Matt Nichol, Lecturer in Law, CQUniversity Australia, John McLaren, Lecturer business law, CQUniversity Australia
In recent years, private equity has changed the global sports landscape, with clubs from Major League Baseball (MLB) and the National Football League (NFL), rugby union in New Zealand and European soccer reaping massive financial benefits.
Sports codes in Australia and New Zealand have also dipped their toes in the water, with potentially more to come: Cricket Australia is reportedly considering selling its Big Bash League teams to private investors.
However, there may be tax implications and other risks that negatively impact these leagues, which enjoy tax exemption status as not-for-profit entities that promote or encourage sport.
Private equity investments raise questions over whether sporting bodies can continue to claim the tax exemption.
Read more: Australia's major sports codes are considered not-for-profits – is it time for them to pay up?
How Australian sport is changing
There was a seismic change in Australian sports’ ownership structure in 2021 when private equity firm Silver Lake paid A$140 million for a 33% share of the A-League.
There was also a $6.5 million bid to privatise Super Netball in 2021. The deal was rejected. Then-Netball Australia CEO Kelly Ryan said the bid was turned down because: “we don’t know whether private equity is what is best for our sport just yet”.
Then in 2023 Football Australia considered selling the men’s and women’s national teams, the Socceroos and Matildas, to private equity for 99 years. The deal did not go ahead due to privacy concerns for participants in Australian soccer and the potential for Football Australia to lose its tax exemption and not-for-profit status.
In 2023, Rugby Australia secured an $80 million line of credit from Pacific Equity Partners.
In 2024, Wollemi Capital Group acquired a majority stake in the Women’s National Basketball League (WNBL).
Now cricket is considering similar moves. It’s been reported the governing body may raise significant revenue by selling its Big Bash League teams to private equity.
Lessons from New Zealand
In 2022, New Zealand Rugby, which controls the famous All Blacks team, sold a 5.71% stake for NZ$200 million (A$180m) to American private equity firm Silver Lake.
The deal valued New Zealand Rugby at NZ$3.5 billion (A$3.15 billion).
While the New Zealand Rugby League Players’ Association initially opposed the sale, it eventually voted to approve the deal.
New Zealand Rugby, the New Zealand Rugby League Players’ Association and Silver Lake created an international rugby investment business called New Zealand Rugby Commercial.
Of the NZ$200 million, NZ$38m (A$34m) was invested in New Zealand Rugby Commercial for revenue generation, NZ$10.5m (A$9.5m) is paid annually to Silver Lake as interest and regional rugby unions receive an annual distribution of 17%.
The players’ association agreed to the deal on the condition that everyday New Zealand investors could purchase up to NZ$10m (A$9m) in the new commercial venture. It is unclear whether New Zealanders did invest.
A second scheduled investment in 2023 by Silver Lake of NZ$62.5m (A$56m) to establish a legacy fund for a small share of New Zealand Rugby’s equity was blocked by the players’ association. However it was eventually approved by the New Zealand Rugby board after negotiations and a vote by the unions.
In late 2023 the New Zealand Rugby board advised stakeholders it was losing money and that it will spend the NZ$200m by 2031. These losses continued and in 2025, New Zealand Rugby posted a loss of $19.5 million (A$17.5m).
The losses appear to be associated with poor management rather than investment by a private equity firm: contributing to the losses were high fixed costs and player salaries.
Risks and possible rewards
Like the private equity deal with New Zealand Rugby, Australian sports exploring similar deals would need approval from their boards and respective player associations.
Private equity represents an alternative income stream for sports that rely on gambling income such as the AFL ($30 million a year) and NRL ($50 million a year). Many clubs in these leagues also earn income from poker machines.
New Zealand Rugby demonstrates that private equity investment can be hindered by mismanagement. However, a benefit can be the funding of grassroots associations.
There is also a risk of ceding ownership control to outside organisations that are motivated by profit and a return on their investment.
These risks can be negated by establishing controlling entities that are composed of the sports governing organisation, player associations and the private equity investor.
There is concern some smaller leagues may miss out on investment from private equity, but the WNBL’s deal shows it is possible to make it work.
The tax conundrum
Australian sports leagues and clubs such as the AFL, NRL and Cricket Australia enjoy an income tax exemption as not-for-profit entities that promote or encourage sport.
However, private equity investment raises questions over whether leagues can continue to claim this tax exemption.
In order to be a not-for-profit, common law requires an entity to not pay profits to its shareholders or owners.
This principle is known as the non-distribution constraint.
As profit-orientated investors who expect a return on their investment, private equity owners in sports would appear to violate the non-distribution constraint if they receive the profits of the leagues they invest in.
Sports exploring private equity must balance the income stream generated from private equity with the potential loss of tax exempt and not-for-profit status.
The authors do not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and have disclosed no relevant affiliations beyond their academic appointment.
