Six provincial unions will join forces and apply for the Crusaders' licence.
The Canterbury, Tasman, Buller, West Coast, Mid Canterbury and South Canterbury unions' names will all be on the expression of interest form to administer the Super team when the Crusaders board send it to the New Zealand Rugby Union today.
While the Crusaders board may have canvassed some New Zealand businesses about injecting capital into the new commercial model – and that doesn't mean they have secured any – it is believed they have not aggressively chased any potential overseas investors.
Canterbury, which still has healthy cash reserves despite posting a $563,000 loss last year, was always expected to spearhead the application for the licence and will provide most of the financial and intellectual grunt behind the scheme.
The NZRU want the licensee to provide a bond of $1 million, and to maintain at least $500,000 working capital at all times.
If the Crusaders board's application is successful, they may not be able to stump up the full amount immediately. Sources have noted they could be about $200,000 short, meaning the provincial unions, or any external businesses that are part of the consortium, will need to provide funding.
Those unions also have to factor in the prospect of being forced to inject more money into the Crusaders if the franchise loses money – something that could be a reality after last year's earthquake damaged AMI Stadium and tore an $800,000 hole in the books last year.
Although unable to provide much cash, the smaller unions are eager to be involved because they don't want their stake in the Crusaders reduced and believe it will reinforce to supporters in the region that they are still a valued part of the franchise.
They also view the licence as an investment opportunity and with the Crusaders boasting one of the most successful playing records in world rugby, there is optimism there may be some financial spinoffs in the future.
This is despite the Crusaders not issuing dividends in recent years.
The tricky part for the Crusaders board is that their application could potentially be gazumped by an outside party that has more cash, believes it can manage the licence better and earns the NZRU's approval.
The NZRU have a number of reasons to offer the licence. They want to avoid liability for franchise losses, offload their costs, decrease their exposure to risk and inject more capital into the game.
They also want applicants to prove they can change or improve a Super team as a successful "entertainment business", rebuild commercial revenue streams and boost ticket sales.
Proving they can reverse declining crowd numbers and dwindling revenues were among the prerequisites for the licences for the Crusaders, Blues, Chiefs and Hurricanes. The NZRU, at this point, has not sought any interest in the Highlanders because of their financial problems.
A major turn-off for licence applicants is they are not allowed to contract players, even though they can select squads.
The NZRU hopes to shortlist candidates late this month and will ask for more detailed, formal offers. A final decision is expected in the winter and new licence holders could be appointed by next season.
Neither Crusaders chairman Murray Ellis or chief executive Hamish Riach would comment yesterday. "It's not something we can talk about at this stage," Ellis said. "We are working through a process."
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