NZ Rugby has released its financial result, and it isn't great.
The organisation has reported a deficit of almost $20 million.
NZ Herald rugby writer Gregor Paul has taken a look at the numbers and he thinks they prove that the Silver Lake deal was a bad call. He explained why to D'Arcy Waldegrave on Sportstalk.
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Episode Transcript
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Speaker 1 (00:06):
You're listening to the Sports Talk podcast with Darcy Wildergrave
from News Talk ZEDB.
Speaker 2 (00:12):
We now go to my old mate Gregor Paul rugby
writer out of the New Zealand The Herald, to look
at a similar issue, to look at the money going
out and coming into in Zenda, as revealed today by
in Zider. He joins us now at seven twenty one.
Speaker 3 (00:34):
Good ay, Gregor, Oh, Darcy, crazy story today or crazy
story in the fact that they may have lost nineteen
and a half million dollars, but they did bill for
two and eighty five million dollars, So it's a good
news and a bad news story.
Speaker 4 (00:49):
Right, Well, no, it's a bad news story. I like
the fact that they made or generated two hundred and
eighty five million dollars a revenue is being overplayed as
a source of good news in my view. Look, that's
that is a good figure, don't get me wrong. However,
(01:10):
we've got to go and contrast and compare it with
previous numbers, pre Silver Lake, New Zealand Rugby's equity partner
coming into the business in twenty twenty two. Because the
reason that they came in and we're given the chance
to invest was because they were going to make these
transformational shifts in revenue. So we were sold this idea
(01:31):
that revenue would climb in excess of I think the
initial forecast had revenue way in excess to three hundred
million by twenty twenty four, and it was two hundred
and eighty five, which is only I think off the
top of my head, I can't remember now. I think
it's about twelve percent increase on last year. But when
you look at where that increase came from, the majority
(01:54):
of it actually came from interest payments that New Zealand
Rugby received as a result of having Silver Lake's money
in the bank. So the biggest growth of revenue was interest.
Now that's not a great story when you get down
to it, and that is not fitting in with a
picture that we were sold three years ago. So I
(02:16):
don't think it's good news bad news. I think it's
bad news bad news.
Speaker 2 (02:21):
Extrapolate this as far as Silver Lakes engagement, what they
actually bring, what they've done, if anything, What do we
learn about their involvement in this through these results.
Speaker 4 (02:32):
Well, I'll make this answer very short. The answer to
what have they brought? Nothing? You know, that's that's The
sad part here, this is the warning that people like
me and a few others who weren't seduced by private
equities sales pitch always said was that they don't bring capability.
They're not they're not rugby people, per see, they don't
(02:54):
have a magic wand they don't actually have the answers
to the problems that New Zealand Rugby thinks that it has.
And if you if you look at it, you go, well, okay.
The revenue model that New Zealand Rugby presented today is
no different to the one that they've been following for
the last thirty years of professionalism. So they made their
(03:16):
money out of selling media rights, sponsorships and match day revenues,
which is what they've been doing forever. They played a
few games offshore and then the USA and Japan last year,
but they've been doing that for the last ten or
fifteen years as well. So there's nothing new in what
silver Lake have brought to the table. They haven't changed
anything except for the fact that they've parked money in
(03:39):
New Zealand's bank account. But of course as much as
you know New Zealand is benefiting from that, they also
have to pay interest on that loan. So we're in
a sort of truly ridiculous position where New Zealand banks
twelve million in interest or fourteen million in interest, but
has to pay twelve million back in interest to silver Lake.
(04:00):
And I am honestly thinking if an eight year old
came up with us as a financial model in a
primary school project, you would smile nicely and try and
redirect them into coming up with a better idea.
Speaker 2 (04:11):
Talking about silver Lake. Back in the day when this occurred,
I distinct they're a members saying, hey, this is Shakespeare,
this is Merchant of Venice, and Silverlake are Shylock, and
they will get their pound of flesh. Don't you worry.
