The advent of equity partners in SA Rugby has altered the organization’s environment.
Increased openness and communication may result from the developing hostility between the South African Rugby Union and the nation’s four major rugby unions.
The adage “be cautious what you wish for” is coming to pass in the South African rugby scene as a strained relationship between the main characters is developing.
And a big part of the reason for that is the arrival of fresh, influential voices in the form of private equity investors at the Bulls, Lions, Sharks, and Stormers.
The South African Rugby Union (Saru) was in dire need of additional funding sources to help ease its financial strain, particularly in the wake of the COVID pandemic. Going with private equity partners made sense both then and now.
Private investors have now poured much-needed cash reserves and business ideas into all of the big teams.
However, the trade-off is that these new power brokers have loud voices and demands, at least from the viewpoint of Saru. They no longer only accept the existing state of affairs with the business model, in which Saru controls the majority of the game’s funds and transfers them to the unions.
They demand more funding, influence, transparency, and a bigger say in the decisions made over Saru’s business dealings.
Due to the fact that Saru represents the interests of fifteen unions rather than just four, there has been an understandable head-scratching in recent weeks and months.
Fresh design
In any case, the Big Four are showing off.This dispute concerns not just the cost of Test match tickets but also the structure of support for South African rugby as a whole.
See the Daily Maverick for more: Rugby unions are upset over the Bok Test cost, but they fail to see that it’s for everyone’s advantage.
The Sharks have been especially vocal because of their US-based investor, MVM Holdings, which is run by South African-born, New York-based Marco Masotti.
Others have been empowered by their leadership and willingness to challenge Saru—possibly even harass him on a few occasions. Through Bulls board chair Johan van Zyl, Bulls players Patrice Motsepe, Johann Rupert, and Lions supporter Altmann Allers signed a letter in February requesting an urgent meeting along with a lengthy list of specific demands.
Additionally, the Stormers have joined the “uprising” after concluding an equity sale to Red Disa Investments, a group led by financial services tycoon Johan le Roux.
In their interactions with Saru, the four main unions are acting in unison.
We need a pro forma income statement so that we can ask Saru, “Please tell us how much we should be spending on players, how much we should be getting from sponsors and ticket sales, etc.,” and then divide up broadcast revenue based on the pro forma model, an insider at one of the unions told Daily Maverick.
“The business model just does not generate enough revenue at the current level of broadcast income.”
This mindset has caused considerable resentment toward Saru, an organization that serves to facilitate the administration of professional rugby in the nation rather than for its own financial gain. Understandable annoyance has also been expressed about the four unions’ portrayal of Saru as somehow refusing them funding.
About R1.2 billion of Saru’s yearly revenue is allocated to national team funding, insurance, image rights fees, competitions like the Currie Cup, United Rugby Championship (URC), and European Professional Club Rugby (EPCR) tournaments, as well as payments to the fifteen unions that make up rugby’s ecosystem.
Older building
Another throwback to the amateur era is the constitutional requirement that Saru’s leadership only interact with unions, like the Bulls Rugby Union, and not the professional firms that support them.
This indicates that between Saru’s top table and the equity partners at those four unions, there is a layer of untrained officials. In the present world, that organization is scarcely optimal.
The fact that the union’s finance directors cannot speak with Saru president Mark Alexander or CEO Rian Oberholzer directly irritates them as well.
“Saru and I are still having discussions. Stormers CEO Le Roux stated, “The major unions are on the same page, and we’ll continue to engage them.”
“We work in a setting where a large portion of our earnings, particularly from the URC and EPCR, go back to SA Rugby (Saru) instead of to us.
