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.

 

Newly-elected acting president Willie Basson said on Wednesday that his aim as the new head of Cricket South Africa (CSA) was to improve the standard of the administration so that it rivalled the professionalism of the national team on the field.
Basson was elected on Saturday to take over from AK Khan, who was also an acting president before resigning last week in the wake of the Nicholson Inquiry which found CSA chief executive Gerald Majola had “surreptitiously” received 1.8 million rand ($237,000) in unauthorised bonuses from the Indian Premier League, as well as irregular travel expenses, in contravention of the Companies Act.
Khan had headed CSA’s own investigation which cleared Majola of any serious wrongdoing, but which was subsequently described as a “cover-up” by the Nicholson Inquiry.
“A personal motivation for my decision to become involved is a long-standing concern for the large gap between the level of professionalism of the on-field activities as opposed to the off-field activities. This gap is a burning issue. In 40 years of being involved in sport, I’ve never come to terms with how much the players sacrifice but administrators, in general, just bumble along and hardly ever face any consequences, except when they’re up for re-election every two years. It’s a major irritation for me, this obvious weakness has to be aggressively addressed and we have to raise the bar.

“The time has come for those responsible for guiding and executing off-the-field activities to have better game plans, executed more effectively and efficiently,” Basson told a news conference in Centurion on Wednesday.

Having suspended Majola pending an independent disciplinary inquiry as per the recommendations of the Nicholson Inquiry, Basson said the CSA board would now place Judge Chris Nicholson’s other main edict – that the governing body should undergo a review of its corporate structure – in the hands of experts.

“The mere fact that we have acknowledged the Nicholson report and accepted it in principle, means we have laid the foundation to appoint competent people to look at a re-invented cricket system. But it’s essentially a legal document and we need to translate it in the light of practicalities for a sports system, so that it leads to an improvement in the administration of the game,” Basson said.

The veteran cricket administrator was previously the chairman of CSA’s transformation committee and he said this would be a key focus in his term.

“In the light of the minister of sport’s recent comments on the status of transformation in the country’s major sporting codes, it will be a high priority item. The board has recently in principle approved a model that will be considered by the transformation committee tomorrow [Thursday]. A fund to support transformation initiatives at provincial level has also been established and is the first in the country,” Basson said.
Basson said restoring the battered image of CSA would also be one of the board’s areas of focus.

“The complex process of damage control of CSA’s reputation and image on the basis of systematic and on-going communication with stakeholders will be an important focus area. CSA is under no illiusion … cricket is beleagured and its image and reputation have been dented over an extended period of time. Image is any organisation’s biggest asset and the process will require cool heads. We have to pinpoint where our image has been harmed and the reasons for the negative public opinion,” Basson said.