VIDEO: We're not a big money team of 'Galácticos'.
New equity owner Red Disa is not about to turn the Stormers into a big-money team of ‘Galácticos’.
Instead of splashing money on ‘big name’ players, the majority shareholder will first create a ‘sound financial base’ for the franchise from which to launch a championship-winning team.
At least they can get going on the back of winning the inaugural United Rugby Championship and playing in back-to-back finals.
Part three of his #EXCLUSIVE one-on-one with @king365ed Fynbos Ekwiteit boss and new Stormers CEO Johan le Roux reveals how he will assist the franchise in remaining a leading light in the game, including servicing existing debts.
Le Roux defined philanthropy as ‘A gift of money or its equivalent to a charity, humanitarian cause, or public institution.’
“The ‘label’ philanthropy is something we use internally,” he told @rugby365com, adding: “Our [Fynbos’] internal affairs are structured like that.
“It is one of two entities – either Fynbos, which this [Stormers] deal takes place in or the Kalander side, which is purely a commercial business.”
(Article continues below the Johan le Roux interview …)
He said they have no intention of losing money in the new company.
“We are happy to write a cheque to get the asset [Stormers] into professional hands.
“However, we are strongly aligned with our equity partners that we need to get this asset on a solid financial footing.
“Financial sustainability is not a sexy ambition for a sports team.
“However, for us, it is essential that you first have to realise what flexibility you have around your income streams, apply that to the team and then start growing it.”
He said the commercial side of the Western Province Rugby Football Union has not been invested in for some time, with the company not having had a CEO for years.
“It is a complex and competitive business,” he told @rugby365com.
Le Roux is well aware the other unions (read franchises) are not sitting on their hands.
“They are improving their product continuously.
“We need to take best business practices into this environment.
“Our challenge and dream is to get the business community behind the team and grow the revenue.
“The fans are there. We need to ensure they get a winning team on the pitch and a product off the pitch that they enjoy.
“That growing revenue stream will be invested into the playing and coaching side.”
He admitted that servicing the company’s debt – including the obligation to SARU for loans extended during the period in which WPRFU was under administration – is a complex matter.
Money from SARU got paid to the union, WPRFU, who then passed on the ‘loan’ to WPPR.
A portion of that debt was serviced when the equity deal was formalised last week, but Red Disa remains liable for the remainder of the loans owed to SARU and will be repaid in terms of the company’s loan agreement.
Le Roux was not willing to reveal the amount of the loan, other than to say it was “substantial”.
He added that the ‘thorny’ issue for an owner is to decide to first build a winning team and let the revenue stream grow from that, or get the revenue to grow first and then invest in the team.
“We are very fortunate that [new Director of Rugby] John Dobson managed to take the players and coaching staff he had and build that into a winning team.
“As our partner from Ireland Mick Dawson [former Leinster CEO)] said: ‘Everything else is easy, but trying to win is tough.’
“If the team keeps winning, we have the skill to build a winning commercial product around that, reinvest in the team and keep winning.”
He concluded by telling @rugby365com that he is not about to buy half a Springbok team.
“We are not a ‘Galácticos’ or a big money team,” Le Roux added.
“We want to reinvest the growing revenue.
“We are solvent for the first time in years. We don’t want to invest that in salaries, rather grow the revenue stream – which over time, will be reinvested in the team.”
@king365ed
@rugby365com
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