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Equity purchase of Saru’s commercial activities brings rugby tensions to the boil

Equity purchase of Saru’s commercial activities brings rugby tensions to the boil
Craig Ray
By Craig Ray
14 Feb 2024
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The South African Rugby Union confirmed on Wednesday that a US-based equity consortium was its preferred bidder for a stake in the organisation.

If you thought the Springboks’ passage to Rugby World Cup 2023 glory was dramatic, it could look pedestrian by comparison to the growing tension within South African rugby.

That’s because the four-year-long search for an equity partner has left the biggest clubs in the country feeling frozen out, and the original equity suitor, unhappy.

On Wednesday, 14 February, the South African Rugby Union (Saru) confirmed its preference to sell a stake in its commercial ventures to a US-based entity called Ackerley Sports Group (ASG). No, no one else knows much about the company either.

ASG was presented to Saru’s general council as the preferred bidder last December, where it was “unanimously” accepted.

The expected favourite to buy into the union, CVC Capital of Luxembourg, which previously had a stake in Formula One and has spent £700-million investing in rugby properties over the past three years, was jilted.

At the general council meeting held on the weekend of the Cape Town Sevens in December, ASG had representatives in town, hired a suite at the DHL Stadium and entertained presidents from the 15 unions that make up Saru.

CVC’s representatives were asked to do their presentation via electronic link from London.

For the deal to pass, the general council must vote with a 75% majority. ASG had several days to entertain the people likely to vote for its bid, understood to be worth $75-million (R1.43-billion), for a 20% stake in Saru.

Unions unhappy


However, a 12 February letter signed by representatives of the four major unions that form the backbone of the professional game in the country – the Bulls, Lions, Sharks and Stormers – suggests they saw it as being railroaded into a deal.

It didn’t help that ASG issued a statement on 8 February, claiming to have a deal with Saru, when so much red tape still needs to be snipped and consultation needs to happen.

“We are excited to partner with a legendary global sports franchise like the Springboks. Our collaboration will establish a worldwide expansion of the most iconic brand in rugby,” ASG co-founder Ted Ackerley said in a statement.

“This investment in the Springboks represents a unique opportunity for us to match the on-field success of the team with the resources needed to establish and sustain the franchise as a global powerhouse.

“We will bring decades of experience and passion for excellence with us while listening carefully to the people of South Africa to ensure that this team continues to reflect the history and culture of this amazing country.”

The statement did concede that the deal was “subject to further negotiations and final approval by the constituent members of Saru”.

Furthermore, the agreement, despite ASG’s statement, is not solely an “investment in the Springboks”, but an investment in the entire South African rugby ecosystem.

Despite the overstated language of the ASG media release, it did enough to spook key role players in South African rugby.

“The recent press release by Ackerley Sports Group seems to indicate that the transaction is all but agreed,” read the letter signed by representatives of the Bulls, Sharks, Lions and Stormers, of which Daily Maverick has a copy.

The signatures of Johan van Zyl (from the Bulls and co-CEO of African Rainbow Capital), Stephen Saad (Sharks and CEO of Aspen Pharmacare), Altmann Allers (Lions and executive chairman of Digicall) and Bruce MacRobert (Stormers and chairman at Consol Holdings) appear on the letter.

“We would like to put on record that we will, acting collectively, take whatever measures necessary to ensure that no transaction is approved that does not, in our view, make strategic and financial sense for us and the SA Rugby ecosystem as a whole,” the letter continued.

Urgent meeting


Saru, which has not made any public utterances on the equity situation for years, issued a statement on 14 February in an attempt to defuse the brewing crisis.

“Once a proposed final structure for the new company and its relationship with the existing SA Rugby structure has been finalised, a series of workshops and information sessions will be undertaken to allow member unions to fully interrogate the deal,” the statement read. “That structure is still a work in progress.”

But those workshops are already behind schedule, leaving the disgruntled unions to ponder if it is by design.

Saru had promised to deliver details of the deal in workshops in January, February and March this year. The January workshop never happened, and so far there has been no firm date set for the February workshop.

The unions, in their letter, demanded an urgent “in-person” meeting with Saru’s leadership. It also has not happened, and at the time of publishing, no date had been set for a meeting.

Furthermore, the four unions, which are all funded by equity partners – Remgro and Rainbow Capital at the Bulls, Red Disa at the Stormers, MVM Holdings at the Sharks and Altmann Allers at the Lions – wanted to present a bid to buy into Saru.

This was never seriously entertained either.

“The preferred bidder is Ackerley Sports Group (ASG), an American company that is an expansion of an investment company established in 2002 by brothers Ted and Christopher Ackerley,” Saru’s statement on Wednesday read.

“Ackerley Partners have owned all or a part of several professional sports franchises in American basketball, ice hockey, soccer and rugby, and recently partnered with 49ers Enterprises to assume majority control of the Leeds United Football Club.

“They (ASG) were unanimously chosen by the members of SA Rugby – including the franchise-owning unions – at a general meeting of SA Rugby on 7 December 2023 after ASG, and another bidder, CVC, made presentations to the meeting.

“ASG’s offer primarily focuses on immediate financial gain and guaranteed income, with lower thresholds for contingency payments, presenting a straightforward proposal for a commercial partnership, which we believe could offer comprehensive advantages to our organisation.

“The ultimate decision will hinge on balancing the immediate financial requirements with the long-term strategic objectives of our rugby organisation.”

It all sounds and appears reasonable, although the four big unions are demanding far greater transparency and clarity on the finer details of what ASG can offer.

Saru has apparently told the four major unions that CVC’s offer was similar in terms of funding and income, but came with more risk. That “risk” was not explained.

CVC has a track record of investing in sport, while ASG is virtually unknown; yet it’s the former that is riskier according to Saru’s assessment.

The goal is for the equity deal to be ratified by May, but as long as there are no face-to-face consultations between the major unions and Saru, an impasse is looming. DM

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