SA Rugby taken to court in Newlands saga
BREAKING NEWS: The Newlands Stadium saga took yet another intriguing new turn when court papers were filed 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.
This follows an extensive three-year inquiry into unlawful conduct, Aerios said in a statement on Wednesday.
It is the latest in the protracted saga that has already seen the professional arm of WPRFU go bankrupt once.
It also comes in the wake of the revelations that WPRFU has to pay back Remgro (about ZAR58-million) and Investec (ZAR50-million).
The debt, owned to Remgro and Investec, is meant to both be settled from a ‘loan’ given by the new player – Any Side Investments (Pty) Ltd.
However, the waters have suddenly become a whole lot murkier around the Newlands Stadium deal.
At the centre of the court action brought by Aerios is SA Rugby, the national body.
Aerios said in a statement it believes the SA Rugby acted unlawfully in trying to rid itself of Aerios for self-gain.
(Continue reading below … )
It did so, Aerios maintains, by applying undue pressure on Western Province Rugby (Pty) Ltd – to release itself from advertising agreements dating from 2012.
Aerios Chief Executive Costas Constantinou said the papers describe the undue pressure and abuse of power the SA Rugby exerted over WP Rugby when it threatened to withhold a commercially important Test match allocation to Newlands.
This WP Rugby did expressly to extract itself from advertising agreements with Aerios.
SA Rugby responded swiftly in the wake of the court action.
“We strongly deny the allegations emanating from Aerios,” and SA Rugby spokesperson told @rugby365com.
“Given the nature of these claims, the matter is now being dealt with by our legal team and we will respond to any further communication from Aerios through the appropriate legal channels.”
WPRFU President Zel Marais also dismissed the claims.
“Any claim would be against WP Rugby (Pty) Ltd, [a company] in liquidation,” Marais told @rugby365com.
“[This has] nothing to do with WPRFU,” he added.
Aerios have instituted the court action on the basis of the information it gathered during the three-year inquiry, which was concluded at the end of 2019.
Based on its findings, it is suing SA Rugby as the main respondent and also the WPRFU for ZAR183-million in damages.
These damages were suffered as a result of the loss of extensive agreements that gave Aerios the exclusive rights to sell Western Province advertising at Newlands and/or the Cape Town stadium, if Western Province relocated or played fixtures there.
The papers argue that WP Rugby considered every available option – including obtaining multiple legal opinions – for ridding itself of Aerios and appeasing SA Rugby.
After enduring months of distress at the hands of SA Rugby, WP Rugby eventually took a decision to “release” itself from the Aerios agreements by going into liquidation, on the ground that it was unable to pay its debts.
Having taken this decision, it immediately informed Aerios that its advertising contracts with Aerios would not be honoured.
This was in 2016.
By entering into these contracts with WP Rugby, Aerios had acquired the advertising rights for professional rugby played at the Newlands and/or Cape Town stadiums.
These included the rights to all international fixtures during the period January 2012 to December 2023, secured in separate contracts signed in 2011 and 2014.
“We believe that SA Rugby endorsed the liquidation of WP Rugby,” Constantinou said.
“In doing so, it abused its effective monopoly over professional rugby and its position of authority over its members.
“In addition, it intentionally interfered with and forced WP Rugby to end its contractual relationship between WP Rugby and Aerios.”
In addition, Constantinou says Aerios was granted the exclusive rights to create, develop, install and operate WiFi and DAS networks and digital mobile content at Newlands rugby stadium.
Aerios was also awarded the exclusive rights, for a period of 20 years, to develop and operate the official WP Rugby applications from which the digital content could be viewed by supporters.
“However, SA Rugby purposely ignored the rights WP Rugby had granted to Aerios. SA Rugby instead concluded broadcasting and mobile digital agreements with SuperSport.
“In addition, it concluded agreements with SA Rugby sponsors, who were awarded certain advertising rights at rugby matches hosted by SA Rugby’s various provincial unions.
“This meant that SA Rugby had granted SuperSport and SA Rugby sponsors commercial rights that WP Rugby had previously committed itself to contractually to Aerios. By acting in these ways, SA Rugby was potentially in breach of its obligations to SuperSport, its sponsors and also to World Rugby.”
Aerios questions the validity of the broadcast rights granted to SuperSport and the various commercial rights that SA Rugby maintained belonged to them, and claimed it could dispose of as it wished.
These rights included advertising rights provided to Super Rugby and Currie Cup sponsors and for any international fixture, including the successful IRB Sevens held annually at Cape Town stadium.
“If they had been challenged at the time, these decisions would undoubtedly have put SA Rugby on a collision course with its council member, WPRFU,” says Constantinou.
“We maintain that SA Rugby abused its power and authority by continuously threatening WPRFU that it would not allocate lucrative test matches – including an imminent fixture between South Africa and arch rivals New Zealand – to the Newlands rugby stadium.”
The evidence suggests that, after WPRFU obtained four legal opinions, it was concluded that WP Rugby had not provided Aerios with any rights that it was not entitled to. But despite these opinions, SA Rugby continued to pressurise WP Rugby into releasing itself from its contractual obligations to Aerios.
WP Rugby was consequently forced to find ways to challenge the agreements it had entered into with Aerios – but without success.
Constantinou says that SA Rugby ignored Aerios’s advertising rights during the 2015/2016 World Rugby Sevens Series matches, which were planned for Cape Town Stadium in December 2015.
“We were set to challenge these rights in arbitration that was set to start a few months before the event,” Constantinou said.
“And the outcome would have established who rightfully held the rights to the advertising at the prestigious Cape Town event. But SA Rugby’s opposition to the Aerios contract culminated in its CEO, Jurie Roux, issuing a number of threats to the then WPRFU President, Thelo Wakefield. In them, Roux stated that SA Rugby would not allocate an upcoming test match between South Africa and New Zealand to the Newlands rugby stadium.”
“For WPRFU and WP Rugby, not being allocated a test match would have had catastrophic financial consequences,” asserts Constantinou.
“Ultimately, this serious threat, together with the various commercial rights challenges, provided a strong motivation for both SA Rugby and WPRFU to find a way of freeing WP Rugby of its agreements with Aerios.”
The Board of WP Rugby met in September 2015 to discuss the test match threat and later also obtained the opinion of senior counsel. Their counsel concluded that the Aerios contracts were valid and enforceable. In addition, WP Rugby would be liable to a damages claim if it unilaterally cancelled the Aerios contracts.
It is on this basis, together with the findings of the three-year inquiry and the legal opinion Aerios has sought, that the papers are being served on SA Rugby and WP Rugby on Wednesday.
Also worth reading …
Surprise new player in Newlands saga
Did WP executive overplay their hand?
New Newlands bomb about to drop?
Stormers move to CT Stadium confirmed
CT Stadium a new Bok fortress?
Newlands: The grand old dame is no more
