D-Day looms for Stormers and professional rugby survival in the Western Cape on eve of RWC 2023

New Stormers captain Salmaan Moerat will hopefully have a team to lead in the URC next season. (Photo: Ashley Vlotman/Gallo Images)

By Craig Ray

30 Aug 2023

The 92 clubs with voting rights that make up the general council of the Western Province Rugby Football Union will decide between a stable future or almost certain collapse of professional rugby on 5 September.

After two years in administration the Western Province Rugby Football Union (WPRFU) will have a chance to save itself at a vote to decide between financial stability and a secure future, or potential bankruptcy and ruin.

So, on the surface, next week’s vote by the WPRFU’s general council to accept a generous equity deal securing vital funding for the professional game, should be an easy decision.

But in the complex and often opaque world of WP rugby, nothing is ever straightforward and nothing can be taken for granted. However, the equation is simple – vote in favour of the equity deal, which is close to R150-million, or face collapse.

It doesn’t appear to be a difficult choice, but the WPRFU is a case study in petty politics and self-serving agendas. It will be an extremely difficult deal to get over the line.

It has been subjected to tough due diligence by an independent panel. That won’t matter to some because it’s also a deal that removes a great deal of power from the general council.

The union was placed under administration two years ago after it faced collapse after years of malfeasance by its previous leadership following several botched property deals around the sale of Newlands’ development rights.

It’s taken a monumental effort by the South African Rugby Union (Saru), both financially and administratively to keep the WPRFU afloat.

But the debt is mounting. Saru is under pressure from other members to stop favouring the WPRFU and start spending the money it’s put into the WPRFU on other projects.

In short, Saru cannot continue to bail out the WPRFU for much longer.

Without funding, another raft of issues such as the Stormers’ ejection from the United Rugby Championship will arise, but that’s a story for another day if this vote, which requires a simple majority, fails.

Less influence

For the WPRFU there is no other deal on the table. After months of scrutinising options, the one the general council will decide to accept or reject is the only one there is.

It has been subjected to tough due diligence by an independent panel. That won’t matter to some because it’s also a deal that removes a great deal of power from the general council.

Stormers coach John Dobson has previously made it clear that an equity deal is vital to the survival of the team and WP Rugby. (Photo: Ashley Vlotman / Gallo Images)

It essentially makes the clubs less influential in the running of professional rugby in the Western Cape and further removes them from spending money badly.

That should be a good thing if the success of the Stormers and Western Province at Currie Cup level is your main priority.

Which it should be. But history has shown us, not only in rugby, but in many sports, that amateur elected officials prefer personal power and prestige to professionalism and high performance.

It’s likely that a small, disgruntled faction of the general council will push a line in the coming days that there are better offers on the table and that they are being bullied into taking this offer. That’s the kind of tactic that led the WPRFU into the mess it’s in in the first place.

It’s also part of the reason a meeting of the general council has been called for 30 August. At this meeting, WPRFU administrator Max Fuzani and Saru chief executive Rian Oberholzer (who was the initial administrator appointed by Saru when it took over the running of the WPRFU in late 2021) will explain the terms of the deal and field questions.

Stormers coach John Dobson and captain Salmaan Moerat will also attend to urge general council members to support the equity deal. Their own futures depend on it.

The term sheet of the proposed equity deal with Red Disa Investment and a smaller partner named Marble Head Investments, has been distributed to the clubs to understand the structure of the deal and to make an informed decision.

Red Disa is a consortium made up of Fynbos Ekwiteit (Pty) Ltd and Ardagh Glass Packaging Africa. Capitec Bank’s Michiel and Johan le Roux are shareholders in Fynbos Ekwiteit, while Irishman Paul Coulson is CEO of Ardagh, who recently acquired Consol Glass, among its many businesses.

In short, these are serious players with serious money. They have made a long-term commitment to professional rugby in the Western Cape and will provide funding and expertise to ensure the union continues to have success on the field.

The situation is dire and if the WPRFU kicks this gift horse in the mouth, then there is no hope for them.

A new entity will be established, called Western Province Professional Rugby (Pty) Ltd (WPPR), with Red Disa as 71.5% shareholders, Marble Head 2.5% and the WPRFU holding 26%.

A new WPPR board with a maximum of 10 members will be established, on which the WPRFU will have no more than two seats. There will be independent directors as well as representatives from all the shareholders.

It will be a clear break from the WPRFU when it comes to the running of professional rugby. Issues such as the sale of Newlands stadium, which is still threatening to sink the union, will not affect the business of professional rugby.

Essentially this deal is removing the Stormers from the clutches of the WPRFU.

Equity deal or bust

The reality in modern rugby is that equity funding is essential. There is not enough sponsorship or broadcast money sloshing around to adequately cover the costs of a successful professional club in these austere times.

In the past year, three clubs in the English Premiership – Worcester, Wasps and London Irish – went out of business.

The demands of professional sport and its associated costs such as salaries, in the wake of a pandemic and amid massive competition for fan interest from more sports, are factors in this situation.

South African rugby as a whole is teetering on the edge. Saru declared a small R4.5-million loss in its last financial year and has projected another shortfall for the next. It is desperately trying to sell a stake to a private equity partner – in this case, CVC Capital.

The situation is dire and if the WPRFU kicks this gift horse in the mouth, then there is no hope for them.

If the offer is rejected, Saru must cut the WPRFU loose.

New Stormers captain Salmaan Moerat will hopefully have a team to lead in the URC next season. (Photo: Ashley Vlotman / Gallo Images)

On Tuesday, the union, which is still under Saru’s management, sent out a strongly worded statement, urging the general council to come on board.

“The diligence in finalising this investment and alignment cannot be overstated. It was a detailed, independent process, led by experts specialising in global equity partnerships and investments,” the statement read.

“This is a deeply considered decision. SA Rugby, as the custodian of WP Rugby while under administration, were never going to make a hasty decision.

“It is a monumental chapter in the history of Western Province Rugby because the investment will safeguard the heritage of rugby in the province and also help realise the professional ambitions of the DHL Stormers globally.”

Those at the top end of the game in Cape Town might be thinking globally, but now it’s time for rugby clubs in the Western Cape to do the same and do the right thing. DM

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Less influence

Equity deal or bust