The founder and CEO of Aspen, Stephen Saad, who also chairs one of SA’s most celebrated rugby teams, the Sharks, is one of those against the deal to sell 20% of SA Rugby Union’s (Saru) commercial rights to a US private equity firm, Ackerley Sports Group (ASG) for next to nothing.
The commercial rights were to be housed in Saru Commercial Rights Company (CRC).
The deal, whose questionable structure was first reported on by Business Day on Monday, faces opposition from the Sharks and the Blue Bulls, the latter owned by both Johann Rupert — the country’s richest man — and Patrice Motsepe.
The strong opposition to the deal by key stakeholders such as Saad, Motsepe and Rupert, along with other influential members of Saru, significantly undermines the likelihood of the deal being approved. Motsepe and Rupert are controlling shareholders in Blue Bulls Rugby Union and Boland Rugby Union.
One of the sticking points the unions have taken umbrage with is the debt-line equity structure of the proposed deal.
On Monday, Business Day revealed the finer details of the deal, which show that ASG’s $75m “investment” in CRC is more like a loan than an outright investment because ASG will have its capital outlay repaid over time, with it retaining its 20% stake.
- READ HERE: The document outlining the proposed deal between Saru and Ackerley Sports Group
“It will have control over decision-making until it has been repaid, while also playing a ‘big brother’ role on Saru’s board. ASG is set to recoup its entire capital investment plus a preferred return of 6%, out of 80% of CRC’s profits. After the repayment period, ASG would continue to earn 20% of CRC’s profits, raising concerns about Saru permanently relinquishing a large portion of potential upside from predictable revenue streams (just prior to an apparent growth phase),” the opposing unions wrote to Saru’s top brass on Monday.
“ASG is reportedly targeting a dollar investment return of over 35%, which represents a highly lucrative deal for ASG and a very costly source of funding for Saru. Raising surplus funds at this cost only to hold ±$40m in a ‘rainy day fund’ raises further questions about the suitability of the proposed deal construct. The valuation metrics of the transaction compare poorly to recent rugby transactions.”
- READ HERE: The letter against the proposed deal, signed by all rugby unions and independent Saru executive committee members.
Remgro CEO Jannie Durand signed on behalf of Boland Rugby and Blue Bulls. The unions asked Saru to postpone the the special general council meeting set for Thursday to vote on the deal, to avoid the “transaction [being] voted down by the Members, creating a public spectacle [that] is not in the interests of Saru or its Members”.
“We, the undersigned member unions and their commercial affiliates (the ‘Members’), are deeply concerned about the proposed Transaction, which is due to be voted on at a Saru special general council meeting to be held on October 17 2024,” reads the letter.
“Based on the available information received to date and the last-minute roadshows only a few days before the general council, we are not supportive of this proposal. Our objections relate to both the substance of the transaction, as well as the process followed to date,” the Members said in the letter.
Would you like to comment on this article?
Sign up (it's quick and free) or sign in now.
Please read our Comment Policy before commenting.