Aerios: Why it works at the Sharks and failed at WP
SPOTLIGHT: Jan de Koning chats to Aerios Chief Executive Costas Constantinou, to get the uncos on the looming court case.
The public spat and looming legal court battle between Aerios and South African Rugby is well documented.
The stadium technology and administration specialists last week filed court papers against both SA Rugby and the Western Province Rugby Football Union.
Aerios (Pty) Ltd, the agency which managed the advertising rights of the WPRFU since 2012, filed damages claims amounting to ZAR183-million.
However, despite the well-documented fall-out with the WPRFU and SA Rugby, they have a similar deal with another franchise that has been operating smoothly since 2008.
Constantinou, known in his company as El Patrón, has been dealing with the Sharks since 2008 and has had his contract with the Durban-based franchise renewed a couple of time.
Apart from the in-stadium streaming rights – a pilot programme they wanted to launch at Newlands – the contracts signed with the Sharks and WPRFU are virtually identical.
Yet they have been at loggerheads with WPRFU for years – a contretemps Constantinou blames on the interference of SA Rugby officials.
“It wasn’t us that went to WP Rugby, Rob Wagner [then WP CEO] came to us came to us,” Constantinou told @rugby365com in a wide-ranging interview to explain the reasoning behind his protracted battle with SA Rugby and WPRFU.
He said WP Rugby was concerned about the decline in attendances at the Newlands Stadium and needed assistance to entice people back into the stadium.
Despite the contracts and the commercial sentiments of the contracts signed with both the Sharks and WP being ‘very similar’, the real difference is that the Sharks “respect the contract and the terms of the contract”.
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“Everyone is happy because of the respect for the contract,” Constantinou said, adding: “They [the Sharks] earn what we promised them they would earn and we get the rights as they promised us.
“The fundamental difference with WP Rugby is that they haven’t respected the contract.”
Constantinou said the problems at Newlands started back in 2013, with the Advertising Right Agreement.
“When we signed that agreement, they were earning [just] ZAR2.1-million in advertising revenue.
“We offered them a ZAR8.5-million guarantee, without a Test match, and ZAR9.5-million with a Test match.
“We also offered to invest ZAR18-million of technology into the stadium.”
This investment included some in-stadium advertising to WP and Stormers sponsors.
“Western Province entered into these deals with us, very happily.
“We were giving them four times what they earned before. We were also putting all the technology into their stadium, including a big screen.”
However, things started to go pear-shaped in 2013, when certain sponsors wanted to renew and now wanted more value for what they were paying for.
Those sponsors wanted more in-stadium advertising and the then WP Rugby CEO Rob Wagner, without discussion with the rights holders Aerios, added additional advertising into the sponsors’ agreements.
“We took exception to that and we had a bit of an arm-wrestle about that,” the Aerios boss told @rugby365com, adding: “Eventually we were forced to discount the rates to them.
“Keep in mind, the first two years we were running at a loss, because of all the investment [into the stadium].
“We were forced to discount it to them to about 33 percent of the market value.
“We were not happy, but they extended our contract and promised us we would be able to deal with any other sponsors, which they kept to.
“We paid them [WP Rugby] about ZAR45-million over five years [for advertising].”
In 2016 Aerios ran into a new set of hurdles around the mobile rights they were given by WP Rugby.
It coincided with the arrival of Paul Zacks as Group CEO of the WPRFU and WP Rugby (Pty) Limited.
According to Constantinou, at this stage, SA Rugby’s lawyers started representing WP Rugby in these divarications and fall-outs.
“Paul Zacks ignored everything in our contract and started doing exactly what Rob [Wagner] did on 2013.
“He sold four to five times more advertising, including third-party clients that we have been dealing with for years at market-related rates.
“One example is the digital perimeter boards, where they got four minutes and he pushed that up to 24 minutes.
“We told them to stop dealing in our rights, but he [Zacks] ignored us.
“Eventually we had to go to court. We got an order of court to stop him from dealing with our rights. They still didn’t stop. We went back to court and got a contempt of court order.
“He now had this massive amount of inventory that he had offered his sponsors and he now wanted us to give him a rate card.
“If we had to charge them for the advertising they gave the sponsors, it would dilute the guarantee we gave them.”
Constantinou feels this was all part of the big plot to by WP Rugby/WPRFU and SA Rugby to rid themselves of the Aerios issue.
He suggested Zacks’ actions turned the agreement into a ‘bad deal’ and he then convinced the board that it was a bad deal.
“This was all with the guidance of the SA Rugby lawyers.”