KKR, one of the world’s biggest private equity investors, is joining a scrum of suitors to buy a stake in the commercial rights to rugby union’s World Cup.
Sky News has learnt that KKR, which has owned prominent British businesses such as Boots The Chemist, has held preliminary talks with World Rugby – the sport’s global governing body – about a potential investment.
The discussions are at an early stage, and KKR is among a pack of prospective investors who have been alerted by World Rugby’s decision to explore a range of options to strengthen its finances.
KKR has invested relatively little in global sports assets
By comparison with peers such as CVC Capital Partners, Bridgepoint and Silver Lake, KKR has invested relatively little in global sports assets, although it was linked to a bid for a stake in the German Bundesliga – the country’s top football league – earlier this year.
Private equity executives said KKR was keen to become more active in the elite sports sector, with World Rugby’s process one of its principal targets.
Sky News revealed earlier this year that World Rugby had appointed Jefferies and Rothschild, the investment banks, to work on a radical shake-up of its commercial activities that may involve selling a stake in the World Cup’s commercial rights.
Since then, Oakwell, a leading sports advisory firm, has also been added as an adviser, according to private equity sources.
News of KKR’s interest comes just days before the rugby sevens competition gets underway at the Tokyo Olympics.
The tournament, which is overseen by World Rugby, kicks off with Great Britain’s men facing Canada in Pool B.
Rugby union has already begun to see an injection of substantial sums of private capital
The governing body’s review of its financing options is aimed at securing new funding that would be ploughed into under-represented areas of the sport.
World Rugby’s new chief executive, Alan Gilpin, has outlined his initial blueprint for the sport, with a major focus on improving player welfare.
If a process does result in the sale of a stake in a new commercial entity to private equity or sovereign wealth funds, it would be expected to generate hundreds of millions of pounds in proceeds.
The next men’s Rugby World Cup will take place in France in 2023, although its rugby league equivalent was dealt a huge blow this week when Australia and New Zealand withdrew, citing safety concerns relating to COVID-19.
Lord Davies of Abersoch, the former Standard Chartered chairman and one-time UK government trade minister, is playing a pivotal role in the strategic review in his capacity as a World Rugby independent non-executive director.
World Rugby, which is chaired by the former England captain, Sir Bill Beaumont, has told its advisers that no options are off the table after an 18-month period in which the wider sport’s finances have been badly hit by the pandemic.
The governing body also owns the rights to international Sevens rugby, the world series of which is sponsored by HSBC.
World Rugby’s plans come amid a deluge of private capital being invested in the world’s top sporting events, associations and teams.
The next men’s Rugby World Cup will take place in France in 2023
Rugby union has already begun to see an injection of substantial sums of private capital, largely through CVC Capital Partners’ investments in Premiership Rugby, Pro-14 and the Six Nations Championship.
If CVC completes an investment in South African rugby which represents the next stage of its global blueprint, it will preside over stakes in the commercial interests of seven of the world’s most important rugby union-playing countries.
CVC and Silver Lake, the US-based private equity firm which – as Sky News revealed earlier this year – is in detailed talks to buy a 15% stake in the New Zealand All Blacks’ commercial rights, may also seek to participate in the World Rugby process.
The sport’s governing body in Australia is reported to be pursuing similar discussions with private equity firms.
World Rugby’s balance sheet has been comparatively unaffected by the COVID-19 crisis so far, because its most important money-spinner – the men’s World Cup – concluded just a few months before governments began to impose national lockdowns on their populations.
The tournament generates 90% of World Rugby’s revenue, and net profits from the last event in Japan were reported to be £350m.
World Rugby announced earlier in the year that the first tickets for the tournament were going on sale, with a record 2.6m being made available.
One of the priorities for any new media or investment partnerships is likely to be the unification of the northern and southern hemisphere rugby calendars in order to maximise their earning potential, according to insiders.
Silver Lake is in detailed talks to buy a 15% stake in the New Zealand All Blacks’ commercial rights Pic: AP
The process to explore new funding options comes two years after World Rugby called off talks about a £6.1bn, 12-year deal to create a global Nations Championship.
The project was abandoned after it failed to secure the unanimous backing of unions.
World Rugby says it has invested more than $100m in providing relief to COVID-affected members, of which it has 128 in total.
The governing body is also forecast to invest £565m in competitions, player welfare initiatives and national member unions over the 2020-23 period – a 22% increase on the prior four-year cycle.
It attributes the larger sum to the success of Japan 2019 and ring-fenced revenue guarantees from the 2023 tournament, which has seen the official travel and hospitality rights sold to the organising committee for the first time.
KKR and World Rugby declined to comment on Friday.