Exclusive: NZ Rugby set for radical boardroom changes

New Zealand Rugby is expected to be told this week that its governance structure is not fit for purpose and that it needs to radically overhaul its constitution to better reflect the game’s changing stakeholders
– initiatives that will likely require a cleanout of the existing board of directors.

It is understood these are the key findings of the independent governance review into NZR which began in January and will be released on Thursday.

Having agreed to consider in good faith the findings of the review – which was conducted by a four-person panel that included former Fonterra executive David Pilkington, former All Blacks captain Graham Mourie and experienced directors Anne Urlwin and Whaimutu Dewes – and “act upon any recommendations to the extent practicable”, NZR is facing the most significant change in structure in its 130-plus year history.

The Herald has spoken to several long-serving rugby figures who say they believe that the review will prove to be a comprehensive and professional piece of work, and will, if its recommendations are accepted, pave the way for the national body to radically reset itself as a modern, world-class institution.

The review will provide definitive views on who the panel consider to be the stakeholders of the game, and state whether it believes all vested interests are adequately represented.

It will be definitive on what role each stakeholder group should have in the governance of NZR, what the right process is to ensure appropriately qualified directors are appointed, and whether the set-up attracts the best people with the requisite skillsets.

While the review was commissioned and paid for by NZR, it was effectively instigated by the New Zealand Rugby Players’ Association which made it a condition of returning to the negotiating table in mid-2021 when discussions about a proposed private equity deal with US fund manager Silver Lake broke down.

NZRPA did not support NZR’s first attempt to sell a stake in its commercial assets to Silver Lake – partly because it felt the terms would prove to be catastrophic to the New Zealand game, but mostly because it felt the national body had run a secretive process that had failed to observe its legal obligations to work transparently and collaboratively with the players.

The lack of astute financial analysis in regard to that first attempted deal, and the botched nature of the process to try to get it over the line, triggered widespread concern in the wider rugby community that NZR didn’t have directors with the requisite skillsets and experiences to effectively govern a sport that is almost unrecognisably different to the one it was 30 years ago.

NZRPA was also conscious that once it agreed to work with NZR in mid-2021 to try to rescope the initial deal, a successful outcome would lead to the creation of a new company that would house and manage all the commercial assets under the guidance of a separate board.

It was felt that it would, therefore, be appropriate to ask whether the national body’s constitution and governance processes remained fit for purpose given the new structure and scale of change, and hence agreement was reached that NZRPA would re-enter good faith negotiations about a private equity deal on the condition NZR agreed to a full-scale governance review.

The terms of reference, which were set on February 4, 2022, stated that: “The purpose of this review is to answer a simple question: Is the constitution and governance structure of the New Zealand Rugby Union fit for purpose – to ensure the appointment of a board that has the required matrix of skills, experience and qualifications to govern effectively; and to confront the challenges, and maximise the opportunities, that will present themselves (including the establishment of a new commercial entity)?

“If not, what are the changes that should be made to allow it to be so?”

NZR has a nine-person board where three directors are appointed, three are elected and three are nominated by the provincial unions and NZ Maori Rugby Board.

This structure has, by and large, been in place since the beginning of the professional age when the decision was made in 1995 to axe the boated committee that had governed the game in the amateur era and replace it with a smaller, corporate-style governance group to reflect the new challenges the sport faced.

But 28 years on, the challenges the sport faces have markedly changed again with NZR struggling on several fronts, most notably in how to make rugby appeal to teenage boys, balancing the needs of elite athletes with those at the grassroots and finding ways to keep players safe without losing the gladiatorial essence.

There has also been a serious power shift in the wider rugby landscape, with Super Rugby usurping the National Provincial Championship as the highest-profile professional competition, while the popularity of women’s rugby has exploded, highlighting the need for more females to be encouraged into positions of responsibility to ensure there is an investment flow to sustain this growth.

As the review’s terms of reference stated in its background section: “The size and complexity of NZR’s operations, and its value, has grown significantly since professionalism.

“It is now a complex global sports business of significant scale, operating in a dynamic and growing global industry, balancing commercial and not-for-profit objectives.

“NZR should have the best possible governance structures, processes and organisational capabilities fit for its needs and the parties agree it should be run by the best possible mix of qualified directors with relevant experience.

“How NZR responds to these challenges and opportunities will largely determine its success or failure – and the health of the sport in this country – in coming decades.”