They're in this for money, They're not in this for
the goodness of rugby. And you talked about people are
being seduced by that concept and it did work, which
(04:33):
brings me to my next point around this. When you
look at their NZR plus, which is probably part of
this brave new world of silver Lake, which appears to
have not made a great deal of money, if any,
it's costing them a fortune. How long is their piece
of rope? How long before a group that are a
(04:53):
rugby organization who really should stick to rugby, stick to
their knitting. Realize they're not broadcasters, they can't make content
and maybe their upcoming agreement with Sky has to work
along that track. They're spreading themselves to thin. This is
not what they do, right.
Speaker 4 (05:10):
Oh, I couldn't agree with you more, Darcy. That's absolutely right.
It is a staggering amount of money and for people
like you and either work in the media industry not
I'm not being facetious, I'm being absolutely genuine. When you
start to think about twelve million dollars got invested in
NZR plus last year. Now you start to think what
(05:32):
twelve million dollars would feel like coming into the Herald's
newsroom or ZIB's newsroom, and what you'll be able to
do with that money, because we're currently living in an
existential crisis as media people. And you look at that
and go, wow, if we had that amount of money,
the results could be extraordinary with what we could do.
And then you look at New Zealand Rugby and go
to your point, they're not broadcast people, so they look
(05:56):
at so they've got execs who have got literally no
idea what they are talking about. In the space in
my view, and they say things, oh, we've got you know,
one billion views on you Tube, and I go, whoopoy,
do you've probably got You could put an all black
Hakker video and maybe a best of highlight highlights package,
and I guarantee you you'd probably get similar results. When
(06:19):
we've got social media influencers who on you know, around
the world, people going off to restaurants and tourism landmarks,
and they produce TikTok videos and these guys are probably
spending low hundreds of thousands on their content production and
driving millions of dollars back and winning literally tens of
millions of followers. So you start comparing and contrasting how
(06:43):
you build an audience with the budget that they've put
at this and there's no way can you tell me
that this is a good return on investment. And you know,
to your point, how long can they keep going? Not
one more day? If I'm the New Zealand Rugby board,
I think you've got to slash that budget by at
least ten million and say here's two million dollars. And
(07:04):
even that is wildly generous for an organization that simply
doesn't know what it's doing.
Speaker 1 (07:11):
For more from sports talk, listen live to news talks.
It'd be from seven pm weekdays, or follow the podcast
on iHeartRadio
You're listening to the Sports Talk podcast with Darcy Wildergrave
from News Talk ZEDB.
Speaker 2 (00:12):
We now go to my old mate Gregor Paul rugby
writer out of the New Zealand The Herald, to look
at a similar issue, to look at the money going
out and coming into in Zenda, as revealed today by
in Zider. He joins us now at seven twenty one.
Speaker 3 (00:34):
Good ay, Gregor, Oh, Darcy, crazy story today or crazy
story in the fact that they may have lost nineteen
and a half million dollars, but they did bill for
two and eighty five million dollars, So it's a good
news and a bad news story.
Speaker 4 (00:49):
Right, Well, no, it's a bad news story. I like
the fact that they made or generated two hundred and
eighty five million dollars a revenue is being overplayed as
a source of good news in my view. Look, that's
that is a good figure, don't get me wrong. However,
(01:10):
we've got to go and contrast and compare it with
previous numbers, pre Silver Lake, New Zealand Rugby's equity partner
coming into the business in twenty twenty two. Because the
reason that they came in and we're given the chance
to invest was because they were going to make these
transformational shifts in revenue. So we were sold this idea
(01:31):
that revenue would climb in excess of I think the
initial forecast had revenue way in excess to three hundred
million by twenty twenty four, and it was two hundred
and eighty five, which is only I think off the
top of my head, I can't remember now. I think
it's about twelve percent increase on last year. But when
you look at where that increase came from, the majority
(01:54):
of it actually came from interest payments that New Zealand
Rugby received as a result of having Silver Lake's money
in the bank. So the biggest growth of revenue was interest.
Now that's not a great story when you get down
to it, and that is not fitting in with a
picture that we were sold three years ago. So I
(02:16):
don't think it's good news bad news. I think it's
bad news bad news.
Speaker 2 (02:21):
Extrapolate this as far as Silver Lakes engagement, what they
actually bring, what they've done, if anything, What do we
learn about their involvement in this through these results.
