Rugby ramps up talks for war chest with private equity

Rugby Australia is courting investment from up to seven Australian and overseas investors, hoping to land a private equity deal worth up to $250m.

Chair of the Australian Rugby Union Hamish McLennan. Picture: Tim Hunter.

Rugby Australia is courting investment from up to seven Australian and overseas investors, hoping to land a private equity deal worth up to $250m.

While RA just posted a $8.2m surplus, private investment is seen as a key plank – along with the blockbuster home events of the 2025 British Lions tour and the Rugby World Cup in 2027 – to re-establish the code as a major player in Australia.

Michael Stock from Jefferies Australia is running the private equity process on behalf of RA.

Stock, the CEO of Jefferies Australia, also consulted for New Zealand Rugby on their $187m private equity deal.

Rugby Australia declined to comment publicly on the process, but The Weekend Australian has confirmed up to “seven parties” are interested in investing in the game and the Wallabies.

RA’s private equity documents have previously stated it “is seeking a target capital raise range of $150m to $300m, with an indicative target level of $250m”.

A proposal which details RA’s private equity plans – dubbed “Project Aurora” – says there is an “opportunity to partner and build a sporting commercial business of scale”.

The document lists the Wallabies as “an iconic household name in Australia and across the globe with strong brand awareness and affinity”.

The Project Aurora plan also details a proposal to split Rugby Australia into two vehicles – RACo and NewCo. That way it would preserve the not-for-profit status of Rugby Australia.

RACo would pay player salaries and Rugby Australia’s management and corporate costs.

NewCo would be responsible for “all costs including matchday and sponsor servicing costs … media/marketing/digital costs and IT costs”.

The governing body is still paying off its debt after borrowing $40 million several years ago – while RA had a solid surplus recently – powerbrokers believe “PE” could be a circuit breaker that could “reinvigorate”, secure and “elevate” the game in Australia.

The Weekend Australian understands RA could sell up to 19.5 per cent to a private equity firm – which could net $150-$250m.

The governing body is expected to keep 75 per cent of that PE revenue to guarantee the code’s financial future.

New Zealand Rugby approved a massive $NZ200 million investment deal with US-based private equity firm Silver Lake last June.

Another private equity firm CVC is close to completing a deal with the Springboks. CVC has also bought into the Six Nations.

However, there are rumblings from traditionalists that private equity is not the panacea it is made out to be.

Last week Code Sports reported that unnamed sources said there was genuine fears within the game that any move to private equity creates a “hunger games” scenario where every decision is based upon profit.

“If it’s a loss-making exercise, they won’t be as attached to the five (Super) teams as Rugby Australia is,” one source said.

“They have no allegiance to the history and culture of clubs, they invest in sport because they want influence, and expect return on their money.”

As another leading powerbroker said: “PE will give the game the immediate sugar hit we need. What we don’t know is what the game looks like five years from now.”