The proposed R1.3 billion private equity agreement between SA Rugby (SARU) and Seattle’s Ackerley Sports Group (ASG) appears to be falling apart as major rugby franchises in South Africa express strong opposition, Cape {town} Etc reports.
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What was initially believed to be a finalised deal over the weekend is now facing significant hurdles ahead of Thursday’s SARU council meeting, where a vote on the matter is set to take place. A critical letter from the leaders of prominent unions – including the Lions, Blue Bulls, Sharks and Western Province – has surfaced, urging SARU president Mark Alexander and CEO Rian Oberholzer to delay the meeting. They argue that proceeding could create unnecessary conflict detrimental to SARU and its members.
Reports indicate that by Monday evening, seven out of SARU’s 14 unions had added their signatures to the letter, signalling a collective disapproval of the ASG partnership. These unions are seeking an alternative proposal to be considered within three months. For the ASG deal to succeed, a 75% approval rate from the unions was required for the formation of a new commercial entity and the sale of a 20% stake to Ackerley, a company without any established presence in Africa or rugby.
As it stands, the deal is now on shaky ground. SARU has been on a nationwide campaign promoting the deal, urging members to vote in favour. However, the recent pushback from the unions has raised substantial concerns that could derail these plans.
In their letter, union leaders requested additional time to review the details of the ASG deal, highlighting various issues, including:
- Lack of Transparency. There are unresolved questions regarding the identities of ASG’s financial backers and their ability to fulfil the deal’s commitments.
- Ambiguous Contributions: The unions are unclear about how ASG plans to enhance SARU’s international brand, particularly when this should fall under commercial management’s responsibilities.
- Questionable Fee Structure: The proposed fees for the deal have raised ethical concerns, as many involved possess significant experience in capital markets.
- Long-term Risks: The unions warn that this deal could fundamentally alter SARU’s revenue control, jeopardising the Springbok brand and the financial stability of its members.
They cautioned that the uncertainty surrounding this transaction could severely affect rugby development initiatives aimed at nurturing future Springbok talent. As SARU continues its promotional efforts, discussions with the Stormers management in Cape Town are ongoing, though the Stormers will be unable to participate in Thursday’s vote due to their administrative status.
The tension with the three URC franchises—alongside Western Province—is particularly significant, as these teams have established private equity partnerships, as per News24.
The Bulls’ investments are shared between notable South African figures Johann Rupert and Patrice Motsepe, while the Sharks are primarily backed by New York-based MVM Holdings. The Lions are led by Altmann Allers, and Red Disa Investments has recently acquired a stake in Western Province. Enquiries made to the provincial presidents who signed the letter received limited responses, with Blue Bulls president Willem Strauss noting a non-disclosure agreement that restricts his commentary.
Expert opinion on the R1.3 billion valuation of SA Rugby remains cautious. Venture capital specialist Logan Govender remarked on the uncertainty surrounding this valuation, suggesting it appears low compared to the New Zealand brand valued at around R2.4 billion. He emphasised the need for greater transparency and a broader search for potential investors, especially for a national asset like the Springboks.
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