Intense pressure from various role players on Wednesday forced SA Rugby to postpone its planned special general meeting where a pivotal vote on the proposed private equity deal with US-based Ackerley Sports Group (ASG) was to happen in Cape Town.
The scheduled Thursday vote by SA Rugby and its 14 provincial unions was expected to approve Seattle-based ASG’s purchase of a 20% share in Saru’s commercial division for R1.3bn ($75m).
According to Business Day, the deal shows that ASG’s “investment” in Saru’s Commercial Rights Company (CRC) is more like a loan than an outright investment because ASG will have its capital outlay repaid over time while retaining its 20% stake.
The plug was pulled on the meeting at the 11th hour on Wednesday only hours after a request from the sports minister Gayton McKenzie.
McKenzie wrote to SA Rugby earlier on Wednesday requesting to be fully re-briefed on the proposal.
“We received the request from the minister this morning [Wednesday] and we are happy to oblige, having shared the request with our member union presidents,” SA Rugby president Mark Alexander said.
“We had previously briefed him on his appointment, but we understand his request for further assurance considering the newsworthiness of this proposal.”
Alexander said a new date for the special general meeting before year-end would be confirmed only after engagement with McKenzie.
For the deal to go through, Saru would normally need 75% of votes, meaning 10 out of the 14 unions would need to vote with them. But only 13 unions will vote as Western Province is under Saru administration.
United Rugby Championship franchises the Lions, Bulls, Sharks and Stormers as well as Currie Cup unions the Cheetahs, Griquas and Boland are opposing the deal and had sent a letter to SA Rugby stressing the uncertainty before the postponement.
“It [ASG] will have control over decision-making until it [the loan] has been repaid, while also playing a ‘big brother’ role on Saru’s board,” the opposing unions wrote this week.
“ASG is set to recoup its entire capital investment plus a preferred return of 6% out of 80% of CRC’s profits.
“After the repayment period, ASG would continue to earn 20% of CRC’s profits, raising concerns about Saru permanently relinquishing a large portion of potential upside from predictable revenue streams [just before an apparent growth phase].”
Border, EP, the Valke, SWD, Pumas, the Griffons and the Leopards were still undecided on the matter on Wednesday afternoon.
SA Rugby chief executive Rian Oberholzer was on a roadshow to convince EP and Border top brass on Friday.
Border president Zuko Badli attended a meeting on Wednesday where Oberholzer was finally trying to convince the 14 unions’ presidents.
EP acting president George Malgas attended the meeting virtually in the morning, but flew to Cape Town in the afternoon.
An EP insider said the union was impressed by Oberholzer’s presentation, but it wanted a balanced view from other unions.
“The big unions have equity partners while EP has none. Of course it is a good deal on paper,” the source said.
Business Day reported that Johann Rupert and Patrice Motsepe, both SA business magnates, shared ownership of the Bulls.
Marco Masotti’s MVM Holdings has a 51% share of the Sharks.
Motsepe and Rupert are controlling shareholders at Boland Rugby Union.
Altmann Allers holds the majority stake in the Lions, while Western Province has seen a recent injection from Red Disa Investments.
Gqeberha’s Township Junior Rugby Development Programme chair, Vuyani Limba, said the deal would be detrimental to the development of rugby in the country, especially in the previously disadvantaged areas.
“The SA Rugby Union is a National Heritage Asset that belongs to the people of SA and nobody or organisation has a right to sell for private ownership,” Limba said.
“The rugby in township and village schools will suffer perpetually, contrary to the state of affairs in former Model C schools where rugby is the order of the day.
“The disposal of Saru’s stake undoubtedly will have dire consequences in black rugby clubs which have no resources to run them effectively as the private sector cares too little for them, but [only] for the elite clubs,” he said.
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