A New Zealander passes the rugby ball to an Irishman, who passes to another New Zealander, who scrambles over for the try — giving New York the lead over San Diego, 19–14. Although this sounds like the set up of a joke, it is a recap of the 21st minute of the March 20 opening-day match of the US Major League Rugby (MLR), which is now entering into its third season.

Bolton Equities Ltd, the New Zealand-based private equity firm that owns Rugby Union New York, will no doubt have been pleased with the eventual 36–29 victory.

Trying to find a place

Rugby is one of several sports in the US that has become attractive to foreigners — both players and investors. Reliance on foreign players to attract US fans started more than 45 years ago, when the Brazilian football player Pelé joined the New York Cosmos. The league folded in the 1980s, but subsequent endeavours, including Major League Soccer (MLS), have since been dependent on foreign players.

Other leagues, such as the National Hockey League (NHL), the National Basketball Association (NBA), Major League Baseball (MLB) and the Premier Lacrosse League (PLL), have experienced an influx of foreign players in recent decades; indeed, 28% of MLB players are now foreign. This influx has brought much-needed investment in the form of so-called ‘private money’ — most often in the form of private equity, domestic and foreign investment. The NBA boasts team owners from Israel, India and Taiwan.

The increase in private money has generated a newfound acceptance of fund ownership. MLS and the NHL now welcome fund investment. Global Rugby Ventures, set up by Errik Anderson when he founded the rugby team the New England Free Jacks, now boasts a minority interest in four MLR teams. 

“Sports are beginning to wake up,” says Giles Morgan, former global head of sponsorship and events at HSBC. “There’s more and more interest in private money in sport. We are approaching a golden age of investment in sport.”

Finding the right partners

MLR and other smaller competitive leagues, such as the PLL, will never replace American football, basketball, baseball, soccer or ice hockey in the US. However, with investment from the likes of Joe Tsai, executive vice president of Alibaba and owner of teams in the PLL, MSL and NBA, they may one day be able to share the limelight. And MLR may become a bellwether of successful foreign investment for other start-up leagues, despite the road ahead going further uphill. 

“We’re not profitable,” says MLR commissioner George Killebrew, who came to MLR in 2020 with decades of marketing and executive experience at the NBA’s Dallas Mavericks. He took charge of a league that is expanding, despite its struggles, on its own volition.

Although Mr Killebrew does not deny that the cash-strapped league would welcome the $10m required for any new team to enter into the fray, he insists that MLR is not desperate. “We’re not in survival mode anymore. We’re not in dire need. We can sit back and look for the right partners,” he explains. 

While several sources told fDi that the teams' owners hope to grow MLR by one or two teams per year until it becomes a 32-team league, the MLR would not disclose any figures related to its projected expansion. Hosting the Rugby World Cup is another goal that Mr Killebrew is working towards.

MLR was founded as a US league that would hopefully produce American players and one day produce a World Cup-winning team. The limit of three foreign players on each team was scrapped early on to give US players a chance to compete with their peers from overseas and thus raise their game. However, some owners are now wary of MLR becoming too foreign-dominated if they are to reach this goal. Despite these concerns, Mr Anderson argues the league should be a “melting pot” and that foreign players offer teams the opportunity to reach out to local communities that otherwise would have ignored them.

Reaching the try line

The league continues to enter talks with potential foreign investors, Mr Killebrew says, and insists MLR has been “very honest”, and does not want to overpromise.

Kanaloa Rugby Hawaii, which is based in Hawaii but backed by several former New Zealand-born rugby players, was set to join MLR last year until the team's chief executive, Tracy Atiga, announced in September that their due diligence review into the “long-term viability of MLR” had resulted in “high-level concerns for our organisation”. Citing Covid-19 as a reason for her group’s decision, Ms Atiga told The Guardian that MLR “has not been able to provide the type of assurances that would enable the trust and confidence required to continue with our membership goals”.

And the promised broadcast and marketing potential have not yet materialised in dollar form. Although MLR has previously broadcast on major networks CBS and Fox, it waited until this season to launch a live-streaming platform, The Rugby Network, which includes both MLR and international matches, blogs and commentary.

Global Rugby Ventures’s Paul Hourigan, who was previously director of sports marketing at Coca-Cola, says MLR’s sponsorship model, based on “value-in-kind” deals with companies, is not about injecting cash into the league. “American Airlines sending out a tweet announcing the start of the rugby season is more valuable. The number-one priority is to get major awareness for MLR [and] aligning with organisations that can allow us to tell our story.”

He cites Paul Rabil, who helped found the PLL and thrust lacrosse into the limelight through social media, as the example to follow. “People now know about PLL,” he says. 

Foreign investors either have to understand the US market or partner with someone who does. Chris Dunleavy, co-founder of Old Glory DC, which partners with the Scottish Rugby Union, says investors who know rugby will have a head start. Mr Anderson agrees, adding that investors need to know the risks: “This is not, ‘Buy a team and expect a positive cash flow the next year’. If you want to do that, buy an NBA team. This is a start-up league in the US. It is a rare and unique opportunity, and will only come once in our lifetime.”

This article first appeared in the April/May print edition of fDi Intelligence.