SA Rugby have penned an open letter following speculation over the a highly publicised multi-millon dollar investment being made into the union.
Last we week it was revealed that South African Rugby Union (SARU) is on the verge of completing a multi-million dollar investment with American sports company Ackerley Partners. Ackerley Sports Group (ASG) are currently negotiating a partnership agreement to invest in South African rugby in a bid they claim will see growth for revenue base of the Springboks and SARU’s commercial activities.
The potential deal, still under negotiation and requiring approval from the 14 member unions, aims to create a Commercial Rights Company (CRC) where the private entity would hold a minority share, leaving SA Rugby as the majority shareholder
CEO of SA Rugby Rian Oberholzer has now addressed the country in no less than an open letter. “As some of you may have read or heard, SA Rugby is in talks with a private equity firm that wants to invest in the future commercial expansion of our sport,” the letter states.
“That talk is not over, and before any deal may be signed, it needs to be approved by all 14 of SA Rugby’s member unions.
However, there has been a lot of conjecture, misinformation, and misinterpretation regarding the intent and realities of such an arrangement. Allow me to correct the information.
“If you take only one thing from this letter, let it be this: The Springboks are not being sold – not now and not ever.
“A corporation will invest in a minority investment in the commercial rights of SA Rugby’s activities in a newly constituted Commercial Rights corporation (CRC) if the private equity agreement is authorized. The primary stake will continue to belong to SA Rugby.
“The CRC shall not be in charge of organizing or choosing any national teams or overseeing any competitions. Its operational workforce will be transferred from the current structures, and it will be based in South Africa. International consultants and expertise will also be added. It will function as the parental organization’s commercial division for SA Rugby.
“What it means in short is that SA Rugby’s commercial activities of selling broadcast and sponsorship rights and running events will continue as before, only in partnership with a company with international experience who believe that our revenues are capable of meaningful increase. This is a good thing.
“That is the “what” is happening, but just as important in answering the question, “why are we doing it”?
“It’s simple: the Springboks are back-to-back world champions, but off the field the financial sustainability of rugby is far from world class.
The sport took extreme measures to survive the COVID pandemic, but we have zero reserves, and a similarly cataclysmic financial disaster would wipe out the sport as we know it in this country.
Comparably, we perform worse in international commercial markets than our contemporaries do, and we have long needed a step change in our company to produce the revenue necessary to keep the Springboks at the top and, among many other things, support our women in winning the World Cup.
We have aggressively sought a partnership with an organization that possesses the platforms, networks, and relationships to boost our commercial value because we are unable to generate that kind of change on our own or from the foot of Africa.
“We think we’ve found possible partners who share similar qualities and will work with us in the CRC, which will exclusively focus on naturally enhancing our brand awareness on the market.
“I hope I have made it clear that this process is not about a quick cash injection; it is about securing the long-rugby in South Africa in the long run financially sustainable so that our international teams can play on an even playing field.
It will give us the funds to invest in plans that will raise our level of performance both on and off the field to that of international best practices, as well as reserves to weather future storms.
“To provide the Springboks (and the rest of rugby) the financial resources to make sure that the concept of a three-peat is not simply a pipe dream, we are forming a new company with a minority stakeholder. We are not selling the Springboks, and we are not giving up any rights.
“We will be stronger together with the right commercial partners.”
