Would you buy the All Blacks?

With 115 years of rugby history behind them, the All Blacks are up for sale. As they put it in the UK media:Yes, those All Blacks: not just one of the most successful and famous teams in the world, but a culture and tradition, a heritage and a lineage.” 

NZ Rugby has voted to sell off 12.5% of the All Blacks to US private equity firm Silver Lake, a move strongly opposed by the NZ Rugby Players’ Association. Covid has wreaked havoc on NZ Rugby’s finances, as it has with many other sports organisations globally – and PE is seizing the opportunity. With negotiations also ongoing on a replacement sponsor for US insurance giant AIG, NZR needs cash.

What value does Silver Lake get out of the deal? They would add their All Blacks stake to their portfolio, along with a 10% stake in Manchester City and a significant stake in the Ultimate Fighting Championship. According to Pitchbook analysis of the investment thesis behind this PE trend, Silver Lake made their name in tech buyouts and invest heavily in deals focused on media rights representation, league ownership, or team ownership.

The All Blacks deal is attractive to Silver Lake for several key reasons:

  • Scarcity: there are a limited number of globally recognised teams, with no real worries about new entrants to the market. Great portfolio diversification, with strong price upsell potential next time.
  • Media rights: sports is the ultimate content-generating machine, particularly with the move to on-demand and streaming services. 
  • Timing: NZ Rugby needs cash, Silver Lake have a $20b war chest for their latest fund, and the All Blacks deal will be at a discount. Bargain. 
  • NFTs: potential opportunities to move into non-fungible tokens as the NBA have done. In 5 months Top Shot have 800k users with $500m in sales. Developers Dapper Labs have just raised a $350m early-stage round at $2.2b pre-money valuation, and there’s huge potential in this area.

This is an interesting moment in time for NZ sport. Let’s see how much influence the NZ Rugby Players Association actually has.