Ken Borland

SA Rugby CEO Jurie Roux said recently that every union whether provincial or international is going to join up with private equity partners either sooner or later. Rugby has been one of the slowest sports to embrace professionalism though and I can hear many fans wailing that private equity is going to ruin the game.

“Private equity in rugby will have a massive influence, it will probably control rugby. And yes, SA Rugby is in discussions with private firms, but I don’t think there’s a union that’s not talking to someone. We all live in a post-Covid world that is now a much smaller pond and there is the opportunity now for investors to buy things at much cheaper prices. Private equity is here to stay, you’ll either join early or late, but join you will,” Roux said in an online press conference earlier this month.

There is perhaps going to be understandable anxiety that rugby is going to end up in the same sort of mess as the Premier Soccer League has with the controversial sale of the famous BidVest Wits club to a little-known National First Division club, Tshakhuma Tsha Madzivhandila, based in Limpopo. Thanks to BidVest cynically pulling the plug based purely on financial considerations, 99 years of history is down the drain, a club that has won nine top-flight trophies and produced players such as Gary Bailey, Peter Gordon, Richard Gough, Sam Magalefa, Thulani Hlatshwayo and Benson Mhlongo for all intents and purposes no longer exists.

Never mind Western Province leaving Newlands, can you imagine the outrage if it was announced that the Bulls were moving to Polokwane and would henceforth be known as the Buffaloes?

But let me allay your fears by pointing out that rugby has mechanisms in place to prevent such stupid things from happening.

Before going to market, a union will split its assets between a commercial/professional arm, which will largely deal with corporate matters like sponsorships, advertising, marketing and broadcast deals, and an amateur arm which will hold assets like the stadium (whether they own it or have a rental deal) and ‘intellectual property’ like the team name.

Stakeholders can then buy shares in the commercial/professional arm. A private company can buy 25% of those shares and the union gets the cash, while the equity partner takes dividends while also hopefully driving up the commercial value of those properties.

Even though SA Rugby’s constitution now allows for private companies to own up to 74% of a union’s professional arm, as long as the ‘amateur’ administrators have done their paperwork correctly then properties like the team name or where they play should be totally protected even if the union is now a minority shareholder.

The Bulls have been amongst the first unions to really make private equity work for them, with Patrice Motsepe’s African Rainbow Capital Investments and Johann Rupert’s Remgro each owning 37% of the Blue Bulls Company. First prize to them because the influx of cash has allowed the Bulls to hire big-name coaches in John Mitchell and now Jake White, who is totally revamping the team with a host of quality additions to the player roster.

Perhaps the first thing for a union to ensure is that there is synergy between themselves and their private equity partners, so that they can work together to run a successful team.

Unfortunately there have been two unions in the news lately for getting it all wrong – the Eastern Province Rugby Football Union and the Western Province Rugby Football Union. Both those beleaguered unions seem to be suffering from a bunch of rank amateurs trying to run multimillion rand businesses.

After years of wrangling seemed to be coming to an end with the signing of heads of agreement to sell Newlands to Investec, WPRFU president Zelt Marais has unilaterally decided not to sign off on the rest of the deal, despite already taking an advance of more than R50 million from Investec. Interestingly, the WPRFU also owe Remgro R58 million for a loan. These are powerful enemies to have and one fears that the once proud union could be heading the same way as Eastern Province.

The embattled Port Elizabeth franchise just seems to lurch from one crisis to the next and fresh problems are now springing up between the company that holds the majority shareholding in the Southern Kings and the EPRFU.

Roux was not specifically talking about the Southern Kings or Western Province, but his message certainly applies to them when he said political interference tends to surface when administrators try to run their franchises as an amateur entity.

But to borrow from Saturday Citizen deputy editor Brendan Seery’s excellent Column, for every couple of Onions that have to be dished out to unions, there will be more Orchids given out to those who make private equity work.

Simply put, rugby is unable to survive this post-Covid world without them so, like the Wallabies and scrums, every union just has to find a way of making these partnerships work.

Amidst these tumultuous times in South African cricket it does seem like acting chief executive Jacques Faul and interim director of cricket Graeme Smith have brought some stability, but it is vital that fans and stakeholders of the game in this country do not forget the reasons for the crisis that led to their appointments and the clarion call for the Cricket South Africa board to stand down must still ring out loud and clear.

