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.

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

The SuperBowl is a television extravaganza and one of the major sporting events of the year, and yet in this country only a minority of sports fans seem to pay much attention to it. But there is one South African sporting legend who is a keen follower of gridiron and American sport in general.

Naas Botha has had a fascination for American Football since his groundbreaking move to the United States in 1983 when he tried out as a placekicker for the Dallas Cowboys. It was a sensational move by the best flyhalf in the world of rugby, from the amateur game to the different world of American pro sport.

While it helped Botha establish himself as a true professional athlete, since 1995 and the end of amateurism in rugby union, there has been little interest by other rugby players in playing American Football.

But Botha believes it won’t be long before a top-class player is lured by the promise of a massive payday in the United States.

“The problem I had when I went over was that I turned up with nothing, with no track record. Half of the people there didn’t even know where South Africa was and they thought we were wandering around with lions. The whole structure of American Football means College football is very important and they take all your stats from there.

“It would be much better now for a player to go over. The rest of the world has a much better knowledge of American Football now and I think a lot more people involved in gridiron know about rugby. Thanks to social media, I think a lot of them will even know about Handre Pollard for instance.

“Organisations like Laureus also bring a lot more attention to American sports. World sport is at a different level these days: in the U.S. they know about our top rugby players and South Africans know about what opportunities there are outside the country. Look at how many players are in France or England; compare that to when I went to play in Italy in 1987 and there was such a big hoohaa,” Botha told The Citizen.

Kicking in American Football is of course not just about distance and accuracy: Botha estimates you have about 1.2 seconds to kick a field goal and it requires a different frame of mind compared to slotting conversions and penalties in rugby. Plus one has to get used to being allowed to be tackled without the ball in gridiron, hence all the protective equipment.

It was thanks to the innovative Dallas Cowboys coach Tom Landry, considered a legend in American Football after 29 years at the helm of the Texan franchise, that Botha played gridiron. But it was the presence of another Cowboys stalwart, Rafael Septien, that prevented the Springbok hero from making more of an impact. Botha was brought in as the back-up kicker, but Septien rarely broke down and so his appearances were limited.

Another South African placekicker, Gary Anderson, had better fortune and became one of the NFL’s leading all-time points-scorers with the Pittsburgh Steelers, even playing against Botha once.

It remains a regret for Botha that during those couple of years of gaining splinters on the bench, he did not take up other offers that came his way, particularly from College (university) teams.

“It was a great experience, being with a big team like the Cowboys, but I was just there at the wrong time. I hung around with the Cowboys, but I should have taken one of the university contracts I was offered. I could’ve taken my experience with the Cowboys with me, built a reputation and a stats base and worked my way through the ranks, but I didn’t know the set-up then,” Botha said.

As it was, he caught game time with the Dallas Harlequins in the national championship, inspiring them to their only triumph in that second-tier competition.

So what of this year’s SuperBowl?

Botha remains a Dallas Cowboys fan and was gutted when they lost 26-21 to the Green Bay Packers in the playoffs, but he concedes the New England Patriots have what it takes to claim their fourth SuperBowl title.

“I’m still a Cowboys fan and how they lost that playoff I don’t know, they blew it. I’ve watched both the Patriots and the Seahawks this year, they’re two very good sides, both very balanced. But I went for a mini-training camp with the Patriots and they are the team to beat, they’ve been fantastic lately,” he said.

What really intrigues SuperSport’s long-time rugby analyst about American Football though is what it can teach those running rugby in South Africa.

“The United States is where sport is at a different level, they’ve shown how professional sport should be run, why try and reinvent the wheel? They have franchises and I wonder if our top rugby teams should not be privately owned? Why postpone it any longer? The unions all have schools, junior and women’s rugby all to look after as well.

“In gridiron, players are on $50 million contracts, in baseball it can be $200 million. Here, if a union wants to keep Bryan Habana, they need to offer R30 million over three years but nobody can afford it. Do we really want to see all the top South African players based overseas?”