SARU addresses equity deal fears as opposition mounts

NEWS: SA Rugby is currently dancing like a cat on a hot plate as it seems the equite deal with Ackerley Sports group (ASG) is in jeopardy and not supported by all the union members as previously reported by the mother body.

The R1.3 billion private equity deal with ASG seem to be in jeopardy after some of the country’s rugby unions and franchises voiced their concerns in a letter to SA Rugby.

Top unions, such as the Lions, Blue Bulls, Sharks and Western Province, have asked Saru president Mark Alexander and CEO Rian Oberholzer to postpone the General Council meeting scheduled for Thursday, October 17.

The deal meant SARU would sell 20% of it’s stake in its commercial arm to ASG, but it looks unlikely to proceed when the council meets to vote on Thursday.

According to News24 seven of Saru’s 14 member unions had signed a letter opposing the deal. The unions are pushing for a postponement of the vote and are calling for an alternative proposal to be presented in three months.

For the ASG deal to go through, 75% of the unions would need to back the plan. However, with the opposition mounting, the deal appears to be on the verge of collapse.

Saru conducted a roadshow to rally support for the proposal, and even sent out a release last week thanking their union members for support the proposed deal.

But serious concerns about the deal’s transparency and long-term impact have surfaced.

The unions argue that there’s insufficient transparency and question whether ASG has the financial capacity to execute the transaction fully.

The financial independence of SA Rugby has also been called into question with the unions warning that the deal risks permanent changes to SA Rugby’s commercial structure, including the Springbok brand.

The unions are of the opinion that investor involvement will hamper the growth and development of the sport and they question why Saru is turning to a private equity partner rather than relying on its own commercial expertise.

SA Rugby sent out a statement earlier on Tuesday to address some of the burning questions for more clarity:

Is it a done deal? No, our team was mandated to pursue further discussion. The members of SA Rugby have agreed on the primary conditions, however, substantial effort is ongoing behind the scenes to finalise the specifics. Since the finer points are critical, no final approval will be granted until our members have been thoroughly briefed and a mandate secured. This process can only be agreed upon once our 14 members have approved it.

Who has sign off? Only one body – the member unions of SA Rugby, the sport’s shareholders. It cannot happen without their approval.

When will they see the details? Once a proposed final structure for the new company and its relationship with the existing SA Rugby structure has been finalised a series of workshops and information sessions will be undertaken to allow member unions to fully interrogate the deal. That structure is still a work in progress.

Are you selling the Springboks? No. The Springboks and all national teams will retain their existing management and ownership models. As national institutions, the Springboks and SA Rugby are not transferable to private equity. This strategy is about harnessing our commercial rights in partnership with an organisation, creating a separate entity dedicated to elevating our commercial profile.

So how will the Springboks be paid? The new commercial entity will remit an annual fee to cover all current operations of SA Rugby – from paying the Boks to providing funding to the unions.

What are the next steps: Once a proposed post-deal structure is nearing finalisation it will be workshopped with member unions. Until such time as that position has been reached it would be counter-productive to speculate on.