A firm led by former Formula One (F1) boss Eddie Jordan initiated the deal that could see the SA Rugby Union (Saru) giving up control of its commercial assets, including those of back-to-back world champions the Springboks.
Saru, which has been struggling to break even for several years, is in the process of selling a 20% stake in an entity called Saru Commercial Rights Company (CRC) to Ackerley Sports Group (ASG) for $75m (R1.3bn), which will have to be paid back.
Despite being a minority shareholder, ASG will maintain a majority presence on the CRC board while also enjoying strong minority protections.
The CRC will oversee sponsorship, broadcasting, events, branding and licensing related to the sport in the country.
Business Day has it on good authority that the Irish-born Jordan, who owns property in Cape Town, introduced ASG to Saru. This meeting initiated the process of selling Saru’s commercial rights across all levels of the sport.
Saru on Monday said no commission was paid to Jordan’s entity. The organisation declined to disclose the consultancy fees it paid to its controversial former CEO, Jurie Roux, who is one of the consultants involved in the deal.
Court case
A year ago, the Western Cape High Court slammed Roux for his “refusal to take responsibility” when rejecting his request to appeal an order that obliged him to repay R37m in damages to the University of Stellenbosch for unlawful expenditure of funds.
Judge Vincent Saldanha said at the time that Roux had sought to use the appeal process to re-argue legal issues already dealt with in the arbitration proceedings and affirmed in the review judgment.
The arbitrators found Roux unlawfully transferred more than R35m from the unrestricted reserves of the university into four accounts under his control in its rugby club, Maties Rugby. He was found to have engaged in this conduct for several years while employed in the university’s finance department.
Roux left his employment with Saru last year in the “interest of the game”.
The EFF said on Monday that it would take minister of sport, arts & culture Gayton McKenzie to task over the deal, which Saru member unions are set to vote on this week.
“We will also raise the matter with the standing committee on finance as to what regulates the financial transactions of sporting bodies such as Saru, and whether the contemplated sale of the commercial rights of the national rugby team is not in violation of any financial or commercial laws in SA,” the party said. “Of more particular concern is the secrecy regarding where the proceeds of the sale will go, as it seems Saru is a law unto itself and the board is set to pocket massive bonuses and commissions.”
Saru has asked its member unions to sign non-disclosure agreements over the deal, which values its commercial rights at $375m.
However, Business Day on Monday revealed the finer details of the deal, which show ASG’s “investment” in CRC is more like a loan than an outright investment, because ASG will have to be repaid its capital outlay over time, with it retaining its 20% stake. It will have control over decision-making until it has been repaid, while also playing a “big brother” role on Saru’s board.
Saru said no commissions would be paid to its officials. Deal fees and related costs, including commissions, are estimated at 15% of the deal, or $11m. “No commissions/bonuses /incentives ex gratia payments of any kind or description will be received by any officials/executives of SA Rugby,” a Saru spokesperson said.
Saru also said the deal would benefit rugby in the country. “Access to networks and channels on a global scale; creation of a reserve fund (we now have none); and short-term financing. But the first two are the overwhelming principal reasons.”
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