Silver Lake, the NZR stake & the media - a cautionary tale
NZ Rugby’s links to the US private equity giants were revealed 18 months ago. What seemed fait accompli instead became a schoolyard scrap - I had a ringside seat.
On May Day, 2021, Brent Impey appeared on Martin Devlin’s DRS show on NewstalkZB to sell the vision of Silver Lake buying a stake in New Zealand Rugby.
A very short time later the then-NZR chairman was back again, this time to rebut New Zealand Rugby Players’ Association boss Rob Nichol, who had appeared on the DRS following Impey.
It was call-and-response radio in which the man in the seat of power got not only the platform to state NZR’s case, but also the last word.
According to Devlin’s producer Thomas Harris, the feedback indicated that Impey had achieved cut-through. Listeners were overwhelmingly supportive of NZR’s position.
On the surface it was a public relations triumph.
It was much more complicated than that.
Impey tugged on the heartstrings of those with strong community rugby ties with rehearsed lines about toilet blocks at Weymouth Rugby Club, a nod to his South Auckland roots. He also prodded at a sense of outrage when he said “80 percent of [NZR revenue] gets spent on the professional players while 20 percent goes to the community game”, casually referencing the fact there were 270 professional players as opposed to 158,000 amateurs.
Impey, the former boss of Mediaworks, was on a roll. He remarked that the alternatives proposed by the Players’ Association through the commissioned BDO report was akin to a Masters dissertation - that being the Silver Lake deal endorsement from PwC - being marked up by a third former, or Y9 in today’s money.
“That’s how pathetic the recommendations that are coming from the Players’ Association are,” he said. The players, he urged, would be scoring the biggest own goal in history if they failed to sign off on the deal.
Administrative squabbles are normally dry affairs but this was captivating. It was great radio. Unlike the interview with Nichol, no master of the soundbite, the affable Impey’s back-and-forth with Devlin came across like a chat between two old mates.
Clubbies from Weymouth weren’t the only ones listening, however.
So were a whole bunch of All Blacks of the recent past and present who were less enamoured of the idea that the chairman of the organisation they had bled for was casting them as something close to grasping.
If you’re looking for the flashpoint; the singular moment when a deal worth close to $400 million was taken - even if temporarily - off the table of an organisation who desperately wanted it, this was it.
As one source familiar with key personnel on both sides of the debate said: “For 25 years they [NZR and the NZRPA] had a relationship that was the envy of the sporting world and they blew it up in 10 minutes.”
As the reporter that broke the original story of the potential Silver Lake-NZR partnership, it seemed like a sudden and inexplicable turn of events.
An NZR source conceded the above interview was a “lightning rod” that galvanised both groundswell support for the deal and high-profile opposition, but it turns out the collapse between the NZR and the NZRPA, perhaps the first genuine breakdown since a spat over participation bonuses at the 2003 Rugby World Cup, was a long time coming.
In fact, Impey is said to have felt compelled to fire his shots because he believed the NZRPA were trying to deceive stakeholders.
The Bounce has spoken at length with parties on all sides of the equation as to what led up to the split, what the fallout was, the role the media played and what comes next.
The word those familiar with the discussions keep coming back to was “misinformation”. Both sides, it seems, believe the other was using it as a tool.
The players, led by Nichol and chairman David Kirk, the former All Black captain and Rhodes Scholar, believe NZR was guilty of using it when selling Silver Lake to the 26 provincial unions and Maori Rugby.
NZR, led by Impey and CEO Mark Robinson, a former All Black and Cambridge scholar, certainly believe Kirk and Nichol were using it in “leaks” to the media and in calls with former players.
(It bears emphasising that historically NZR’s attitude to anything that has run contrary to their preferred narrative has been branded misinformation. One senior NZR man admitted to The Bounce that the “Kremlin” nickname was well earned, but that under Robinson they had made a concerted effort to be more transparent with the media and, by extension, the public.)
If you believe the NZR, the need to get the Silver Lake deal over the line was existential.
Rugby’s business model in the southern hemisphere was broken and although the All Blacks brand was the most valuable in world rugby the fragile Sanzaar alliance was not delivering results either through its unwieldy franchise competition, Super Rugby, or the flagship annual Rugby Championship tournament.
NZR had to find new ways of sourcing capital. Under the leadership of Steve Tew they started investigating private equity but couldn’t get anything to stick. Then investment bank Jefferies, whose head of global equity sales Matt Foulds was Robinson’s Cambridge rugby captain, came on board and suggested putting all their assets on the table.
Clearly what Jefferies was pitching - a 12.5 percent stake in the game through a subsidiary company that managed all the commercial elements - was attractive to Silver Lake, an equity firm with a technology bent that had branched out to sports and entertainment, most notably through stakes in mixed martial arts phenomenon UFC, football’s nouveau riche Manchester City and the Madison Square Garden Company that has the blue chip NBA and NHL franchises New York Knicks and New York Rangers in their portfolio.
