- By Benjamin Harrison
The All Blacks have long been synonymous with sporting supremacy, seemingly dominating the international rugby landscape for the best part of the last century. Notwithstanding their recent ‘blips’ in form, they have been viewed as the standard bearers; picking up 3 World Cups out of a possible 9, whilst accumulating a win percentage of just under 80%.
This sustained on-field dominance has led to the formation of a truly global brand, and has left their closest rivals; England, Australia, South Africa and Ireland trailing, from a commercial perspective, in their path. Brand Finance, a British Consultancy group, valued the All Blacks at a figure of £144m, making them the most-valuable brand in rugby, and by some distance too. When AIG became the All Blacks’ first ever Front of Shirt sponsor in 2012 (a partnership which still stands today), it exemplified not only the pulling power of the All Blacks brand, but also how multinational companies were starting to recognise the power of the All Blacks as a promotional marketing vehicle. The partnership was symbolic of rugby’s ever-growing importance on the global stage.
Taking all this into consideration, the news that broke on 6th November stating that New Zealand Rugby (NZR) are exploring private equity investment in order to raise funds may have come as a surprise to many. Why does the most valuable and recognisable team in rugby have to resort to selling itself to the highest bidder?
The most obvious answer to this is the Coronavirus pandemic, which has undoubtedly had and, will continue to have, a profound negative impact on the sporting landscape. The pandemic’s impact on the three main revenue streams for sporting entities; broadcasting, commercial and match day revenue has been significant, with many franchises witnessing substantial reductions in revenue. Manchester United, a global sporting giant, for example recently announced a loss of £70m in revenue attributed to the impacts of the pandemic, equating to a staggering 19% reduction in comparison to last year.
The devastating financial impact of COVID-19 has been felt globally, and the All Blacks have been no exception to this. Put simply, perhaps the rumours and interest in obtaining private equity investment are merely a means to survive. New Zealand Rugby’s chief executive, Mark Robinson, announced last week that the NZR had spent 47% of its cash reserves in order to ‘get through’ the financial implications caused by the pandemic. The NZR model of ‘central contracts’, where players, primarily All Black representatives, are contracted to the union rather than the clubs they represent has exacerbated the impact. Unlike nations such as England and France, the NZR has had to bear the full consequences of the pandemic and continue to pay out large sums in wages, whereas elsewhere these cost-bearing actions are evenly spread out across all the participating clubs. The southern hemisphere nations (New Zealand, Australia, and South Africa), have always been envious of the lure of the northern hemisphere from a commercial viewpoint (South Africa was rumoured to be prepared to walk away from the Rugby Championship to join the six Nations), and more specifically television contracts, and perhaps this financial gap and vulnerability has become apparent more than ever off the back of this news.
Although undoubtedly the COVID-19 pandemic has caused sporting teams to think unconventionally in order to raise new income streams, those who have been keeping tabs with the commercial landscape of rugby, may not be surprised to hear that the All Blacks are exploring investment. After all, leading private equity group, CVC, have already been readily exploring the rugby market and have invested heavily in the Gallagher Premiership and Guinness Pro14 in the Northern Hemisphere. From this perspective, it makes sense commercially that the All Blacks are the next rugby brand that investors are casting their eyes towards.
As I alluded to earlier, the All Blacks are by far the most powerful brand in rugby, and therefore undoubtedly they would be viewed as an attractive proposition by investors. Rugby, as a whole, is viewed as an ‘unpolished diamond’, with huge scope for growth across the globe. A quick look at Rugby Union’s exponential growth over in America suggests that the sport is close to exploding in terms of popularity. With rumours circulating that rugby is exploring ways to become increasingly globalised and more accessible for the masses, maybe this step by the All Blacks is to ensure that they are adequately represented at the negotiating table when the inevitable next shake-up of international rugby occurs (speculation of aligning the Northern and Southern Hemisphere rugby calendars) and new television contracts are agreed.
All in all, COVID19 has without doubt sped up the necessity for sporting teams, including the All Blacks, to explore new, unconventional methods of generating capital. Whilst, this could be viewed as a solution to the short-term financial problems caused by the pandemic, rugby has been going through transition to become more global and commercialised for some time. Therefore, in my opinion it should be of no surprise that investment groups such as CVC, are turning their attention to the ‘crown jewel’ of international rugby, and have been convinced of the scope for growth within the sport, with the All Blacks being at the forefront of this change.