A counter-deal to the one favoured by SA Rugby for a 20% share in their business is unlikely to be finalised by December 6.
That is the day SA Rugby’s members council will vote whether they accept the preferred deal with the Ackerley Sports Group (ASG), but before that date a lot of murky water will flow under the bridge.
SA Rugby’s preferred $75m (R1.3bn) deal with ASG has come in for stinging criticism with red flags, herrings and now tape all forming part of the discourse in the lead up to the vote.
A franchise representative who is hoping to put together a counter-offer said their plan is unlikely to be finalised in time. “We’re trying to put this together but with both hands tied behind our back.”
SA Rugby and ASG’s exclusivity period in which they have to conduct negotiations is still in force which effectively puts the franchise owners at a disadvantage as they are unfamiliar with the rules of engagement.
“Conceptually we’re looking at what the deal might look like but we don’t have the finer details,” said the franchisee, who wanted to remain anonymous.
We’re trying to put this together but with both hands tied behind our back
— Franchisee involved in a counter-offer
He had no concerns that the money can be raised to put together a viable counter-offer. “Many of the individual (franchise owners) can do it on their own,” he said about Johann Rupert (Compagnie Financier Richemont), Patrice Motsepe (African Rainbow Capital Investments) and Stephen Saad (Aspen Pharmacare), who count among South Africa’s franchise equity partners.
“If the deal is good and will stabilise South African rugby and lead to more transparency around the funding models for the individual teams which we invested in, then raising the cash will be easy. If you know it will solve the issues that are fundamental to running professional rugby you can raise the cash.”
Crucially, however, he admits “even without an exclusivity arrangement it will be tough to do a deal in the time frame. With the exclusivity in place it is impossible.”
Though he has not been furnished all the details of SA Rugby’s agreement with ASG, the franchisee said the deal and the process in which it is being formulated was fundamentally flawed.
“Look at how other companies do this when it has to be put to a vote. There is a prospectus. A document with a couple of hundred pages containing the relevant reports, including fees and disclosures.
“With this deal I have seen a few slides that were sent in May, the rest is stuff you see on a projector at a meeting. At one meeting we were not allowed to ask questions because we weren’t members,” he said.
“This is insane and highly irregular. You need a term sheet that sets out the transaction dynamics. We know more about it through the leaked Ackerley term sheet than what SA Rugby told us. Then they say the term sheet they showed us is outdated. They say we don’t understand the deal but that is an indictment on the process because those are the people who are supposed to be voting on it.”
He said the deal has immense shortcomings and that the positions of the franchisees have not shifted.
SA Rugby last week indicated they would conduct more information sessions with their members but the franchise official insists they know as much now as they did a fortnight ago.
“They sent us a 15-page letter in response to the letter we sent but that did not take the argument an inch forward.”
Those against the deal are spooked by the terms SA Rugby agreed to in repaying the R1.3bn.
“It is a loan that is repaid at 6% interest,” warned the franchisee.
SA Rugby CEO Rian Oberholzer insisted it’s not. “ASG have to finance the running of SA Rugby and they cannot take any money out of the CRC (Commercial Rights Company) until it shows a profit,” said Oberholzer on a rugby podcast.
One of the main bones of contention the franchisees harbour is the consolidation into the ASG deal of SA Rugby’s revenue streams including the Test match hosting rights.
The franchise delegate insists even if SA Rugby “sweetens the pot” on that front it remains the least of their worries.
