28 Mar 2024

How NZ Rugby’s board plans to rearrange the way the game is governed

8:03 am on 28 March 2024

On Wednesday, NZ Rugby (NZR) board chair Dame Patsy Reddy announced a plan to reorganise governance of the game.

Accompanying the announcement was a visual aid:

A flow chart depicting NZ Rugby's proposed governance structure following a wide-ranging review in 2023.

NZ Rugby's proposed governance structure following a wide-ranging review in 2023. Photo: NZ Rugby graphic

Needless to say, the plan is complicated and the result of some major compromises.

How did we get here?

In June 2022, NZR signed a deal with US private equity firm Silver Lake. The deal was hard fought over many months. As a condition of its support, the NZ Rugby Players' Association won agreement for an independent governance review.

That review was carried out last year by a panel led by governance expert David Pilkington, and the findings were brutal.

The report painted an alarming picture of a dysfunctional organisation beholden to the provincial unions. It pointed to the unions' constitutional voting powers and influence over board selections and concluded urgent change was needed.

The 26 provincial unions had long believed they "owned" NZ Rugby, but the Pilkington report said otherwise. That's not how incorporated societies work, it said.

There were two key recommendations.

First, the creation of an independent professional process to appoint a skilled, high-performing, independent board. And second, the creation of a 'stakeholder council' to give voice to the full range of people in the game.

Essentially, Pilkington was proposing the entire NZR board sack itself and a new fully independent board be appointed. The provincial unions would also have to cede a significant amount of power - they would no longer have a voice at the boardroom table and instead be represented through the council.

What's the compromise proposal?

After seven months of negotiations with its members, NZ Rugby has come back with several tweaks that amount to a significantly compromised proposal.

Rather than sacking themselves, the NZR board has proposed a "transitional model" in which directors will be phased out as their respective terms end. A managed retreat, if you will.

Under the proposal, a transitional appointments panel agreed with voting members would be established in the interim to provide certainty in the upcoming board appointments process.

Another major backdown is around the make-up of the appointments panel that selects the board.

The Pilkington report recommended a five member appointments panel made up of two independent members appointed by the Institute of Directors, one independent member appointed by the NZR board, and two appointed by the council.

However, under the NZR proposal, all five members of the appointments panel will be "agreed with voting members".

While this appears a subtle shift, it means the provincial unions will effectively choose the make-up of the appointments panel for the board, which hands them back a lot of influence.

New Zealand Rugby Chair Dame Patsy Reddy.

Dame Patsy Reddy is chair of NZ Rugby's board Photo: Michael Bradley

The concessions are even greater on the creation of the 'Stakeholder Council'.

The review panel saw council's role as "providing input" on board selection, competency framework and succession planning. The council would have a maximum of 15 members made up of representatives from a large cross section of the community including the NZ Māori Rugby Board, the Pasifika Advisory Group, Super Rugby clubs, secondary schools rugby, Women in Rugby Aotearoa and Sport NZ.

NZR has proposed to rebrand the group as the Rugby Council. It appears its role, powers and make-up would be decided by itself.

"The purpose, responsibilities and membership of the Council would be co-created with our rugby stakeholders and subject to approval from our Affiliated Bodies at the 2025 AGM."

Why is there so much rancour over NZR's "Pilkington-lite" model?

The sticking point for the provincial unions is the lack of a seat (or seats) at the boardroom table.

Representatives from the unions have drafted their own proposal that is significantly different in key areas, most notably their insistence that the board must include three members with at least two years of experience on a provincial union board.

An NZR board appointment has long been considered a rite of passage for provincial union leaders. But union representatives say the move is not about egos, rather it is about ensuring there is sufficient "rugby experience" on the board.

The grassroots game represents NZR's largest membership base, and union bosses say it is important that there is sufficient representation from the community end.

It's a particularly sensitive moment for the provincial unions. Big question marks hang over the future of broadcast plans for the National Provincial Championship and Farah Palmer Cup, and its overall role in the high-performance pathway of elite level players.

What happens now?

The impasse is expected to culminate in a head-to-head vote at a Special General Meeting (SGM). The 26 provincial unions will pit their proposal against NZ Rugby's.

If the provincial unions win, Reddy has indicated she is prepared to quit as chair. She says over the past 12 years there have been five governance reviews, which only led to incremental change.

"We've spent a lot of time with the provincial unions seeking to co-design the way forward. We've reached this position where the provincial unions have a different perspective on board representation and I felt I had to be open with them and say if that proposal was brought forward and ultimately successful that I would not be able to work with it because I don't believe in it," she said at a media stand-up in Wellington on Wednesday.

"It was not me threatening, it was me letting them know that was not something I can support."