The proposed equity deal between SA Rugby and US-based private equity company Ackerley Sports Group (ASG) has suffered another setback after the president of another provincial union has spoken out against it.
According to a Netwerk24 report, South Western Districts (SWD) Rugby Union president Ben Brinkhuis has confirmed that his organisation’s management has decided not to vote in favour of the ASG transaction.
Friday is D-Day for the equity deal to go through as the South African Rugby Union’s (SARU) main council, which consists of the 14 full member unions’ presidents and chief executives, will have to vote on the ASG deal.
Initially, the vote was set to take place on October 17 but that meeting was postponed upon request from the South African government’s Minister of Sport, Arts and Culture, Gayton McKenzie, who wanted to be fully briefed on the ASG proposal.
Plenty of criticism for the ASG proposal
This, after the proposed transaction was heavily criticised with critics unhappy about the deal’s financial structure, enormous commissions, and the lack of guaranteed funds.
10 out of the 13 votes are required from the provincial unions for the deal to be approved.
The financial bailout of $75m (around R1.3bn) from ASG will see them receiving a 20 per cent stake in SARU’s commercial rights company.
Seven provincial unions have expressed their dissatisfaction over the proposed ASG deal and SWD is the latest one to do that.
Group of power brokers to test SA Rugby’s resolve with new equity deal proposal – report
Brinkhuis said the biggest sticking point for SWD is the huge commission – 15 per cent – which must be paid to Formula 1 team owner Eddie Jordan’s Jordan and Associates for putting the deal together.
At the weekend, it was revealed that a group consisting of South Africa’s rugby power brokers have reportedly compiled a counteroffer to rival the ASG one and Brinkhuis said the new proposal gives his union financial guarantees.
Unhappy about commission
“The new transaction provides that no commission is paid. That’s money that can be ploughed back into South African rugby rather than technically giving away 15%,” he told Netwerk24.
On Tuesday, a letter was sent to SARU which outlines general provisions of the alternative transaction which articulates the relevant unions’ opposition.
The counter-proposal also makes provision for bridging financing so that SARU will not have to make smaller payments to unions if the ASG transaction is not voted for immediately.
“For me, it’s about giving some sort of guarantee. Given that the SWD is a small union and it will guarantee us a better income stream, why would we say no to that?” said Brinkhuis.
“We went to see how this affects us as a union and held a meeting of our executive committee. We unanimously decided to support the new proposal.
“We have done contracting (of players) and have staff that need to be paid. Now we have black on white that is guaranteed to us.”
Src: Planetrugby.com - https://www.planetrugby.com/news/sa-rugbys-us-equity-deal-hangs-in-the-balance-as-president-hits-out-ahead-of-crucial-vote
