Private equity groups interested in financially crippled Rugby Australia

Private equity seems all but certain for Rugby Australia — with billionaire Andrew Forrest one of a trio of interested parties looking to invest in the financially under-siege game.

Andrew Forrest is preparing to buy a share of Rugby Australia. Picture: Getty Images

Billionaire Andrew Forrest is leading a trio of private investors vying for a stake in Rugby Australia that could value the struggling sport’s commercial rights at more than $1bn.

News the mining magnate is interested in Rugby Australia comes just 24 hours after the game recorded a $27.1m deficit on the back of years of poor corporate governance and a COVID crisis that has left the game fighting for survival.

The Weekend Australian can reveal Forrest is deep in talks with Rugby Australia bosses and ­sources say the mining magnate is “very keen” to invest in the game. Forrest has a strong relationship with RA chairman Hamish McLennan and new chief executive Andy Marinos.

McLennan told The Weekend Australian he respected Forrest’s leadership style and his passion for rugby. “I really like Andrew Forrest. He is obviously a visionary and he is genuine in his desire to help rugby,” McLennan said.

“Andrew’s a kindred spirit when it comes to wanting to disrupt the status quo.”

Market experts have said a 15 per cent stake in the Rugby Australia business could be worth at least $250m and potentially up to $350m.

The Weekend Australian has also learnt that US private equity firm Silver Lake and Luxembourg-based CVC are also interested in investing in the game in Australia.

McLennan said private equity investment had “become a common occurrence in rugby around the world and, on balance, it will be a positive catalyst for change”.

Forrest’s Tattarang arm is one of Australia’s largest private investment groups, with investments spanning agriculture, energy, resources, property and hospitality, and owns businesses such as RM Williams.

“If approached by Rugby Australia, any investment would be reviewed and considered as with other opportunities presented to Tattarang,” a Tattarang spokesman said. “Most importantly, Tattarang remains committed to the success of the Western Force both on and off the field, including our significant commitment to grassroots rugby in Western Australia.

“This includes working with Rugby Australia to nurture emerging talent to ensure Australian rugby thrives and constitutional reform is in the best interests of club management, players and supporters.”

Earlier this year Forrest called for Rugby Australia to bring in an AFL-style commission to shake up the game and hone its focus on the game’s grassroots. Forrest is optimistic rugby union could once again become a major player in the Australian sporting market.

Silver Lake, which owns a stake in Manchester City soccer club, is also a contender to invest in Rugby Australia. The US-based group advanced its grip on rugby in the region this week. On Thursday, New Zealand Rugby approved a historic private equity deal at its AGM, with a 12.5 per cent stake set to be sold to Silver Lake for $361m. The value of the commercial rights is boosted by the All Blacks brands. That potential sale values the Kiwi rights at $2.9bn. New Zealand Rugby also suffered badly in the last financial year, making a loss of $31m.

Australian rugby sources say Silver Lake may be looking to build its rugby portfolio even more in the area, while CVC is also keen to boost its rugby stocks again. CVC has small stakes in the English Premiership, Pro14 club competitions and the Six Nations. CVC recently bought a 15 per cent share of the Six Nations for $650m. It recently held talks with South Africa, the reigning world champion, about buying a 15-20 per cent stake in the sport’s commercial arm in the country.

McLennan said the game’s administration would consult with its stakeholders to work out what would be placed in the “corporate bucket” — be it ticketing, marketing, media rights — to determine its approach to private equity.

“It will be an exciting process but we will need to assess, along with our member unions and super rugby franchises, what goes into the corporate bucket,” McLennan said. “A percentage of the entity will in turn be sold to private equity.”

Rugby Australia’s annual report released on Thursday revealed myriad financial concerns for the code. It said: “Subsequent to year end, the group has received a conditional offer for a financing facility of up to $40m to ensure the long-term financial viability of the group through to the 2025 Lions tour and beyond.”

McLennan declined to reveal who was providing the financial support.

At Rugby Australia’s AGM on Thursday, McLennan criticised unnecessary spending by previous administrations and pointed out that the game’s grassroots had long been neglected. While the new administration has cut millions out of the business, the books show RA owes $1.2m in loan repayments and $1.9m on a currency hedge fund gone bad. It has a net asset deficit of $7.4m.