New Zealand Rugby is being urged to consider a third option, before it signs away a stake of its commercial rights with US private equity firm Silver Lake.
Photo: Photosport
A group led by former NZR chief executive David Moffett is proposing a co-operative ownership model similar to European football giants Barcelona, Real Madrid and Bayern Munich and NFL side the Green Bay Packers.
Under the Silver Lake deal NZR would set up a company called Commercial Co which would own NZR's commercial rights. Silver Lake would take a 12.5 stake in this for $390 million.
The Players Association (NZRPA) is opposed to deal, saying the numbers don't add up and that selling off 12.5 percent in perpetuity doesn't make financial sense, leading to a bitter dispute between the two parties.
The NZRPA agrees the game needs a substantial cash injection and along with investment company Forysth Barr are proposing a public share float which it estimates could raise $190 million.
NZR has rejected a public share float believing it would only appeal to 'mum and dad' investors and doesn't meet other criteria the Silver Lake deal does.
Moffett, who was chief executive of the NZR between 1996-2000 and has also held the same role with the Australian NRL and Welsh Rugby Union, believes a co-operative model is the way forward.
David Moffett Photo: Photosport
"Both (the Silver Lake and NZRPA share float proposals) have merit but neither of them really satisfies the aspirations of rugby fans or the wider public who would like to see the full control of rugby and especially the All Blacks stay in New Zealand ownership.
"There are many questions to be answered about the Silver Lake offer... (we) request of the NZR a full and frank disclosure of the proposed deal, so that the fans and people of New Zealand can be better informed.
"In respect of the proposed IPO by the NZRPA, we are concerned that if the listing were to go ahead, what if any safeguards can be put in place to stop Silver Lake, Rugby Australia or any other non-invited entity from accumulating the bulk of shares in the public company," said Moffett.
Co-operatives are familiar to the New Zealand business community said Moffett citing the likes of Fonterra, Southern Cross and Farmlands.
"This common form of corporate ownership in New Zealand does not carry the listed public company requirements of compliance and share price and market risk," he said.
German Bundesliga club Bayern Munich is run as a co-operative, in a model similar to the one proposed by former NZR chief executive David Moffett. Photo: PHOTOSPORT
Moffett suggests a co-op could raise similar levels of funding to the Forsyth Barr share float proposal.
"Indeed, it is entirely possible....the capital raise suggested in an IPO could be exceeded. But equally as important, the cost of sourcing and servicing the capital and repayments will be substantially less than the other options -which will mean more finds available to NZR."
The fundamental difference with a co-operative said Moffett is that the organisation can develops its own rules and regulations to meet the needs of their members - a key objective when dealing with the unique nature of sports.
It is based on a vote per member not the number of shares held - therefore no one group can acquire a controlling interest
A co-operative doesn't require cash dividends but rather provides members benefits and there can be different classes of shares-membership that allows a differentiation of the type of investment meaning their there could be a range of classes including Super Rugby Franchises, Provincial Unions, Player Associations, and Public for example.
"The motivation for putting forward this option is that, given the significance and relative permanence of the decision and its subsequent consequences, we believe it is imperative that all options are on the table and given appropriate consideration, to ensure that there is no doubt in anyone's mind that the final decision is made with full consideration of all options available, along with their relative benefits and risks."