Speaker 4 (02:32):
Well, I'll make this answer very short. The answer to
what have they brought? Nothing? You know, that's that's The
sad part here, this is the warning that people like
me and a few others who weren't seduced by private
equities sales pitch always said was that they don't bring capability.
They're not they're not rugby people, per see, they don't
(02:54):
have a magic wand they don't actually have the answers
to the problems that New Zealand Rugby thinks that it has.
And if you if you look at it, you go, well, okay.
The revenue model that New Zealand Rugby presented today is
no different to the one that they've been following for
the last thirty years of professionalism. So they made their
(03:16):
money out of selling media rights, sponsorships and match day revenues,
which is what they've been doing forever. They played a
few games offshore and then the USA and Japan last year,
but they've been doing that for the last ten or
fifteen years as well. So there's nothing new in what
silver Lake have brought to the table. They haven't changed
anything except for the fact that they've parked money in
(03:39):
New Zealand's bank account. But of course as much as
you know New Zealand is benefiting from that, they also
have to pay interest on that loan. So we're in
a sort of truly ridiculous position where New Zealand banks
twelve million in interest or fourteen million in interest, but
has to pay twelve million back in interest to silver Lake.
(04:00):
And I am honestly thinking if an eight year old
came up with us as a financial model in a
primary school project, you would smile nicely and try and
redirect them into coming up with a better idea.
Speaker 2 (04:11):
Talking about silver Lake. Back in the day when this occurred,
I distinct they're a members saying, hey, this is Shakespeare,
this is Merchant of Venice, and Silverlake are Shylock, and
they will get their pound of flesh. Don't you worry.
They're in this for money, They're not in this for
the goodness of rugby. And you talked about people are
being seduced by that concept and it did work, which
(04:33):
brings me to my next point around this. When you
look at their NZR plus, which is probably part of
this brave new world of silver Lake, which appears to
have not made a great deal of money, if any,
it's costing them a fortune. How long is their piece
of rope? How long before a group that are a
(04:53):
rugby organization who really should stick to rugby, stick to
their knitting. Realize they're not broadcasters, they can't make content
and maybe their upcoming agreement with Sky has to work
along that track. They're spreading themselves to thin. This is
not what they do, right.
Speaker 4 (05:10):
Oh, I couldn't agree with you more, Darcy. That's absolutely right.
It is a staggering amount of money and for people
like you and either work in the media industry not
I'm not being facetious, I'm being absolutely genuine. When you
start to think about twelve million dollars got invested in
NZR plus last year. Now you start to think what
(05:32):
twelve million dollars would feel like coming into the Herald's
newsroom or ZIB's newsroom, and what you'll be able to
do with that money, because we're currently living in an
existential crisis as media people. And you look at that
and go, wow, if we had that amount of money,
the results could be extraordinary with what we could do.
And then you look at New Zealand Rugby and go
to your point, they're not broadcast people, so they look
(05:56):
at so they've got execs who have got literally no
idea what they are talking about. In the space in
my view, and they say things, oh, we've got you know,
one billion views on you Tube, and I go, whoopoy,
do you've probably got You could put an all black
Hakker video and maybe a best of highlight highlights package,
and I guarantee you you'd probably get similar results. When
(06:19):
we've got social media influencers who on you know, around
the world, people going off to restaurants and tourism landmarks,
and they produce TikTok videos and these guys are probably
spending low hundreds of thousands on their content production and
driving millions of dollars back and winning literally tens of
millions of followers. So you start comparing and contrasting how
(06:43):
you build an audience with the budget that they've put
at this and there's no way can you tell me
that this is a good return on investment. And you know,
to your point, how long can they keep going? Not
one more day? If I'm the New Zealand Rugby board,
I think you've got to slash that budget by at
least ten million and say here's two million dollars. And
(07:04):
even that is wildly generous for an organization that simply
doesn't know what it's doing.
Speaker 1 (07:11):
For more from sports talk, listen live to news talks.
It'd be from seven pm weekdays, or follow the podcast
on iHeartRadio
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