Mark Alexander confirms SA Rugby search for equity partner to ‘allow the game to grow’
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CAPE TOWN – The South African Rugby Union have again confirmed plans to bring an equity partner on board to boost their finances and assist in growing the sport locally.
In his president’s address at the annual general meeting on Tuesday, Mark Alexander said that following the devastating impact of Covid-19 on the game – which saw SA Rugby creating an austerity plan that shaved off R1.2 billion from its expenses last year – the governing body has to find other sources of income.
And, as chief executive Jurie Roux has said previously, selling a part of SA Rugby’s commercial values to an equity partner is one of the plans.
The Times of London newspaper reported earlier this year that Saru were in discussions with CVC Capital Partners for a 15-20 percent stake. CVC already own shares in the Six Nations, PRO14 and English Premiership, while New Zealand Rugby recently concluded a massive £202 million deal (nearly R4 billion) with Silver Lake for a 12.5 percent stake.
The Six Nations stake of 14.3 percent amounted to £365 million, which equates to a whopping R7.2 billion – and with the Springboks’ standing as the current world champions, they should be able to command a worthy sum of money for any stake.
SA Rugby recorded a R7.9 million loss in their annual financial statements released at the AGM on Tuesday, after no Bok Tests were played in 2020, which resulted in a major drop in broadcast and other revenues.
“In response to the position we find ourselves in, as well as to the changing trends in global sport, SA Rugby is proposing private equity participation in the commercial rights of the organisation for reasons of growth and sustainability,” Alexander wrote in the annual report.
“Outcomes for Saru include:
– Raising a significant amount of external capital to invest in our objectives over the long term;
– Placing Saru in a stronger financial position in the immediate and long term;
– Utilising capital to build and accelerate larger revenue streams for the immediate and longer term, such as digital;
– Providing the capability and financial support that creates leverage in all SA Rugby commercial negotiations with broadcasters, sponsors, and licensing partners;
– Fast-tracking the association of our products with the best brands in the world.
“With this new capital and partnerships, SA Rugby will be positioning itself to commercialise future growth, which will deliver the best international capability in sports media and entertainment (OTT, digital, sponsorships, and licensing), while being strategically, commercially and culturally aligned with Saru.
“Further key features include the ability for Saru to attract and incentivise strong talent, the capacity to provide significant access to capital, and the maximising of our commercial rights with the largest rugby properties in the world – Premier League Rugby, Six Nations, PRO Rugby – by associated bundling.”
Alexander warned, though, that some of the austerity measures will continue into 2021 as the sport is still operating within the Covid-19 pandemic.
The big money-spinner for SA Rugby was supposed to be the upcoming British and Irish Lions tour, but that is dependent on whether government approves their request of allowing fans to fill 50 percent of stadium capacity.
“Irrespective of how we go about dealing with the monthly distribution of funds, the pandemic is not over, and we cannot rule out adjustments later in the year,” Alexander said.
“Let’s remain cautious in our spending. Not only do we need to change our strategy to deal with a new normal, but we also have to change how we manage and administer our business.
“I believe we can improve how we conduct financial affairs, and crucially, how we go about contracting players. As the saying goes, we must cut our coat according to our cloth.
“I urge our members to journey with us as we explore the opportunities of equity investments in our game. In 2020, we saw how pressure on revenue streams can have a profound impact on the business of rugby. It is therefore essential that we establish new revenue streams to allow the game to grow.”