Several well-placed sources have told the Herald that NZR has long been braced for a lower offer from Sky, aware that the conditions under which it agreed terms in 2019 have greatly changed.
Back in 2019, Spark Sport was in operation and was cashed up and chasing broadcast rights to live sport. It shocked Sky by winning the rights to most of New Zealand’s cricket content suite.
That unexpected coup put pressure on Sky to up its offer from $80m a year to $111m and throw in a five per cent equity stake that was worth, at the time, about $20m.
But Spark collapsed in 2021 and without any competitive pressure, Sky has been able to negotiate a price reduction that is likely going to have a material impact on NZR’s expenditure and ability to invest in all areas of the game.
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A near $25m per annum drop will leave a significant hole in NZR’s accounts from 2026, at a time when it will also be on the hook to pay its own equity partner, Silver Lake, an annual dividend, that based on this year’s figures, will be close to $20m.
Silver Lake bought a 7.5 per cent stake in New Zealand Rugby Commercial – the company that was formed in 2022 to house all the game’s revenue-generating assets.
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Under the terms of the deal, that $262m purchase initially operated as a loan – charged out at 4 per cent per annum – but the fund management group has the right to convert its investment into equity later this year.
Assuming it does, it will then be entitled to receive a 7.5 per cent share of New Zealand Rugby’s revenue, which for the last two years has been about $270m.
And this is where the pressure may be felt the most by NZR. In 2021 it aggressively sold the need to do a deal with Silver Lake on the basis that it would prove transformational to the domestic game’s revenue profile.
The basic premise of the pitch was that Silver Lake would inject capital to fund new revenue streams and bring experience and capability that would enable NZR to drive more money from broadcast and sponsorship contracts.
But so far, the vision has not been matched by the reality and the arrival of Silver Lake as an equity partner has not delivered in line with expectation, and NZR has lost $57m in the last two years.
No new revenue streams have come online, and Silver Lake’s big chance to shine was this latest broadcast negotiation, but there now seems a realistic possibility that the total income NZR derives from media rights between 2026-2030 will be less, not more, than it was between 2021-2025.
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The uncertainty about the total value NZR will bank in the next cycle is because there could still be an uplift, perhaps significant, in the values of the overseas rights paid for All Blacks content.
Pre-Covid, offshore broadcasters such as Sky Sports in the UK, paid about $40m a year for the rights to the Tri-Nations (it had to be split three ways with Australia and South Africa).
But post Covid, the bottom fell out of the market and NZR, and Sanzaar, now earn comparatively tiny fees from offshore media companies.
Silver Lake, and NZRC chair Ian Narev, however, believe that global interest in Southern Hemisphere rugby has been rekindled and that could see improved offers from established rugby territories such as the United Kingdom and other parts of Europe.
The next broadcast cycle also includes an attractive range of content, with the All Blacks slated to tour South Africa in 2026, host the Lions (women) in 2027 and (men) in 2029, with the Springboks touring New Zealand in 2030.
These events could deliver healthy revenue spikes, as will the Nations Cup – a biennial competition that will see the Southern Hemisphere nations (New Zealand, South Africa, Argentina, Australia, Japan and Fiji) play each of the Six Nations in a calendar year – the broadcast rights to which are likely to be sold to an aggregator who will then on-sell them to domestic broadcasters.
But while there is some likelihood that these offshore markets will pay more than they currently do for content, the reality of what NZR is facing is confronting.
To off-set the Silver Lake stake and retain what it currently earns from broadcast revenue, NZR needs to bank $120m per annum.
It is understood that NZR would ideally like to conclude a deal before the end of the year.
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