This is interesting....

Unshackled: New Zealand Rugby puts perpetual licences on the table for franchises

Robert van Royen
Mar 04 2021

New Zealand Rugby (NZR) has put perpetual licences with fewer restrictions on the table, opening the door for new investment and commercial opportunities for cash-strapped franchises.

The Crusaders, having banded together with the four other franchises, last week became the first to sign off the new licence, which essentially secures their future in Super Rugby, and gives them more off-field control than in the past.

Consultation remains ongoing at the remaining four franchises, including the Chiefs, who chief executive Michael Collins confirmed would work through it with their investors and board in the coming weeks.

“It is really, really positive but it's taken a long time. There's really good things just around the corner, I believe.” Collins said.

Delayed by the Covid-19 pandemic, the new model has been about two years in the making, and puts a welcome end to the old licencing model, which resulted in them expiring at the end of each broadcast deal.

“It was a marginal financial model and there's been quite a bit of tension around where certain commercial rights reside. Most clubs have made virtually no money for a decade, and the whole Super system at the club level has been break even for about a decade,” Crusaders chief executive Colin Mansbridge said.

“We [Super teams] said let’s see if we can change the model.”

One of the biggest gripes with the old model was the regular expiry, making it unattractive for private investors to commit. It didn’t stop some from coming on board with teams, but it’s understood they’ve long been frustrated by a lack of certainty and longevity.

“We need investors or shareholders to be able to be invested in something that's going to exist for a long period of time,” Mansbridge said.

Asked how much capital he’d like to raise, Mansbridge was reluctant to put a figure on it but said the potential for “tens of millions” of dollars was there.

There were other limitations under the old model. The new revenue source took more than a year of negotiating with NZR to get over the line, and came with many conditions.

“Those things, we would be able to do as a right, as long we don't bring the game into disrepute,” Mansbridge said.

Re-worked commercial rights will allow franchises to innovate and create revenue streams, while existing revenue streams will be re-directed to them from NZR, including advertising from virtual banners and space on jerseys. Should new rights be invented, they would default to the franchises.

“It's a fundamental break from survival mentality, where every broadcast deal you limp your way through to the end,” Mansbridge said.

NZR will continue to pay the wages of two coaches per team, and employ the players and second them to the Super sides. Everything else, including staff salaries/wages, the cost of hosting games and academy programmes, remains the franchise's responsibility.

The Kiwi teams will have an obligation to participate in Super Rugby. However, theoretically, they could compete elsewhere out of season, just not with NZR contracted players unless consented.

“I'm really excited by the commercial terms under the proposed new licence, and couple that with some really good opportunities around competitions and potential competitions, then I think it's going to put us into a real strong position moving forward,” Collins said.

The Crusaders have recruited PWC, who have done deals in the northern hemisphere, to seek potential investors and partners, some of whom have already been introduced. That said, Mansbridge doesn’t expect to have struck any deals before August.

“We do think the brand of the club and the core intellectual property will lead to some good partnerships. Again, not just about price, it’s not just about the cash, but also adding value to both organisations.”

Mansbridge confirmed the nature of the relationship going forward would be less guarantor and more equity holder.

The 11-times champions would also remain shareholder owned by the six provincial unions in their catchment, and any potential investors or partners coming on board would have to be given the green light by them.