Franchises for sale: Call Steve Tew

BY GREG FORD

New Zealand's super rugby franchises are to be sold, according to a discussion paper obtained by the Sunday Star-Times.

The document, which has been circulated among several of the game's major stakeholders for comment, went before the New Zealand Rugby Union board last month.

The NZRU agreed to release it to us on the condition the union could explain the rationale behind the controversial details.

It had long been speculated that the NZRU wanted to raise some quick cash by selling off its five super franchises. That speculation can now end; it's going to happen.

"This is the future," says NZRU chief executive Steve Tew. "If the Australians get the Melbourne franchise it will be almost exclusively funded by private investment.

"It's something we will work on in the coming years, because the reality is New Zealand rugby is undercapitalised.

"The value of New Zealand rugby is immense. At some stage we have to find a better way of cashing in on it."

By talking about the subject Tew knows "I will turn off some fans", but he stresses that the NZRU is taking what he calls a "very cautious approach" as it addresses the questions of to whom and when the franchises will be sold.

Considerable progress, as revealed in the discussion document, has already been made around the conditions of sale.

The NZRU says the franchises should be sold much the same way Telecom was, with the NZRU holding what's known as a "golden share".

While an Eric Watson could "invest" in a team like the Hurricanes, he couldn't own it outright.

Only one of New Zealand's provincial rugby unions would be eligible to buy a majority share.

That means Wellington could buy the Hurricanes instead of managing them, as it does now on behalf of the NZRU.

But, again, there are strings attached.

The "golden share" rule would prohibit the likes of Canterbury from pawning off the Crusaders, changing the franchise constitution or raising additional capital without the NZRU's prior approval.

The NZRU would also reserve the right to appoint the head coach and have a say on whether franchises took home games overseas.

The NZRU wants also to bulk-fund player contracts so it can maintain control over them. However, the paper reveals that player contracts direct with the franchises are on track to come into place in 2011.

It has long been a bugbear of the provinces that the super franchises are not franchises in the true sense of the word.

They say the franchises need greater autonomy to run their teams, and that the conditions imposed by the NZRU on administration and the franchise boards are suffocating.

Tew hopes that by devolving ownership of the teams to the provinces many of these concerns will disappear.

The NZRU already knows it has saleable product in the All Blacks, which was confirmed last week in Tokyo with the Bledisloe Cup test against Australia.

"Adidas budgeted, based on previous experience with AC Milan and Real Madrid and other teams that have visited Tokyo, that they might generate four million yen's worth of licence [fees] over a 10-day period. They did 20 million.

"That's a huge, huge number.

"It's great for us because we take a royalty from that and it spread the All Blacks name throughout Tokyo and Japan. So in the medium- and long-term we need to ask how we build on that?"

That's the All Blacks, but what about super rugby teams? Should the NZRU be flogging the game's most valuable assets for a quick buck, and how much would they be worth anyway?

Given super rugby runs at a loss, who would actually invest in such a venture?

Tew: "There are plenty of owners of sports clubs in Europe who are not in it for the money. They are in it for the prestige. Their football team is their toy."

But such relationships can easily come dramatically unstuck: the owner eventually runs out of cash and the clubs goes kaput.

Tew is well aware of this, citing several examples himself. Yet, he says, during his time as a super rugby chief executive with the Crusaders, he fielded plenty of interest from potential investors. The Blues, too, initiated a relationship with a British rugby club, hoping to share intellectual property.

That eventually came to nothing.

But such relationships, Tew says, are the way of the future, as long as there are protections in place.

- © Fairfax NZ News