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Counties Manukau Rugby and its clubs could be set for a significant windfall with the long-touted investment deal from Silver Lake getting the crucial support of the New Zealand Rugby Players’ Association.

The NZRPA today approved a partnership between global investment outfit Silver Lake, New Zealand Rugby and NZRPA, which paves the way forward for a $200m investment by Silver Lake that will help fund the grassroots portion of the sport.

Under the terms of the agreement, which remains subject to ratification by the Provincial Unions and Māori Rugby Board, Silver Lake would invest NZD $200 million in a new commercial entity that will house all revenue-generating assets of NZR, with additional co-investment of up to NZD $100 million to be offered to New Zealand-based institutional investors later in 2022. Silver Lake, NZR and NZRPA will also establish “Global Rugby Opportunities” to invest together in rugby-related businesses outside of New Zealand.

The CMRFU board is expected to review the detail of the latest proposal when it meets next week and chairman Craig Carter said it was important to understand what today’s announcement means for the grassroots game and the Union’s clubs.

“We need to work through the details of the proposal but there’s certainly the potential for this to be a watershed deal for the grassroots game in this country for the long-term,” he said.

“We will certainly be looking to share more information with our stakeholders in the coming weeks before any ratification takes place.”

Mark Robinson, NZR CEO said: “This partnership presents rugby with an extraordinary opportunity to secure its future and unleash its true potential. We are truly excited by what we can achieve together with Silver Lake’s world class capabilities: from fostering and growing our grassroots, to enhancing the experiences we can create for New Zealanders, and truly maximising our potential on the global stage.”

Rob Nichol, NZRPA CEO also cemented the NZRPA’s support: “NZRPA is excited for this partnership and what it means for the future of rugby. It addresses our fundamental principles—ensuring a true comprehensive partnership, allowing us to invest together in rugby globally, and establishing the right governance models. Silver Lake have shown great integrity and a commitment to getting the right deal in place.  They were willing to listen to everyone and understand what rugby means to people in our country.  We are confident that Silver Lake is the right investment partner.”

In summary, the partnership agreement comprises the following components subject to necessary approvals:

• Establishes NZR CommercialCo under the control of NZR that will contain all the revenue-generating activities of NZR.
• Silver Lake invests NZD $200 million into NZR CommercialCo at an NZD $3.5 billion valuation in the form of a perpetual convertible security at a low interest rate, which can convert into ordinary equity after three years.
• Later in 2022, an additional co-investment will be offered to New Zealand-based institutional investors so that domestic capital can have the opportunity to also participate in the investment. A minimum of NZD $62.5 million will be offered, with the potential to seek up to NZD $100 million if parties agree. Silver Lake will underwrite this institutional syndication if it is not fully subscribed.
• 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) vs. the 10-15% stake that had been previously proposed.
• An increase in valuation compared with the prior proposal driven by the improved future financial outlook from broadcasting and sponsorship, resulting in NZR raising a substantial amount of money whilst selling a smaller share of the entity, allowing NZR to fund all its investment needs and putting the game on a sound financial footing for the future.
• Silver Lake, NZR and NZRPA will through “Global Rugby Opportunities” (GRO) together invest in global rugby and rugby-related technology businesses, earning NZR and NZRPA a 15% share of the profits of GRO (split 50/50) in return for their contribution of sports expertise, know-how and relationships.

Under this partnership, the protections and controls for NZR remain in place as previously agreed.  Silver Lake would be a minority investor and NZR will retain full control over rugby as well as the commercial strategy. The new NZR CommercialCo entity board will be controlled by NZR and will comprise a new independent chair, and other independent directors, to assure high governance standards and at the same time business acumen to make NZR CommercialCo a success for everyone interested in rugby in New Zealand.

The NZRPA will have a seat on the NZR CommercialCo board.

Separately and subject to ratification, NZR and NZRPA have agreed terms for a new collective agreement which continues the current revenue sharing arrangement and governs the new relationship between NZR, the players, and NZR CommercialCo.

Further, NZR will undertake an independent review of its governance structures and processes to ensure it is fit-for-purpose for this new chapter. NZRPA will also be reviewing its constitution and governance structures in 2022 as part of a strategic and business planning process it is undertaking.