South Africa’s rugby unions that hosted Tests this year and the South African Rugby Union (SARU) will try to resolve their differences in a bid to reach an agreement on a proposed private equity deal.
The financial bailout of $75m (around R1.3bn) from an American investor for a 20 per cent stake in SARU’s commercial rights company has become a sticking point between the governing body and the country’s bigger unions.
The Test-hosting unions are refusing to transfer the right to host Springboks Tests to the American investor, the Ackerley Sports Group (ASG).
A meeting is set to be held in Cape Town on Thursday between SARU and the six unions which hosted Tests this year.
One of ASG’s conditions for the private equity deal is that they be put in charge of Springbok Tests. However, the unions are not in favour of that and are demanding that they retain the right to host Tests themselves, which is a way for them to fill their coffers.
A first round of negotiations was held recently and according to Sunday newspaper Rapport, it is believed to be especially the Bulls and Stormers who highlighted this particular point of concern.
SARU are hoping to receive exact figures from the union representatives at Thursday’s meeting about the actual profit which they make by hosting Tests.
“The Test model in isolation is not that critical,” an insider told Rapport.
“After all, the proceeds (if ASG were to host the Tests) remain in the rugby scholarship. As long as it is divided sensibly.”
Profit per Test not sufficient
Another source said the profit per Test of around R20 million to R25 million is not sufficient.
“It is also not about where the Tests are hosted, rather about a sustainable Test model from which all the unions and SARU will benefit,” explained the source.
“The real problem is SARU is taking the Tests away from the franchises and giving a 20% stake to Ackerley for free. It is still uncertain whether Thursday’s meeting will continue. They cannot meet only about the Test model, the other issues must also be tackled.”
SARU are keen to be able to make certain proposals to ASG regarding the Test model after its meeting with the Test unions.
The governing body are insisting that all the unions have been aware of the new Test model for a long time. Even if the ASG deal is not approved, SARU will be in control of when Tests are played in South Africa from 2025 onwards.
Springboks: Government intervention delays SA Rugby’s crucial meeting over $75m private equity deal
Another point of concern is the approximately $7.5m (around R132m) worth of commission that must be paid to Formula 1 team owner Eddie Jordan’s Jordan and Associates for putting the deal together.
“It’s not something that is hidden from unions and that they only heard about recently,” a rugby boss told Rapport.
“It has already been approved by SARU’s financial committee, executive committee and the main council. This has been known since the beginning of the negotiations.”
Meanwhile, it has emerged that ASG have indicated that they are prepared to meet with the shareholders of the international franchises – over their issues of concern – on December 3 in South Africa about the equity transaction.
Date set for unions to vote on ASG deal
On December 6, SARU’s main council, which consists of the 14 full member unions’ presidents and chief executives, will have to vote on the ASG deal.
They were initially going vote on the deal on October 17 but that meeting was postponed upon request from the South African government’s Minister of Sport, Arts and Culture, Gayton McKenzie, who wanted to be fully briefed on the ASG proposal.
10 out of the 13 votes are required from the provincial unions for the deal to be approved.
“SARU are doing the deal as the governing body has no reserve funds. If we have another Covid, we will be wiped out as a sport,” added the rugby boss.
Meanwhile, SARU have visited various partners and sponsors in South Africa during the past week to explain that the ASG deal is not a hijacking of SA rugby, as is believed.
“SARU has not been profitable since 2010, so there is no money for ASG to take,” another rugby boss told Rapport.
He said ASG want to invest R1.3 billion and will also take the responsibility to make more money – through the commercial rugby company that will be established together with SARU.
“If it doesn’t happen, ASG gets nothing. The Ackerley group commits to this and it is not SARU who takes the risk,” added the rugby boss.
“It will, as it were, be a donation (to SARU) if there is no financial progress.”
READ MORE: Springboks’ $75m private equity deal ‘on verge of collapse’ after dissent from top provincial unions