EP deal rests on Saru law change
IF THE proposed partnership deal between EP Rugby and Pro Rugby North America is to get off the ground then SA Rugby must change their constitution to allow for up to 74% private ownership of South Africa’s six Super Rugby franchises.
It is believed that the “game changing” amendment to the SA Rugby constitution could be made as early as next month when rugby bosses gather in Cape Town for a general meeting.
Earlier this week SA Rugby president Mark Alexander, who is in Europe with the touring Springboks, met Douglas Schoninger the CEO of Pro Rugby North America, about a potential deal that could change the face of South African professional rugby.
The pair spoke at the World Rugby conference on Monday after Schoninger expressed his interest in acquiring the Nelson Mandela Bay junior, Currie Cup and Super Rugby teams.
At present investors are limited to 49% ownership, and this is something that could put investors off when considering getting involved with professional commercial rugby.
“People must be aware of the present situation and the pathway ahead that could be out of reach for EP unless a deal can be structured to grow the game,” was the warning that the architect of the London meeting, Tony McKeever, issued.
McKeever is the former CEO of the Southern Spears and founder of Mandela Bay Rugby.
Alexander has made it clear that he wants change to boost the South African professional game and make it more attractive to investors.
After he was formally inaugurated as SA Rugby president he revealed his union was looking to increase the allowed private equity involvement at all levels from 49% to 74% and there was already interest from abroad.
Alexander said SA Rugby wanted to increase the percentage to keep the best players in South Africa and to contribute to the growth of the game with more and bigger financial resources available.
“We are going for licensing so the equity partners can particip he said. “We are toying with the number, but it looks like a 72% or even up to 74%.”
McKeever said Alexander has shown “refreshing and innovative leadership” since he came to power.
“From what I understand, Mark Alexander is assembling support from the Saru unions that will financially unlock the residual assets of the six franchises by having an amendment to the Saru Constitution Clause 22.3. This limits ownership in the commercial company to 49%.
“To be truly professional as in France, the UK and New Zealand, Mark is proposing that this ownership percentage be increased to 74% so the respective rugby unions still sit with a major shareholding of 26%.
“This business model and structure will then attract investors like PRO Rugby and others, who will then have proper ownership and structures in place that replicate those successful businesses.
“The fast pace at which the administration and management of rugby is moving in the Northern Hemisphere, has overtaken South African rugby, so rugby in South Africa needs to recalibrate itself.
“What better way to start with the six franchises as Alexander has declared and in the instance of EP Rugby, there is a very powerful and long-term agreement to be had to put EP Rugby’s Currie Cup and Super Rugby participation on a growth trajectory on and off the field.
“This is an absolute necessity especially as Sanzaar are discussing shortly, limiting the number of Super Rugby teams from 2018 onwards from 18 to 16 teams.
“Who then become the two casualties? Is it the Force and the Kings or the two newcomers Japan and Argentina?
“Would it not be better to increase Super Rugby to 20 teams and pull in a USA team and a Pacific Island Team and play two pools of 10 in which the two last placed teams in the Premier Division are relegated and the two top teams in the Second Division are promoted?” said McKeever.