made a significant error of judgement, but it’s hard not to have some sympathy for the bind many South Africans feel. Whenever the subject of racial equality comes up, South Africa’s tortured history is inescapable. Many younger white South Africans, particularly Afikaners, rail against the idea that they have to prove to the world they are not racists; this generation feels they should not have to bear the burden of the sins of their forefathers.
Where we see a simple gesture for a racial equality, some of them see a loaded, politicised movement aimed at questioning their integrity.
That side of the equation is hellishly complex, but if you’re a cricket lover, you want to be watching a South African team with de Kock in it. He’s brilliant.
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IDEALLY, we as a society and sport as a sector will have no need for powerful stories like this by Adelaide United’s Josh Carvallo, because being a gay professional team sport athlete would not be cause for even the raising of an eyebrow. We’re not there yet, however, and and until we do then announcements like this remain a powerful way of letting young gay athletes know they’re not alone. Well played, Josh.
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IN AN increasingly commercialised world (see lead above), it can be hard for minority sports to get cut through, even ones with the global popularity of motocross. It would be remiss, however, not to mention the stellar efforts of Dunedin rider Courtney Duncan, who became a three-time world champion this week, after two podiums in the latest round in Italy. “What a feeling to do it three times in a row, with the same team, the same brand…it’s amazing - words don't describe it,” she said, describing it quite nicely in fact.
THE WEEKEND THAT WILL BE
Christian Cullen and Beauden Barrett are my two favourite all-time All Blacks. They might not be the greatest but they’re the two that compelled me to stop everything I was doing to watch in the hope they unleash a moment that makes your jaw fall to the floor. For that reason Barrett’s 100th test is appointment viewing. He might not be the best No10 in the country any more as I’m sure Richie Mo’unga fans would agree; he might not be the best fullback in the country, as his parents might even agree; and there’ll be Damian McKenzie fans that argue (tenuously) that he’s not even the best 10-15 combo back in the country, but he’s still capable of genius and as the Herald reports, his unconventional route to 100 is worth celebrating.
All Blacks v Wales, Cardiff, Sunday 5.15am, Sky Sport 1
There’s something a bit hinky in the ICC World T20 schedule that has New Zealand and India playing a must-win match two games in but here we are. Both lost their opening matches to Pakistan, India far more comprehensively, however the smart money remains with the subcontinent giants. New Zealand is not without hope. They’re India’s bogey team, but they have to find a way of getting more out of the powerplay on a Dubai wicket that should be easier to bat on.
India v New Zealand, World T20 Group B, Dubai, Monday 3am, Sky Sport 3
The tin-tops are back and I couldn’t be happier. When you spend the bulk of your formative years in New Plymouth there are certain elements of the place that seep into you and never leave (and thank god for that). To wit, there’ll always be a place in my heart for a hard-driving AC/DC riff, bourbon and watching Ford v Holden. I may even combine my enjoyment of the latter two tomorrow.
Supercars, Sydney, Race 20, tomorrow 9.10pm, Sky Sport 5
Cards on the table, UFC has never grabbed me and probably never will and the whole City Kickboxing woe-is-us carry on over lockdown rubbed me up the wrong way. However, Boru, a great mate of mine in Sydney who believes in UFOs and UFC with equal fervour, reckons I have to watch this fight. So I might.
Dan Hooker v Islam Makhachev, UFC 267, Abu Dhabi, Sunday 7am, Sky Now ($)
Misery loves company so what better EPL match to focus on than under pressure Spurs v the under-even-more-pressure Red Devils.
Tottenham v Manchester United, London, Sunday 5.30am, Spark Sport
If you read about the recent history of the Astros, it’s hard not to watch them win without vomiting a little in your mouth. On the positive side, they do have Dusty Baker, who has never won a World Series in a managerial career that started in 1993 (he won one as a player during a 19-year career), so that will be something… I guess? The best-of-seven series is locked at 1-1.
Houston Astros v Atlanta Braves, World Series Gm 3, Houston, tomorrow 1.09pm, ESPN
KANE WILLIAMSON HAT WINNER!
Thanks for all who have entered. We have drawn a winner, and are just waiting for that person to confirm. The winner will be unveiled on Instagram and in the next post on The Bounce.