There is the danger that because of the sterling work done by Faul and Smith, people think everything is suddenly hunky dory with South African cricket. The battle against the Covid-19 pandemic has also provided a timely distraction for the incompetent, self-serving board to hide behind.

But an expected loss of a billion rand and the poor governance and thoroughly undemocratic behaviour of people like suspended CEO Thabang Moroe and president Chris Nenzani happened on the board’s watch. Many of them were active participants and supporters of #CricketCapture, the rest turned a blind eye and were in breach of their fiduciary duties as directors.

So far, the board has shown no intention of accepting accountability for their gross dereliction of duty to the game.

The big problem in South African cricket, however, is that the governance structure is all wrong and that makes getting rid of the parasites on the board a tough task.

The problem dates back to 2013 and CSA’s reaction to the Gerald Majola Bonus Scandal and the Nicholson Commission’s findings which eventually forced the board to get rid of the then chief executive. But CSA did not follow the commission’s recommendation that independent directors make up the majority on the board. Instead, CSA implemented a new system where five independent directors were elected on to the board alongside seven non-independent directors.

Those seven non-independent directors also sit on the Members Council, a 14-member group that elects the board and, according to CSA’s Memorandum of Incorporation, is the only structure that can dissolve the board.

The seven non-independents are elected from the 12 provincial presidents and CSA also devised a system whereby provincial presidents sit on the Members Council for three years, and can also serve a second three-year term.

So you can see the problem?

With the resignation of Gauteng’s Jack Madiseng as a director, six of the seven non-independent board members also sit on the Members Council that will vote on their fate. So it means at least seven provincial presidents have to vote against them.

But many of those provincial presidents have been part of the problem because they sit on the Members Council for three years. The old saying of turkeys voting for Christmas springs to mind.

A quick survey of the 12 provinces suggests four that would probably vote for change – Gauteng (Madiseng) and KwaZulu-Natal (Ben Dladla) apparently have their mandates already, North-West are currently under the administration of Archie Pretorius, one of Majola’s critics who was kicked off the board during the 2013 sham, and Western Province, who have a new president in Nic Kock, an advocate who has not been scared to take on CSA already in his short term in charge at Newlands.

But Eastern Province are led by a massive supporter of the Moroe/Nenzani axis in Donovan May, Boland have also been a backer through their president, Angelo Carolissen, although his second three-year term should be coming to an end soon. Border have a new president in Simphiwe Ndzundzu but sympathy for Nenzani would be understandable because he comes from the Bisho area.

South-Western Districts also have a long-serving president in Rudi Claassen, as do Free State (Zola Thamae, one of the directors) and Northern Cape (Rihan Richards). Northerns seem unsure of how to vote, mostly because their president, Tebogo Siko, has been newly elected on to the board and should not be blamed for the crisis. Easterns also have a new, young president in Xolani Peter Vonya.

Nenzani and his vice-president Beresford Williams, who has also strongly supported the regime, also have votes on the Members Council.

So because clubs wanting change in some provinces still have to wait two more years before they can outvote their president, change will be slow in coming via the traditional route.

Which is why I would call on any angel investors looking to get involved with Cricket South Africa to stipulate in their contracts that their sponsorships are dependent on the board changing.

And companies like Momentum need to follow through on their earlier ultimatums that they will withdraw their support unless the CSA board resign.

What will hopefully become a new era in South African cricket administration also desperately needs a change in governance structure so we don’t get into this sort of mess again. They had a chance in 2013 to get it right, hopefully in 2020 that chance will be taken and not dropped like a sitter at mid-off.

https://citizen.co.za/sport/sport-columnists/2265248/cricket-south-africa-clean-up-should-extend-to-the-board/

The vibrant Loftus Park piazza as viewed from the Protea Hotel

If you are one of the many fans of the Bulls from outside of the Pretoria region, when was the last time you made the pilgrimage to Loftus Versfeld?

Fortunately in these tough economic times, the new mixed-use development next door to the stadium – Loftus Park – is going to make it much easier for out-of-town visitors to come and watch their favourite team, whether that be the Bulls or Premier Soccer League giants Sundowns.

The new Protea Hotel by Marriott Pretoria Loftus Park is a four-star oasis and yet you can get a room in this well-appointed, modern establishment for as little as R1045 per night.

And the rooms are spacious, overlooking a piazza that offers a host of eating and shopping options, or the greater Pretoria area, with most of the historic landmarks such as the Voortrekker Monument and the Union Buildings visible.

