SA Rugby’s intended partnership with Ackerley Sports Group: What you need to know

Following a lengthy investigative and consulting process, SA Rugby intend to go into an equity deal with American investment firm, Ackerley Sports Group, to help secure the rugby body’s financial and commercial future.

Following several information sessions with all of SA Rugby’s members unions, a Special General Meeting is scheduled for Thursday, 17 October, where members will decide whether to approve the investment.

It has been alleged in recent days though that some member unions are not entirely satisfied with the process that has transpired and the overall deal, which leaves the vote on Thursday in trouble of not taking place.

Here is everything you need to know about the proposed deal between SA Rugby and Ackerley Sports Group.

The timeline

• 2018: SA Rugby initiate exploratory discussions with several private equity firms.

• 2019: The SA Rugby General Council, composed of its member unions, authorise the Executive Council to formally begin negotiations with CVC Capital Partners.

• 2020-2021: The impact of the Covid pandemic stalls conversations as the Springboks do not play a home Test in front of fans for two years.

• 2023: Negotiations with CVC continue. SA Rugby ask CVC to improve their post-Covid offer. During this time, several other potential investors express interest.

• 2023: Discussions are held with multiple potential investors but, by year end, only CVC and newcomer Ackerley Sports Group (ASG) remain serious contenders.

• 2023 (December 8): SA Rugby’s member unions unanimously approve Ackerley Sports Group as the preferred bidder following presentations from both entities, which include details on the associated success fees and transaction costs. The members mandate management to present a formal offer to the Council for consideration.

• 2024 (March, May and June): Information sessions are held with all members unions (the provinces), during which all questions are addressed. Additional sessions for smaller groups are planned.

• 2024 (October): Further information sessions are held for members in five separate groups to thoroughly examine the proposal.

Who is Ackerley Sports Group and why them?

The General Council of the South African Rugby Union (Saru) approved a recommendation from its executive committee on 22 December last year to accelerate conversations with ASG about a potential investment in Saru’s commercial rights.

The deal with SA Rugby would see ASG receive a shareholding of up to 20% in a new company holding all commercial rights. The remaining 80% of the shares would be retained by Saru.

The Seattle-based ASG – and its forerunners – have owned all or a part of several professional sports franchises, including Leeds United, the Seattle SuperSonics, the Seattle Storm, the Seattle Seadogs, the Seattle Seawolves, the Coachella Firebirds and the Seattle Kraken over the past 40 years.

What about the Springboks?

According to SA Rugby, the Springboks and all other rugby activities would continue to be managed separately by Saru, without any investor shareholding.

Saru’s activities would be funded by fees paid from the new commercial entity for the licence of the commercial rights into that entity.

Why an equity deal?

SA Rugby have stated that a private equity partnership offers not just an immediate financial boost but also crucially provides the expertise, networks, and resources necessary to enhance the commercial value of South African rugby.

This collaboration can position SA Rugby, the Springboks and, eventually, other teams for greater global prominence.

Who at SA Rugby benefits from such a deal?

SA Rugby have stated clearly no employee, elected official or consultant of SA Rugby will be paid any form of commission, bonus, incentive, finder’s fee or any other form of remuneration on this – or any other – equity deal.

A commission of 15% – including the transactional costs incurred by legal, tax and mergers and acquisitions advisers – is payable to third parties for their professional services and as commission.

Who will decide if the deal goes ahead?

A Special General Council (SGC) meeting of the 14 full member unions (provincial unions) has been scheduled for Thursday, 17 October, at which a formal offer is planned to be presented for consideration.

If the proposal receives a 75 percent majority of the voting membership, it will trigger the conclusion of an agreement for a private equity company to invest into a newly established company to hold the commercial rights of SA Rugby.

The game’s rugby affairs – such as the management, coaching, contracting and selection of all national teams as well as competition management – will continue to be the responsibility of Saru.

The private investors will take up a 20 percent stake in an SA Rugby commercial rights company, which will manage and be responsible for the sponsorship, broadcasting, eventing, branding and licensing aspects of the sport.

What CEO of SA Rugby Rian Oberholzer has to say?

“We are very pleased to have arrived at this point and believe we will be able to table an offer to our members that makes commercial and business sense.

“This is a watershed moment for rugby in South Africa as we attempt to ‘globalise’ the Springbok brand in the way that our peers in New Zealand have.

“Private investment will bring financial security as well as the capital investment and global experience and networks to enhance how we communicate, how we do things and how we interact with our stakeholders.

“Our performances on the field have kept us near or at the front of the pack for several years, but we have been lagging off the field. This is our opportunity to catch up with our peers in that arena as well.”