Rugby set to kick off talks on private equity deal
Rugby Australia will kick off talks to raise $150m or more from private equity within weeks.
Rugby Australia will kick off talks to raise $150m or more from private equity within weeks, as it also considers a fresh loan from a US investment firm to shore up its short-term financing.
RA, which hopes to turn a small profit this year, is set to formally meet with global private equity giants CVC and Silver Lake in August in what could be the latest move by private equity into Australian sport.
Netball Australia is also locked in negotiations with an investment group headed by entrepreneur Matt Berriman, which has offered $6.5m to buy the Super Netball competition.
Berriman’s group, which includes former netball star Liz Ellis and ex-ABC boss Michelle Guthrie, has made the offer on behalf of an international private equity investment firm with $US125bn funds under management — a description that fits CVC.
Other sports are understood to have also expressed interest in adopting the proposed Netball investment model.
Rugby’s potential private equity deal would be in addition to more financing set to come the code’s way. The Weekend Australian also understands Ares Management, a global alternative asset management company listed on the New York Stock Exchange, is keen to lend more money to RA as the sport heads towards the 2027 World Cup.
The Australian last year reported that RA clinched the expensive $40m short-term funding deal with the US investment firm, in a move that has helped dig the sport out of its alarming financial problems and shore up its finances over the next few years until a money-spinning tour by the British and Irish Lions in 2025.
RA’s most recent financial statement shows it has already drawn down $25m of the Ares loan, with about another $15m of the facility still available. The loan is calculated at 7 per cent above the Australian Bank Bill Swap Reference Rate.
RA chairman Hamish McLennan said the alternatives of potentially engaging a private equity deal or going for a bigger cash loan show the financial future of the code is growing stronger.
“Thankfully we’ve got more optionality now with a rugby world cup 2027 and British Lions tour in 2025 coming to Australia,” McLennan said. “We could borrow more money from Ares, do a convertible note with another institution, or do a classic style private equity deal.”
“Andy (Marinos, the RA chief executive) and the team have done a great job, stopping the financial haemorrhaging at RA and we are operating off a lessor cost base. We hope to turn a small profit this year, which is a major breakthrough.”
Helping Marinos with the PE negotiations are RA board directors Matt Hanning and Brett Godfrey. Warwick Negus, a former Goldman Sachs Managing Director who sits on the Waratahs board, is the member union representative in the PE talks.
McLennan played down suggestions of a constitutional overhaul for the sport — an AFL style commission had been mooted during rugby’s turmoil in recent years — with the current board working well together.
“What’s most gratifying is that the alignment between the super rugby clubs, the MUs (Member Unions) and RA is the best it has been in years, we have a shared vision with our World Cups, Trans Tasman rugby, and grassroots … but obviously the reform process needs to continue.”
Australia is hoping to net a $100m profit from the World Cup in 2027. “A lot of that will be quarantined into an endowment fund … that will be passed onto the game’s grassroots,” McLennan said. “We had a near death experience (after the 2003 World Cup). We nearly went under.”
Netball Australia, meanwhile, is understood to have given Berriman’s group an initial positive reception. The cash-strapped sport would receive $4.5m in an upfront payment and then two $1m annual payments over the next two years.
The plan would “bring together the right mix of netball, commercialisation and investment experience and some independent directors that will ensure governance, structure and the skill sets required to make this plan a success”, a document seen by The Weekend Australian says.
Berriman’s backer would also provide additional investment in Super Netball to “drive it to success” and there could potentially be the opportunity for an ongoing annuity revenue stream to be paid to Netball Australia.
A privatised Super Netball would hope to achieve revenue and profit increases and be financially sustainable within about three years.
Soccer’s A-League already has a private equity back in Silver Lake, which bought a 33 per cent stake to value the competition at $US300m ($425m) last December.
Melbourne entrepreneur Larry Kestelman owns the National Basketball League, which he took control of in a $7m deal in 2015.
RA, which hopes to turn a small profit this year, is set to formally meet with global private equity giants CVC and Silver Lake in August in what could be the latest move by private equity into Australian sport.
Netball Australia is also locked in negotiations with an investment group headed by entrepreneur Matt Berriman, which has offered $6.5m to buy the Super Netball competition.
Berriman’s group, which includes former netball star Liz Ellis and ex-ABC boss Michelle Guthrie, has made the offer on behalf of an international private equity investment firm with $US125bn funds under management — a description that fits CVC.
Other sports are understood to have also expressed interest in adopting the proposed Netball investment model.
Rugby’s potential private equity deal would be in addition to more financing set to come the code’s way. The Weekend Australian also understands Ares Management, a global alternative asset management company listed on the New York Stock Exchange, has agreed to lend more money to RA as the sport heads towards the 2027 World Cup.
The Australian last year reported that RA clinched the expensive $40m short-term funding deal with the US investment firm, in a move that has helped dig the sport out of its alarming financial problems and shore up its finances over the next few years until a money-spinning tour by the British and Irish Lions in 2025.
RA’s most recent financial statement shows it has already drawn down $25m of the Ares loan, with about another $15m of the facility still available. The loan is calculated at 7 per cent above the Australian Bank Bill Swap Reference Rate.
RA chairman Hamish McLennan said the alternatives of potentially engaging a private equity deal or going for a bigger cash loan show the financial future of the code is growing stronger.
“Thankfully we’ve got more optionality now with a rugby world cup coming,” McLennan said. “We could borrow more money from Ares, do a convertible note with another institution, or do a classic style private equity deal.”
“Andy (Marinos, the RA chief executive) and the team have done a great job, stopping the financial haemorrhaging at RA and we are operating off a lessor cost base. We hope to turn a small profit this year, which is a major breakthrough.”
McLennan played down suggestions of a constitutional overhaul for the sport — an AFL style commission had been mooted during rugby’s turmoil in recent years — with the current board working well together.
“What’s most gratifying is that the alignment between the super rugby clubs, the MUs (Member Unions) and RA is the best it has been in years, we have a shared vision with our World Cups, Trans Tasman rugby, and grassroots … but obviously the reform process needs to continue.”
Australia is hoping to net a $100m profit from the World Cup in 2027. “A lot of that will be quarantined into an endowment fund … that will be passed onto the game’s grassroots,” McLennan said. “We had a near death experience (after the 2003 World Cup). We nearly went under.”
Netball Australia, meanwhile, is understood to have given Berriman’s group an initial positive reception. The cash-strapped sport would receive $4.5m in an upfront payment and then two $1m annual payments over the next two years.
The plan would “bring together the right mix of netball, commercialisation and investment experience and some independent directors that will ensure governance, structure and the skill sets required to make this plan a success”, a document seen by The Weekend Australian says.
Berriman’s backer would also provide additional investment in Super Netball to “drive it to success” and there could potentially be the opportunity for an ongoing annuity revenue stream to be paid to Netball Australia.
A privatised Super Netball would hope to achieve revenue and profit increases and be financially sustainable within about three years.
Soccer’s A-League already has a private equity back in Silver Lake, which bought a 33 per cent stake to value the competition at $US300m ($425m) last December.
Melbourne entrepreneur Larry Kestelman owns the National Basketball League, which he took control of in a $7m deal in 2015.
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