SA Rugby’s inbox may not be bulging with the promise of prospective equity partners but in the shadows moves are afoot to put together a deal they cannot refuse.
Though details are sketchy, and talks are at an exploratory stage, a firm collective offer from the ranks of the franchises may emerge within the next month.
Potential investors were hamstrung by SA Rugby’s exclusivity period with the Ackerley Sports Group (ASG) but that expired at the end of last month.
ASG indicated after its $75m (R1.4bn) offer for a 20% stake in SA Rugby’s commercial programme was rejected by the South African Rugby Union (Saru) members council on December 6 that it intends tabling a revised bid. ASG then had three weeks to do so but has since served notice it would engage with any approved South African consortium to revive the deal.
Given the events that led up to and including the December 6 vote, it is unlikely that ASG will find receptive ears that matter on the members council.
SA Rugby said the status quo remains and that nothing new was on the table. If an offer emerged it would be discussed by its executive “to see if it makes sense” before being taken to the general council for further debate.
This really should not drag on for months and months.
— Franchise insider
A clearer picture has, however, emerged of how franchise owners, who were vehemently opposed to the ASG deal, will present themselves as potential suitors.
It has long been reported that the co-owners of the Bulls — Remgro and African Rainbow Capital — will likely table a bid that could include other franchise owners.
Controlling Sharks shareholders MVM Holdings were reportedly also preparing an offer but they are unlikely to go it alone. It is more likely that the owners of the major franchises would produce a collective bid, a franchise insider told the Sunday Times on condition of anonymity. “That would make sense. There is only one path here. It is the only real alternative,” he said, warning that further delays in finding an equity partner for SA Rugby would be counterproductive.
“This really should not drag on for months and months,” added the insider, who went on to stress the point that it was in everybody’s interest to get SA Rugby in a healthier state, which in turn may help alleviate financial strain on franchise owners.
He said he’d favour a consortium that has 50% South African investment and the other half from an investor who brings something different to the table, most likely from North America.
In fact, SA Rugby during its courtship with the Seattle-based ASG highlighted the benefits of hooking up with an equity partner from the US that could help put the Springbok brand on the map.
SA Rugby argued that it didn’t possess the network to open doors abroad or to build income-generating and brand awareness platforms. The right equity partner, it argued, could unlock that potential.
That insistence may also shine a less favourable light on the offer of investment company Alvest Group, which has also expressed interest in partnering with SA Rugby.
The group heads a consortium that includes 27four, EasyEquities and RainFin. They value the Bok brand at $375m (R7.16bn). “This proposal seeks up to a 40% stake in Saru’s commercial rights, aiming to unlock rugby’s global potential through inclusivity, grassroots development and innovation, while preserving Saru’s majority ownership,” the company stated in a press release.
Alvest has no experience in the sports industry but it is hoping to rally local support. It champions broad-based shareholding. “Why can’t the car guard at Loftus, the fan in the Eastern Cape, or the institution in Sandton all own a piece of Springbok equity?” it argued.
The franchise insider, however, believes the only real option available to SA Rugby would have to come from within. He said CEOs of the franchises “are now talking more”.
“If it is something reasonable, we’ll get them all on board,” he said before adding he was happy to play a facilitating role. “It will be like herding cats but it can be done.”
The insider insisted they move swiftly and that they could potentially put a proposal together in the next month. He’s even prepared to forego some red tape. “We have to move quickly. There are some people who want an audit into Saru, and want to do a deep dive, but I want to move forward on this. I want this sorted out.”
An offer from within the ranks of SA Rugby could potentially speed up the process. SA Rugby will still need to perform due diligence on any potential suitor, but when it comes to putting the matter to a general council vote, the headwinds that blew the ASG offer off the table would have long abated.
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