SA Rugby’s move towards an equity partner has become bogged down in a climate of caution and suspicion, and may only reach finality in September.
The national federation is trying to conclude a deal with the Seattle-based firm Ackerley Sports Group (ASG) but have gone about the deal with an abundance of caution, while sectors in the franchise fraternity continue to raise concerns about the deal that is believed to be worth between $75m (R1.37bn) for a reported 20% stake in SA Rugby’s commercial arm.
There has been much disquiet in local rugby circles since ASG jumped the gun earlier this year when they announced they were set to partner the Springboks.
“We still don’t know who’s actually putting the money up,” said one provincial representative who did not want to be named.
“It might well be a Saudi fund or a Jewish consortium — I’m just using examples here but that needs to be disclosed as there are certain sensitivities about the world. Though it is only a minority share we can’t just sell to a structure we don’t know. It is a shelf company at the moment.”
He went on to explain that ASG was not an “institutional equity fund” like CVC Capital Partners, which has invested in the Six Nations and the United Rugby Championship, or Silver Lake, which concluded a deal with New Zealand rugby. “Those entities are registered private equity funds that have to adhere to FSB (financial services board) regulations.”
We still don’t know who’s actually putting the money up
— Provincial representative
SA Rugby president Mark Alexander, however, said ASG has a track record in sport. “This group will underwrite it. These are the same guys who bought into Leeds United.”
Alexander was keen to draw the distinction that the concerns being raised emanate from local franchises’ equity partners and not the member unions. He inferred that expediency was at play. “Some may have vested interest trying to get in on the deal. We can get money in South Africa but two years down the line we will be back where we started.”
The provincial delegate expects a bumpy road ahead saying he’d be surprised if the deal goes through smoothly.
Another provincial delegate who has adopted a wait-and-see attitude added: “There is still a lot of water that needs to flow into the ocean before the deal is done.”
Three quarters needed
SA Rugby can’t conclude the deal without 75% approval from their general council. “The four franchises keep asking questions that remain unanswered,” said the first delegate.
“We all need this thing to go through but it needs to go through in the right way. It will affect the industry.”
The other concern that was raised involves how the commission on the deal will be structured. “The commission on this deal is 15%,” said the delegate. “It is never going to get voted through by the franchises. Break the 15% down. If 5% goes to fees then there is 10% left and that would be $7.8m. Who’s getting that?”
When the Sunday Times put that question to SA Rugby CEO Rian Oberholzer, he said: “The structure covers a finder’s fee for the entity (Eddie Jordan Enterprises, from F1 fame) that brought ASG to the table. Out of that they pay all their legal and financial fees. We don’t pay any fees for the conclusion of the deal, whether legal tax or financial, it comes out of the commission.”
He then made sure to stress that his predecessor would not benefit from the spin-offs. “Jurie Roux is not getting a commission on this.”
He also assured that no-one at SA Rugby will share in the commission.
Oberholzer, meanwhile, has found himself at the centre of nepotism claims relating to Access Management Services (ASM), the company he used to head but in which he no longer has an interest.
ASM, now headed by Oberholzer's son Lourens, will help organise the Test series against Ireland. Alexander said there was no conflict of interest. “Internally we have a conflict management framework in place,” he said.
“We have too many events (women's competition and the U20 World Championship) and we need help on a temporary basis. It has gone through the necessary levels of our governance. This is a storm in a tea cup.”
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