Saru vote on equity sale to US consortium postponed under pressure from sports minister

Sports Minister Gayton McKenzie stepped in to mediate the growing impasse between unions in South African rugby over the proposed sale of an equity stake to a US consortium.

The South African Rugby Union’s (Saru) general council was set to vote on whether to sell a 20% equity stake to Ackerley Sports Group (ASG) for $75-million (R1.3-billion).

The vote was set for 17 October, but it became clear that there was too much uncertainty and not enough clarity over the details for the process to go ahead.

Seven unions, led by the four United Rugby Championship (URC) clubs, the Bulls, Lions, Sharks and Stormers, opposed the sale. They, along with Boland, Griquas and the Cheetahs were signatories to a letter sent on 14 October demanding a postponement.

The “dissidents” wanted more clarity on vital aspects such as the R131-million “transaction fee”, which appears to be a finders or introduction fee, to be paid to a company called Jordan & Associates, owned by former F1 team boss Eddie Jordan was instrumental in putting ASG and Saru together.

The dissident unions opposing the sale to ASG in its current form also wanted more clarity on whether it was a loan or a pure equity sale, among many other questions.

“The transaction results in a permanent and material change to the commercialisation and control of revenue in South African rugby and by extension a treasured national asset in the Springbok brand,” stated the letter from the seven unions.

“It also puts the future of all its members [the 15 provincial unions] at major financial risk. This uncertainty will impact on rugby development programmes which are meant to create the next generation of Springboks.”

Minister steps in 

By Tuesday night it was clear that the vote was doomed to fail if it went ahead. McKenzie’s late intervention ensured that it was put on ice until December at least.

“We received the request from the minister this morning and we are happy to oblige, having shared the request with our member union presidents,” said Saru’s president, Mark Alexander.

Saru president Mark Alexander. (Photo: Lefty Shivambu / Gallo Images)

“We had previously briefed him on his appointment, but we understand his request for further assurance considering the newsworthiness of this proposal.”

The minister said in his letter: “It is always important that levels of consultation and information-sharing are adequate in matters such as these, especially when regarding matters of significant public interest.

“I would therefore like to humbly request that tomorrow’s scheduled meeting to decide on the way forward with your members be postponed so that I can be fully apprised of the particulars surrounding this proposed deal, or any deal that may be agreed to through your structures.”

Sports Minister Gayton McKenzie. (Photo: Gordon Arons / Gallo Images / Getty Images)

Alexander said: “We look forward to providing any information the minister may require.

“We believe that the proposed partnership, along with our identified partner, offers an opportunity for organic growth rather than simply serving as a cash injection.

“Importantly, it ensures that the Springboks will remain under the control and direction of SA Rugby, safeguarding the future of our organisation.”

Task team? 

While the meeting with the minister is the next step, beyond that, Saru and the seven dissident unions, but realistically, all the members, are going to have to find a way to workshop their way through the proposal.

It is clear that many of Saru’s members are unhappy with the proposal and they appear to have many valid reasons for that. Saru has no choice but to hear them out and provide more context and detail where it can.

It will require a calm and rational approach from all parties because the financial future of SA rugby is at stake.

Historically, there has always been tension between Saru and its members over money flow and cash disbursements. Saru funnels the bulk of its income back to unions after paying expenses including running national teams and competitions and paying its salaries.

Approximately 60% of its R1.4-billion annual income filters back to members.

The issue of Test match hosting is also always contentious and is one of the concerns of the latest deal as the Saru model is set to change.

The latest model, apparently agreed in 2019 but delayed because of Covid, will come into effect in 2025. In the new structure, Saru will dictate where Tests are held and pay a hosting fee to the union.

Currently, member unions pay a predetermined fee to Saru to stage a Test — it was R20-million for the All Black Tests this year — and retain whatever profit they make over and above that amount.

The unions feel the revised model will lead to far less income from one of their major sources of funding.

As a result of these developments, a task team will be set up to provide more information on key issues for additional clarification to members.

“We remain committed to transparency and accountability, and it is important to correct the misinformation and posturing that has surfaced in the media,” said Alexander.

“We believe our organisation has a long-standing track record for good governance and responsible management, as well as nation-building representative teams.

“Throughout this process, we have diligently adhered to all protocols and followed due process. Our actions have consistently been guided by the principles of integrity and fairness.

“We would urge all stakeholders and the public to rely on verified, accurate information and to support our ongoing efforts to uphold the high standards of South African rugby in delivering a sustainable future for the sport. Our commitment to the growth and success of the sport in our country remains unwavering.” DM