Brumbies reveal private equity plan to sell up to 49 per cent stake to investors

In a landmark moment for the franchise, Brumbies chief executive Phil Thomson and chairman Matthew Nobbs presented to the ACT rugby clubs at a special meeting on Tuesday night to detail the initial phase of the proposal.

The Brumbies are set to go to the private equity market in the coming months with a flexible proposal to sell anywhere between 19 per cent and 49 per cent of the business.

The club has had various valuations on what certain stakes would generate in revenue, but it's unclear how much the Brumbies would pocket.

The Brumbies generate around $20 million in revenue each year, but spend almost all of that in team costs and community investment. The private equity process could value the Brumbies in the tens of millions.

Either way, it is hoped the move would secure the Brumbies' financial future after years of declining grants from Rugby Australia and the COVID-19 hit sponsors market.

Rugby Australia is launching its own push into private equity, hoping to follow the same path as New Zealand after their trans-Tasman neighbours secured a $200 million investment from US firm Silver Lake.

The Brumbies have put together their own plan after six months of negotiating and have already spoken to the ACT government about what it would mean if they could find an investor.

The next step was meeting with ACT rugby club officials on Tuesday night to outline the potential requirement to form a new entity and governance model.

The meeting with club presidents was seen as a crucial step along the way to ensure all parties were on the same page.

The ACT Rugby Union has been the key stakeholder in the Brumbies from the very start of Super Rugby in 1996, and in the past have been reluctant to give up any intellectual property rights.

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But the reality of Australian rugby is that it faces a declining financial market, and Thomson says now is the right time to "establish the franchise as one of the pre-eminent rugby assets in the world".

"The sports world is moving in the direction of private investment," Thomson said.

"We want to keep pace with the modernisation, commercialisation and professionalism of the most valuable properties in global sport. We're a world-class rugby brand and new investment would allow us to diversify and improve our core revenue drivers.

"As we move forward with this investment, community rugby is still at the front and centre. Our rugby playing community ... has always been fundamental to the success of the Brumbies and we want to ensure we continue that."

The Brumbies have been working on a 50-page private equity document for most of the year to find new ways to grow the business.

The club was in a reasonable financial position before COVID-19 hit in 2020 and is one of the only Australian franchsies with no debts.

It is hoped a long-term Super Rugby agreement with New Zealand - which is expected to be finalised in the coming months - will give the Brumbies a boost as they prepare to enter the market.

Australian rugby is also hoping for an overall revival on and off the field as they prepare to host the British and Irish Lions in 2025, and the men's and women's World Cups.

Nobbs has been seeking private equity opportunities for at least the past four years, adamant it was the avenue for survival.

"To survive and buck the trend, I think the discussion on private equity and ownership is one we must have," Nobbs told fans in 2020.

The Brumbies are still searching for a major sponsor for next year after Ray White ended its partnership.

Crowd numbers across Super Rugby have dropped dramatically in the past five years, with the Brumbies averaging less than 10,000 for home games.

It has put a financial strain on the business, but the club is hopeful private investment will give it stability and the ability to win back supporters.

"Rugby Australia also recognises the need for private capital," Thomson said. "As a sport we're reviewing all aspects of our competition to ensure all the appropriate settings are in place to capitalise on the golden decade."

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