Cash crunch: Another 'win' for SARU and the biggest losers

SPOTLIGHT: The South African Rugby Union’s kingpins this week appeared before parliament’s Portfolio Committee on Sport, Arts and Culture, and it produced some fascinating titbits.

One of the more ‘heated’ topics was the secrecy surrounding a SARU-commissioned report by PwC, to investigate the failed Ackerley equity deal.

Unconfirmed media dispatches suggested that ‘disciplinary action was warranted’ against some SARU officials.

However, SARU, upon further legal advice on the PwC findings, decided not to take disciplinary action.

The details of this report have been kept under lock and key.

While members Portfolio Committee were invited to ‘scrutinise’ the PwC findings, there was an ardent discussion about signing non-disclosures and whether committee members could discuss those findings in parliament.

SARU is clearly keen on keeping the details out of the media.

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Another aspect that received some attention was the financial report, first released by SARU in June, and tabled as part of their annual report to the government’s oversight committee, Chaired by Joseph McGluwa.

SARU admitted that their year-end position does reflect a position of ‘technical insolvency’, with liabilities exceeding that of assets in the group by ZAR51-million.

As per their June release, SARU had suffered a year-end post-taxation loss of ZAR93-million.

However, the bigger picture – or long-term strategy, as SARU put it – shows that additional revenues have been secured through an accelerated commercial programme for 2025 and beyond.

This includes a strategy called ‘Destination 2027’, a comprehensive four-year strategic plan aimed at reinforcing the long-term sustainability and competitiveness of South African rugby.

While the rugby landscape in South Africa looks rosy – with the World Cup, Sevens and Under-20 titles in the bank – it is perhaps prudent to compare South Africa’s situation, or financial losses in 2024, with its major rivals.

In the face of an ongoing global ‘cash’, countries like Wales, New Zealand, England and Australia have their own issues.

The Welsh Rugby Union is faced with financial mismanagement, leadership issues, and a lack of investment in youth development, leading to struggles for both the national team and regional teams. There is a suggestion that two of the four Welsh regions should be culled.

New Zealand’s issues reported include overspending, accumulating debt, declining revenue, and reliance on private investment. New Zealand is rapidly depleting its investment from the private equity firm Silver Lake.

England’s issues are reflected in the failing Premiership, with some clubs still technically insolvent. Three clubs – London Irish, Wasps, and Worcester Warriors – have entered administration between 2022 and 2023 as a result of a flawed business model that has led to the clubs spending more than they earn, and a dependence on wealthy benefactors that is not sustainable.

While financial pressures remain a universal challenge, SARU’s performance remains noteworthy, particularly given the substantial investment undertaken to maintain international competitiveness.

In the report, SARU revealed that the financial pressures confronting South Africa are mirrored globally, as leading unions continue to report substantial losses:

SARU is certainly far better off than its main rivals, like England. France, Ireland, Scotland, Wales and New Zealand.

Federations and their reported losses in 2024:
* England: £37.9m (ZAR918m)
* France: €29m (ZAR588m)
* Ireland: €18.4m (ZAR372m)
* Scotland: £11.3m (ZAR273m)
* Wales: £7.5m (ZAR181m)
* New Zealand: NZ$11.6m (ZAR123m)
* South Africa: ZAR93m

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