NRL private equity a $3bn call

NRL clubs could be asked to make a final call on private equity this week after the game was valued at potentially more than $3 billion.

South Sydney are already privately owned but more private cash could flow

The NRL is about to answer a $3bn question. The Australian understands the company charged with gauging interest in the game from private investment has valued the competition at upwards of $2.4bn — and potentially as high as $3.1bn.

The ball is now in the court of the clubs, states and the ARL Commission. It is understood club powerbrokers could discuss the matter as early as this week — a private equity injection can only go ahead with their support.

Oakwell Sports Advisory is understood to have pieced together the valuation and it is likely to be asked to join a phone hook-up to provide greater insight into its body of work, which has been finalised after the company was given greater understanding of the game’s finances.

It is understood Oakwell co-founder and partner Andrew Umbers was involved in a call earlier this year with a select group of clubs that kicked off speculation the game could sell a stake to private equity.

Since then, ARL commissioner Gary Weiss has been taking a deeper dive into private equity on behalf of the commission. At the same time, Oakwell has been working in the background to provide the clubs, states and commission with a definitive valuation for the competition.

Oakwell had previously projected that the code could be worth as much as $3bn, but only now has a tangible figure been put on the value of rugby league.

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The commission has a meeting later this month where private equity could be placed on the agenda, although it will only reach that stage if the clubs can be convinced that it is in their best interests and that of the game.

“Most clubs don’t know much about it,” one club chair told The Australian.

“You have to look at it. So many sports have done that (sold a stake). I’ll be keen to see what they have come up with.”

The latest developments on the private equity front come as NRL chief executive Andrew Abdo prepares to lay bare the extent of cost-saving at Rugby League Central.

It is understood Abdo will detail the number of job cuts on Monday morning. Each division or department will then provide specifics of where the cuts apply.

The NRL has targeted $50m worth of savings from head office as it looks to emerge from COVID with its bottom line intact.

The Australian recently revealed the NRL and its clubs were budgeting to lose as much as $400m in revenue over this season and the next two due to COVID and it was looking to mitigate some of the damage by slashing the running costs at head office and striking a new pay deal with players.

The latter hasn’t been easy. The NRL and players union continue to haggle over whether the pay cut should be 5 or 10 per cent. At the same time, the NRL has a prospective solution to any money woes in the form of private equity.

Codes across the globe have begun dabbling in the area, rugby union and soccer in Europe among the sports to sell off stakes in return for significant money upfront.

Given the valuation placed on the NRL, a 20 per cent stake could be worth anywhere from $480m to $620m. Should the clubs and commission press ahead with the sale, the money would be split between them.

The clubs would be provided with greater financial certainty during one of the most difficult and traumatic times in their existence while the commission could use its share to invest, be it in a stadium or potentially the English Super League.

This week will prove pivotal given the amount of scepticism in the game that surrounds the concept. A number of officials are concerned at the motives of any private equity company and fear giving an outsider a say in how the game is run.

There is also concern over whether the game would have a say should a private equity partner decide to sell out down the track. Those who believe private equity is a potential golden goose for the sport are quick to point out that the commission would dictate how any private equity partner exited the sport. The commission could retain a buyback clause or have final say over whether a fresh partner was up to standard.