The SA Rugby Union (Saru) has resolved to investigate allegations that its CEO Rian Oberholzer stood to financially benefit in the R1.3bn bid to buy a stake of the organisation’s commercial rights, including those of back-to-back world champions, the Springboks, to US private equity firm Ackerley Sports Group (ASG).
The deal fell through in December after it failed to garner sufficient support from Saru’s unions who were hostile to the structure of the deal, which essentially handed control of the commercial rights to ASG.
“A governance review by an independent audit firm is being commissioned by SA Rugby to assure stakeholders that governance requirements were adhered to in relation to a proposed equity transaction,” the organisation said.
“The executive council of SA Rugby met on Friday to discuss stakeholder concerns raised by certain media reports around technicalities relating to the transaction.”
News24 reported on Friday that Oberholzer, whose term ends at the end this year, is a sole director in an outfit called Win by One.
Oberholzer was appointed director of Win By One in July last year — a few months before Saru’s general council voted down the ASG bid to acquire a 20% of an outfit to be called Saru Commercial Rights Company (CRC).
The ASG bid was also titled “Win By 1”. The name Win by One comes from the margin the Springboks won by in the lead-up to the 2023 world cup victory, winning the quarter final, semi-final and final by one point.
Saru said Win by One of which Oberholzer is a director of is a special purpose vehicle in which ASG would have acquired its shareholding of the commercial rights from.
“For convenience’s sake that entity was called Win by One (Pty) Ltd. The Win by One LLP company established by ASG is a separate entity in an international jurisdiction in which Saru has no interest,” Saru said.
“The implementation steps of the transaction, should it have been approved, would include the set-up of a commercial entity owned by both shareholders. As part of preparation, Saru set up the special purpose vehicle (SPV), named Win by One, which was 100% owned by Saru as per standard commercial practice.”
“Such entities require the naming of at least one director until the board of the new company would have been constituted. As the accounting officer of SA Rugby, the CEO was automatically named as the sole director of the new company as is business custom and practice.”
Company records seem to back up Saru’s version. Win by One’s registered address is the same as Saru’s headquarters in Tygerberg Park, Cape Town.
Oberholzer, 64, has spent the better part of his life in professional rugby circles. He was tournament director of the 1995 Rugby World Cup and CEO of Saru from 1996 to 2003, before returning to the role in 2023.
He was also the first CEO of Sanzar (SA New Zealand Australia Rugby).
The success fees that were due to be paid over the ASG deal are also set to be investigated.
Saru said provision was made for a maximum of 15% costs towards the equity transaction.
“…An estimate of a maximum of 5% was identified to cover the transactional fees for lawyers, mergers and acquisitions specialists, audit and tax advisers among others. The company that comprised the agents and associates who introduced Saru to the transaction presented the commission structure to Saru,” Saru said.
“It included an agreement reached with the brokers for a success fee of 10% should the deal go through. The success fee was renegotiated to 8% with the brokers before it was presented to the general council. The division of the fee among the parties in the event of success was at their discretion.
“The agreement and fees went through all the necessary approvals and governance structures according to SA Rugby’s policies. As the proposal was not approved no fees have been paid to the brokers. The professional fees incurred by SA Rugby are to be carried by SA Rugby.”
Business Day first reported on the unorthodox structure of the ASG proposal to acquire a 20% stake in the Saru’s commercial rights for $75m (R1.4bn) and gain control over the Springbok commercial rights.
According to ASG’s offer, payment of the $75m would have been staggered, with the first tranche of $35m set to be paid on the parties putting pen to paper, and the rest over four years.
But the capital would have been repaid to ASG, though the private equity firm would have perpetual rights to the 20% stake in CRC.
ASG would have the upper hand on the CRC board, consisting of seven equal voting members (plus certain nonvoting members), including three appointed by Saru, three by ASG, and an independent board chair appointed by ASG.
ASG’s entry valuation of the SA rights is significantly below the $133m US private equity firm Silver Lake paid for a 6% stake in the All Blacks’ commercial rights in 2022. New Zealand Rugby kept full control of the brand and commercial entity.
Hefty success fees were also to be paid with former Formula One boss Eddie Jordan’s company brokering the Saru-ASG deal.
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