The SA Rugby Union (Saru) is technically insolvent after reporting its biggest loss in nearly 30 years in the 2024 financial year, the governing body blaming it on the failure to bring in an equity partner. However, a strong start to 2025 has improved the outlook considerably.
The nearly R100m loss in 2024 came after the union’s deal to sell 20% of its commercial rights to US private equity firm Ackerley Sports Group (ASG) for $75m (R1.3bn) fell through when the proposal failed to garner the required 75% support of Saru’s member unions in December.
In his letter to member unions and other stakeholders published in the union’s annual report last week, Saru CEO Rian Oberholzer said the financial pressures confronting SA rugby were mirrored globally and most leading unions continued to report substantial losses.
“The necessity to address short-term financial pressures became an urgent priority in early 2025, prompting decisive action to stabilise the organisation. However, the absence of an equity agreement resulted in SA Rugby reporting its largest financial deficit since professionalisation in 1996 — R95m,” Oberholzer wrote.
“This outcome underscores the considerable investment required to sustain participation in elite international competitions, including the Vodacom United Rugby Championship and the Investec Champions and Challenge cups,” he said.
“The events of 2024 have demanded resilience, agility and strategic foresight, particularly in light of the unexpected pivot away from private equity investment. While challenges remain, SA Rugby is steadfast in its commitment to sustainability, innovation and competitive excellence.”
‘Extremely high bar’
Reflecting on the failed ASG deal, Oberholzer said the union had learnt key lessons. One of these was that achieving the necessary 75% approval threshold was an “extremely high bar”.
He said the underwriting of national rugby operations was an intricate and formidable challenge for private investors and that future negotiations must prioritise “transparency and early alignment with member unions to mitigate commercial and reputational risks”.
Business Day reported on the structure of the ASG deal in October, which raised eyebrows as some elements appeared to favour the private equity partner. In terms of the ASG offer, payment of the $75m would have been staggered, with the first tranche of $35m paid on the parties’ putting pen to paper, and the balance over four years.
However, the capital would have to have been repaid to ASG even though it would have kept perpetual rights to the 20% stake in the Saru Commercial Rights Company. ASG would also have had the upper hand on the board of the entity housing the commercial rights.
The board would have consisted of seven equal voting members (plus certain nonvoting members), including three appointed by Saru and three appointed by ASG.
But an “independent” chair was to be appointed by ASG, giving it an effective majority despite holding a minority stake.
Moreover, ASG’s entry valuation of the SA rights was 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 also retained full control over both the brand and the commercial entity.
The loss reported by Saru in the year under review came despite increased revenue from broadcast rights and sponsorship. The union raked in R852m in revenue, up 16% from the previous year, while income from sponsorships was also up 16% to R488m.
However, operating expenses of R1.87bn consumed total revenues of R1.55bn, and the organisation’s year-end financials reflected a position of technical insolvency, with the carrying value of liabilities exceeding that of assets by R81m.
“Although the year-end accounts reflect a position of technical insolvency, the strong commercial start to 2025 and detailed cash flow projections confirm that the group can continue to operate as a going concern into the foreseeable future,” the union said. “Furthermore, no form of borrowings or third-party funding exists outside of normal trading activities.”
Warned of demise
In December, Saru president Mark Alexander warned MPs of the sport’s demise in SA if its revenue structure was not overhauled and an equity partner found.
“We do not have a reserve fund. Even though our income streams increase, so do our expenses,” Alexander said. “If we do not have a cash investment to at least ensure financial sustainability, if we are hit with a crisis again [such as Covid-19], we are going to face a serious problem,” he said at the time.
Saru has started 2025 on the front foot, with increased revenue from sponsors and a forecast profit of about R100m for the full year. In March, FNB took over from telecom major MTN as the Springboks’ title sponsor.
The national team jersey will sport the FNB logo on the front for the first time next month when the Springboks take on Italy. Pick n Pay has also joined the array of Saru’s sponsors.
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