The Big Read SA rugby plays a losing financial game
Drop in sponsorship, crowds, coverage in SA has sport in decline
● It is now almost a decade since the Springboks were on top of the rugby pile as champions of the world, victors over the British and Irish Lions and Tri-Nations winners in 2009.
The “holy grail” was achieved with the national team beating the All Blacks three times in 2009, and the Blue Bulls would waltz into two successful Super Rugby finals (2009 and 2010).
Along with dominance on the field, in financial terms rugby was perhaps in its best health in the modern era, with its major teams — on the surface at least — being SA’s most profitable sports franchises.
Under the stewardship of CEO Johan Prinsloo, SA Rugby made a before-tax profit of R28.5m in the 2009/2010 financial year.
Today, the game that was first played in this country more than 156 years ago, at Bishops College in Cape Town, and that took root in various parts of SA, is in a precarious position because of the loss of sponsorship and an inability to outgrow its confines.
In its latest annual report, SA Rugby reported a before-tax loss of R33.7-million; in the 2016 financial year a loss of R23.3-million was recorded. Cricket SA, which also has myriad issues and is the smaller sport in popularity, last week reported an annual profit of R350-million.
SA’s rugby woes aren’t limited to the field; the numbers are not stacking up in the boardroom, even though MTN and FNB have come on board as sponsors. Anheuser-Busch InBev’s Castle Lager brand and Vodacom have continued their headline sponsorship of the Rugby Championship and Super Rugby.
The loss of key sponsors such as Absa and BMW three years ago contributed to SA Rugby’s financial decline. But former South African Breweries (AB InBev) sponsorship manager Errol Madlala, now director of Pitch Sports & Media Entertainment, said gaining and losing a sponsor was a cyclical issue and not one that should necessarily jeopardise an organisation’s finances.
Absa was the longtime sponsor of the domestic Currie Cup, which is now jointly sponsored by Nashua and DirectAxis.
“You align your sponsorship based on your strategy, and once you’re at the end of your cycle, if your consumers know your brand, you may want to do something else with your next five years — and relevance over five years can change markedly,” said Madlala.
“Part of the monies companies pay is for association, and you ask yourself whether you want to align yourself with this company further … In 2016, it was a negotiating cycle, which meant the sponsorship had run its course and it wasn’t in the middle of a sponsorship period.”
Further affecting the health of rugby is the Super Rugby product, which finds itself in murky waters because of small crowds.
While the crowds are good for schools and club games, Super Rugby has been cannibalised by the greed of administrators who have sought to extend the tournament in terms of matches and teams.
From its inception in 1996, Super Rugby has gone from a 12-team tournament to 14, 15, 18 and now back to 15 teams.
It speaks volumes about the parlous financial state the rugby franchises find themselves in that they refuse to make public their financial reports. When Business Times requested the annual reports of the county’s four major Super Rugby franchises, the unions weren’t too comfortable about opening their books.
Nielsen Sports MD for Africa Asia & Middle East Kelvin Watt said the franchises staying quiet spoke volumes about their financial struggles. “The franchises used to publish their results and the fact that they don’t publish [now] tells you everything you need to know about their finances,” he said.
“If it wasn’t for the money Altmann Allers and Johann Rupert have ploughed into the Lions and Western Province Rugby, they’d be in serious trouble. They can’t get their money back and they’ve ploughed huge amounts of money into the franchises.”
Rupert’s Remgro Sport Investments is owed about R44-million by Western Province, SA’s oldest rugby union.
Watt said there might come a point when the province would have to sell its 128-yearold Newlands stadium because it was simply broke. “It’s actually difficult to know the exact money SA Rugby is losing, and they’re imploding because you can’t make the money back with the big broadcast rights.”
Rugby teams were getting R10-million less this year from SA Rugby, worsening their plight, said Watt.
Teams such as Western Province and the Sharks had about 16,000-18,000 season ticket holders about six years ago, contributing about R1,500-R2,000 a ticket.
Today, they are selling as few as 7,000 tickets at the same price, which equates to a R20-million loss, he said.
“There are plenty of unsold corporate suites, which leads to massive losses, which affect revenue, but players’ salaries have gone up. SA Rugby can’t afford to have the numbers of professional players on its books.”
Then there is the uncontrollable matter of the economy. Over the past decade, the rand has weakened substantially against the dollar, euro and pound. The rand’s woes have made it an increasingly difficult task to keep the best players, such as Duane Vermeulen, bound to South African franchises.
A couple of weeks ago, SA Rugby president Mark Alexander said they were looking at cutting player numbers to ease the costs on franchises and unions. South African rugby has more than 900 professional players.
“The unions can’t back keeping 80-100 players in the system and what happens now is that they go to the annual Craven Week, where they contract all these young players who then stop studying and now we have a false market where you get a player who earns R20,000 for the rest of their lives. We can’t have that and we need to be responsible,” said Alexander.
Accessibility has also blighted the growth of the sport, with rugby available only on the Naspers-owned MultiChoice pay-TV platform, meaning that most South Africans rarely get to see the Springboks in action.
There is also the matter of the pricing of test match tickets. For SA’s home leg of the Rugby Championship, when the Springboks host Australia and New Zealand in Port Elizabeth and Tshwane respectively, prices will range from R125 to R650 for the Australia game, and from R380 to R950 for the All Blacks game.
For a local Premier Soccer League game a general access ticket costs R40.
Watt said ticket prices and the lack of free-to-air coverage of rugby had played a significant role in the drop in popularity of the game. South African rugby crowds have been disappointing, and even internationally attendance is waning.
The New Zealand Herald newspaper reported that there were only 27,000 spectators at the 52,500-seater Suncorp Stadium for the past weekend’s test between SA and Australia.
“Not having rugby on free-to-air TV has cost SA Rugby 20 years of an audience, and the cost of that from a fan-base perspective has been unbelievable,” said Watt. “The cost there is incalculable.”
The direct impact of a lack of free-to-air rugby means South African rugby has isolated itself from a substantial portion of the country’s population. The seemingly neverending flight of South African rugby-playing capital to the greener pastures of Europe means that South African rugby can’t readily replenish its stocks.
It’s actually difficult to know the exact money SA Rugby is losing
Kelvin Watt
Nielsen Sports MD