‘SA Rugby must come clean’
Franchises concerned equity partner deal seems a fait accompli without approval of members council
● SA Rugby has sought to extinguish fires lit by a potential equity partner — but discontent continues to rage among their top franchises.
In a letter to SA Rugby president Mark Alexander, the Lions, Bulls, Sharks and Stormers seek clarity about a potential equity deal with Seattle-based firm Ackerley Sports Group (ASG), which last week trumpeted a partnership with the Springboks.
That a deal has been concluded has since been dismissed, in various forms, by SA Rugby. “It actually pissed me off because it was misleading,” said Alexander.
The franchises remain concerned the deal now seems a fait accompli without the approval of SA Rugby’s members council but Alexander was keen to stress the local game’s governing body was far from putting pen to paper.
Reports suggested that ASG was ready to take up a 20% stake worth $75m (R1.42bn) in a jointly run entity that goes by the name Commercial Rights Company (CRC).
“The CRC will not be responsible for the management or selection of any national teams nor for the management of competitions,” SA Rugby CEO Rian Oberholzer said in a statement.
“It will be based in South Africa and have an operational staff transferred from the existing structures, augmented by international expertise and consultants. It will be SA Rugby’s commercial arm, a sub- sidiary to the mother body.”
Though SA Rugby has gone to great lengths to deny it is near completing a deal or that the Springboks are for sale, it is yet to directly address the concerns of the franchises.
“We don’t feel due process was followed,” said a delegate on SA Rugby’s members council who did not want to be named. “I know SA Rugby said in a press release that there was a general council meeting last December, but that was just an information session.
“We were prematurely asked to vote on a preferred bidder. Some questions got asked in that meeting. They indicated they would get back to us on some of those matters but they haven’t.”
He said the provincial delegates were effectively ambushed as they had no prior knowledge that the bidders would be making presentations at the meeting. Representatives from Ackerley were present while CVC Capital Partners, who had long been favourites to seal a deal with SA Rugby, had their say via a Microsoft Teams call.
They went on to explain Ackerley were SA Rugby’s guests at the Cape Town Sevens the following day, where provincial presidents got the opportunity to hobnob with the Americans.
The delegate raised the concern that provincial presidents with little to no commercial background would determine whether the deal goes ahead. One of the reasons SA Rugby identified Ackerley as their preferred bidder was the promise of an initial cash injection.
A deal with CVC would have realised benefits over a longer term. Alexander countered this by saying the decision was made on the back of wider consideration. “The whole idea is not to get a quick cash injection because if we do, we’ll be in the same place three years from now,” he said.
“It is about an organisation that can help grow our business. We need an organisation we can partner with that can help take us to exploit our commercial rights in other territories. We compete in Europe but we are rand based, so we start off on a low base.”
Having explained why ASG are Rugby’s preferred bidder Alexander said: “We are not saying the CVC deal is off the table.”
He explained why CVC’s bid was the less attractive proposition. “We received a first offer from CVC in 2020. That offer was made on a low base. We were building up the organisation again, recovering from Covid. We weren’t happy with the offer and we asked them to sharpen their pencils.”
Critics of SA Rugby’s decision added that members were told there were “red flags” concerning CVC. “Then explain to us what the red flags are,” demanded one delegate.
“Why did all other federations and leagues that CVC have now invested in not raise red flags that we now picked up? We were in a four-year negotiation with CVC before walking away at the last minute and have a deal with an unknown company. No one really knows who the Ackerley group really is. It’s a concern trying to understand how SA Rugby got to where they are and what the process is.
“We want to know how they evaluated the business. What are they going to do with the distribution? What is the entrance and exit strategy of this deal? There has to be an entrance and exit strategy. All we want is transparency.”