New Zealand Rugby is in talks to sell its main shirt sponsorship inventory, from the All Blacks down to U20 level, to a single investor.
According to a report in the New Zealand Herald newspaper, the rugby union has a proposal ready to take to market but has not yet entered formal discussions with investors.
It is claimed that the target buyers are “giant private equity groups” or “major US or Japanese advertising agencies” which would sell on the rights to sponsor brands.
The governing body has reportedly talked informally to equity groups like CVC Capital, an investor in the UK’s Premiership Rugby and which recently finalised its acquisition of a 28-per-cent stake in Pro 14; and Silver Lake, a major investor in the Endeavor sports and entertainment agency and which recently acquired a stake in City Football Group for $500m (€443m).
The rights would include the full portfolio of shirt sponsorship rights — the All Blacks, Black Ferns, Sevens, Māori and U20 team – and has been valued at more than NZ300m (€171.6m/$193.4m) over five years.
The need to raise cash is pressing at NZR, which expects to lose revenue of NZ$120m in the current fiscal year because of Covid-19, and will lose its main shirt sponsor, finance and insurance brand AIG, at the end of its current deal — worth about NZ$120m over five years — in 2021.
According to Joel Seymour-Hyde, head of Octagon UK, which has worked with AIG from the outset of the sponsorship in 2011, the investment model for such an agency or investor-funded venture is not uncommon, but more traditionally found in the media rights space.
He told SportBusiness: “There’s no reason why it can’t work in the sponsorship sector too. Certainly, it has been reasonably common in Europe and other AsiaPac markets like Japan, even if less prevalent in the UK and the US.
“Clearly, every rights-holder in the world has faced some very challenging commercial and income-based circumstances in 2020. Whilst it’s not my position to comment on the financials of NZR, the revenue derived from sponsorship is significant for the NZR – in value and ratio – so it’s a very important commercial agreement to get right.”
The perceived value of the NZR package is linked to the brand value of the New Zealand All Blacks, which commands enormous respect in rugby-playing territories, but may not necessarily fit a global brand awareness campaign, says Seymour-Hyde.
He continued: “A brand wouldn’t necessarily invest in New Zealand Rugby, or to be frank, rugby as a sport, if their aim was purely global brand awareness. It’s not a global sport in that sense, or, arguably, only is every four years around the Rugby World Cup.
“NZR has a fabulous group of teams for brands to associate with and build campaigns around but defining the proposition and value they can bring to sponsors is the key. NZR will definitely be looking for a global brand, not necessarily one that needs global brand awareness as their primary sponsorship objective.”
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Octagon, he said, has delivered successful programmes for AIG and the All Blacks in the US, UK, Dubai, Ireland, South Africa, France and Japan among others. “It’s very hard to think of another international sports team that would be possible with,” he said. “One of the beauties of the All Blacks, in particular, is their resonance across all rugby markets, and in some cases, non-rugby markets.
“Wherever you go, fans are aware of the aura, history and incredible achievement of the team, and what the All Blacks jersey represents. They are certainly one of the very few international sporting teams, whose sponsorship can be successfully activated in other markets despite the presence of a local national team.”
Seymour-Hyde concluded that selling to a global agency-investor could be a smart move in the current market conditions.
He noted: “New Zealand is a wonderful country but not necessarily the easiest place to sell to global brands from. Therefore, leveraging the power of a globally-networked agency to get into the right conversations, is another smart reason for taking this approach.”