Equally, what Silver Lake had was attractive to NZR: capital and, more nebulously, capability to turn the All Blacks brand power into cash money.
NZR was selling the concept as a win-win. The NZRPA saw a sugar hit that could turn into a win-loss as they raised a number of questions around sovereignty, the inherent financial risks associated with private equity, the potential for competing interests and what they saw as a lack of due diligence over alternative capital sources.
(NZR denies this, saying Jefferies “exhaustively” looked at all options).
While the Players’ Association might be a singular union, its constituents are a disparate collection of athletes from different socio-economic backgrounds, ethnicities and sensibilities.
Some could have cared less about a private equity deal; others at first glance probably thought it was an expedient solution to the age-old problem of being able to compete with the monied clubs in the northern hemisphere. The NZR will privately say they had received tacit support from many high-profile players to proceed with the deal.
Others would have had concerns, particularly around custodian versus ownership issues. All Blacks are indoctrinated with the mantra that they are guardians rather than keepers of the jersey, and selling a chunk of that jersey overseas, no matter how simplistic or even misinformed that idea is, ran counter to that ethos.
Mostly though, they’re young men who have spent their life trying to perfect arts such as the spiral pass, the left-foot step and the ball-and-all tackle while leaving the running of the sport to others.
Lately there had even been chatter that the Players’ Association - or more particularly the Collective Agreement between the NZR and the NZRPA that framed all aspects of the professional game - was beginning to lose its allure with a younger generation of players who wanted more control over their personal brands.
Even if there was a smidgen of truth in that, many saw that Impey had reached beyond an attack on Nichol and the organisation he headed, to attack the avarice of players themselves.
Now they were queuing up to have a pop at the deal. Richie McCaw, an adventure-racing friend of Nichol who had also stuck his head into dangerous places for his country during 148 different tests while avoiding saying anything remotely controversial, ever, went on the record expressing doubts.
Conrad Smith and Kieran Read, with more than 200 test caps between them, joined the fray.
A source said that as long as the players’ motives were questioned the NZRPA suddenly had enough volunteers continue to speak publicly for weeks on end if needed.
Mercifully, quiet descended.
On the one hand, Impey had done what he set out to do, selling the vision of a post-Silver Lake utopia in which struggling grassroots clubs around the country transformed into castles on the hill, the new paint shimmering in the sun to attract the next cohort of future stars.
On the other, however, he’d swiftly alienated the one stakeholder with the potential to throw dirt in the paint pot.
The use of the media, it was now obvious, would be a complex dynamic.
FORMER Golden State Warriors beatman Ethan Strauss recently started his House of Strauss newsletter on this same platform. His opening salvo had one paragraph that felt familiar.
“I dislike how much of the game behind the game is shielded from readers,” Strauss wrote about the NBA’s behind-the-scenes politicking. “For example, Creative Artists Agency (CAA) happens to represent key media personalities at ESPN NBA... When you combine that nugget with knowledge of CAA’s influence over the New York Knicks (GM Leon Rose is a former CAA superagent, coach Tom Thibodeau is a CAA client), ESPN’s reports of Zion Williamson (CAA client) having an interest in joining the Knicks gets put in a different light. The way it’s presented to the consumer is the mere reporting on a rising star in New Orleans wanting to play in New York. You’re not supposed to know that ESPN wants this to happen because ESPN is CAA and CAA is ESPN, which means that CAA is the Knicks, meaning that the Knicks are ESPN. You’re not supposed to know that this factors heavily into why New Orleans is shit out of luck, gumbo and jazz music be damned. In many ways, the agencies run the NBA. The media that they use to execute their messaging is making the principals seem peripheral. So often, the story of a trade or free agency signing is told absent mention of its true author.”
While there is nothing quite as back-door as that happening with NZR, the Players’ Association and the media, it pays to know some of the relationships at play. When you are armed with that knowledge, you get a better idea of how some stories are framed.
For ESPN and CAA, read NZR and Sky.
When you’re watching a Sky rugby show, you’re watching NZR in-house TV. In essence, it’s Россия covering the Politburo. Sky are not only broadcasters of the national game, they are broadcast “partners”. More than that, NZR has an equity stake in Sky as part of the estimated $400 million, five-year deal struck in 2019.
(The stake has been diluted from 5 percent to about 1.5 percent after the broadcaster last year announced a $157m rights issue which NZR declined to invest in.)
At the time, NZR then-CEO Steve Tew trumpeted the move: “For rugby in New Zealand, this is a hugely significant agreement that secures the long-term financial health of our game.”
It didn’t, Covid be damned, but it did secure continued editorial compliance.