A room at Protea Hotel Loftus Park

There is also plenty of underground parking, which costs just R40 a day. All-in-all, Protea Loftus Park is just the perfect solution for travelling fans wanting to watch a game at Loftus Stadium: Avoid the rush and crush, stay at the hotel and then just simply stroll the 100 metres or so to the stadium.

For after the game, Protea Loftus Park boasts a truly jamming venue in the Skyline Bar, Restaurant and Lounge. This rooftop venue features a pool, live music on weekends and a fantastic selection of food and drinks.

The swimming pool at Skyline on top of the hotel

My wife and I were hugely content with our steaks – fillet for her, T-bone for me – which were full of flavour, expertly cooked and decent-size helpings as well.

We also thoroughly enjoyed some churros that were brilliantly done – crispy on the outside, light as a feather on the inside and accompanied by a divine dark chocolate sauce. My wife said they tasted as if angels had farted on her tongue.

Best of all, a very attentive staff ensures that they are always close-at-hand to provide superb service that is not too intrusive.

For those that are not interested in the epic sporting battles going on next door, or who have time to kill before or after the big game, the hotel can organise a guided tour of Pretoria. Even though I know the Jacaranda City well, that was one of the highlights of our weekend, being both highly-informative and great fun.

The sun sets over the capital … and a wonderful weekend … as seen from Protea Loftus Park

Nielsen Sports, the provider of analytics for the sports industry, recently gave their annual presentation on the biggest trends in sports business and the two major talking points over the last year are the rise of e-Sports and the fact that sports bodies and their sponsors have to know who their fans are in this rapidly evolving marketplace.

Their research shows that, on average, only 10-15% of any sport’s fans are actually ‘game experts’ – people who have intimate knowledge of the rules, history, players, tactics etc. So any sports body or sponsor that only targets this section of the fan base are clearly missing out, for instance, on the 30-35% of ‘connection fans’ – for them it’s about the big event and they are the people packing out the stadia for Pink Day, the Cape Town Sevens rugby or the Durban July.

In the past, the relationship between a sport and a brand was based on the sponsor wanting visibility and the sport just wanting money. But this relationship is now much broader and the rights a sports body sells need to be more flexible and more tailored to their specific partners. Sponsors these days want to own stories and content rules in this digital age in which internet advertising spend overtook that for TV worldwide last year.

It was disappointing to hear that our traditional sports like rugby and cricket are battling to grow in this environment. In South Africa, 25% fewer millennials are interested in rugby, and cricket has seen the same drop in support.

The fastest growing sport in the world is e-Sports, which is basically what professional, competitive gaming is called, and unfortunately, rugby and cricket just don’t have games on the market that are good enough. Research has shown that there is a strong crossover between people who play the virtual game on their computers and supporting the actual ‘live’ sport. For instance, Fifa’s eWorldCup drew seven million gamers last year and Formula One enjoyed similar success with their eSports Final, the winner of which gained a one-year contract as a simulator driver for McLaren.

That e-Sports is rapidly evolving into a major player in the sports industry is shown by the fact that one-third of all their fans came onboard in the last year and they are typically millennial men with money to spend. Which means major global brands like Gillette, C-Smart and Mercedes are moving into that space, the higher LSM also attracting sponsors like Audi and Mountain Dew. Gaming is a $32 billion industry now and at the competitive level it is a mega-production, a whole show with adverts, sponsored decks and kids packed into stadia.

This year’s Overwatch League features 12 franchises based in cities like Boston, London and Shanghai who paid $20 million each to participate. The broadcast rights were sold for $90 million and the average audience is 280 000 per minute.

Speaking of broadcast rights, this field has also become extraordinarily broad for sponsors and sports bodies. Pay TV’s influence is still stable, but there are disruptors now in the picture, especially tech giants like Amazon and Facebook and even Twitter.

The cellphone has become a way of life and we are living in a mobile-first generation. Although high data costs hold us back in South Africa, 20% of local football viewers watch via internet streams, with 69% of those people watching the game live and 42% of those watching the whole game.

Rugby has 25% of its viewers streaming the game, 68% of that watching live and 48% for the whole game; cricket’s figures are 22% streaming, 78% of that live and 40% watching the full game.

The sports industry is certainly a very fluid environment for rights-holders and sponsors to get their heads around.

https://www.pressreader.com/south-africa/the-citizen-kzn/20180623/282484299488829