Sky is the best broadcast producer of rugby matches on the planet, their match coverage unparalleled. However, it’s tackling of the myriad issues surrounding rugby is pallid by comparison and lacking journalistic heft. Multiple Sky sources have said there is an unwritten rule that governs their coverage: the New Zealand game, and the running of it, is to be shown in a positive light.
It’s why when Sir John Kirwan called for Nichol’s head during the Silver Lake imbroglio you could be forgiven for thinking the former Blues coach was reading from the Party manifesto. Kirwan has shown himself to be his own man, but would he have enjoyed the same freedom to use the platform of a Sky TV show to call for Impey’s resignation, or Robinson’s, if he felt it was the NZR’s position that was irresponsible?
It was not just Sky that was compromised, however. This author was working at NZME* as sports editor-at-large for the Herald titles and for perhaps the only time in my 17 years under those mastheads felt genuine doubts as to whether the first rule of journalism - without fear or favour - was being applied.
Extraordinary measures were being taken to avoid offending NZR, an organisation that has an extraordinarily low bar for taking offence (the mere mention of the name Chris Rattue around NZR HQ used to have staff breaking out in hives).
A colleague was leaked a critical source document and before he had even hit the first keystroke on the story was contacted by the NZR communications department asking if he wanted “help” with what he was writing.
In the end a 200-word response was posted alongside his exclusive in what served only as a real-time dimunition of his work.
I put together a clearly marked opinion piece critical of NZR’s apparent strategy of buying off financially stricken provincial unions and using it as a key plank of their sales pitch to the public. The column was sent to NZR for a response prior to publication, the first time that has happened to me despite having in the past written far more critically about New Zealand Cricket, the New Zealand Olympic Committee, Sport New Zealand, High Performance Sport New Zealand or any number of organisations big enough to fight their own battles.
Another colleague’s column was “killed” - in other words removed entirely from the system post-publication.
A fat paragraph was trimmed from one story that outlined one of Silver Lake’s less wholesome investments.
All these things taken in isolation were perhaps defensible, but when you combine it with Impey’s wireless tour that included a primetime interview with Mike Hosking where you would swear the questions had been written by NZR, then you were left with the distinct impression that Sky was not the only outlet doing the national body’s bidding.
When you also learn that Sky - which, remember, is NZR - was dangling the audio rights to rugby around that time, and that NZME wanted them (having lost cricket to Mediaworks a year earlier and with a new player SENZ readying to enter the market), it left some Herald sports staff, including myself, feeling that their ability to do their job properly had been compromised**.
(In the interests of balance it is important to note that key people within NZR have an almost 180-degree different view. They believe the Herald has been censorious when it comes to evaluating their performance and if anything has been done to redress that balance it has been long overdue.)
Even after analysing all the ins and outs, the different declarations and motivations, the fact remains that selling a stake of the national game is one the biggest New Zealand sports stories of our lifetimes. Once it’s gone it is gone - and forever is a long time.
The media’s role in this is critical. It cannot allow the debate to devolve to lowest-common-denominator narratives like “NZR are going to sell the haka” and “the players are greedy”.
It has to apply the blowtorch to NZR and the NZRPA; to Robinson and Stewart Mitchell (Impey’s replacement), and to Nichol and Kirk.
It is not the media’s role to trust NZR on this, nor to take every critique of the Players’ Association at face value.
Anything less than intense scrutiny would be failing the sport and the industry. It cannot be left to Brian Gaynor to ask the right questions.
It is also imperative that fans understand how sports rights can be used in a media landscape increasingly reliant upon the concept of “content”, particularly when traditional publishing media is now also in the business of video and radio.
It might be that when all is said and done, Silver Lake is the answer to many of the troubling questions facing rugby and, in particular, southern hemisphere rugby.
If you had to wager, it’d be sensible to back the odds of a slightly modified Silver Lake deal eventually getting over the line, but if rugby really is a game for all New Zealanders then all New Zealanders should know all the options - not just the most expedient one.
The players and the NZR have gone quiet on negotiations now - a radio silence, if you’ll excuse the pun, that might have been useful a few months ago. Both have a fit-for-purpose line regarding continuing conversations around options and opportunities in the space.
It is “inching forward” in the words of one source.
For a deal this big and this groundbreaking, that’s a sensible pace to proceed at.
* For the uninitiated, NZME is the rebranded APN, the owners of the New Zealand Herald, after it bought out The Radio Network in 2014. NewstalkZB and the now defunct Radio Sport are/ were news outlets and rights bidders.
** There is no pleasure to be had writing that because the opportunities and latitude afforded to me by editors under the Herald mastheads from 2004 until the day I left were remarkable, as was their backing of me during difficult stories, which is why this brief moment in time was so personally disorienting.
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