There has been an unexpected development in the battle to acquire a stake into the commercial rights of SA Rugby with the US-based Ackerley Sports Group (ASG) reportedly keen to combine with a South African consortium.
ASG made an initial offer of 75 million (R1.4 billion) for a 20% stake in the governing body’s commercial rights company and when announcing the proposed deal last October SA Rugby chief executive Rian Oberholzer revealed that ASG were chosen as the preferred bidder by SARU’s membership in December 2023.
“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,” he said.
“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.”
ASG’s initial offer rejected by most of the provincial unions
However, ASG’s initial offer was rejected by the majority of South Africa’s provincial unions. For the proposal to be approved a 75% majority had to be achieved in the vote in which 13 member unions took part. As it turned out seven of the unions in question opposed the deal.
That specific deal had one last hope as ASG held an exclusivity period until the end of 2024 when they could have submitted a revised bid. They failed to do that though and no longer have exclusivity in negotiations with the South African Rugby Union (SARU).
Despite that setback, ASG still appear to be eager to invest in SARU’s commercial rights company and according to Netwerk24, a letter from the US-based consortium is doing the rounds which states that: “ASG will, by deepening and expanding its own team, continue to participate in SARU’s process of finding a world-class financial syndicate in the coming month.
“ASG intends to engage with any approved South African consortium going forward, and to work with a professional advisor to ensure that any future plan is effective and takes into account the needs of provincial unions.”
ASG added that it feels its strategic plan should be part of any new proposal to create financial stability for SARU and its members.
South Africa: Private equity deal falls through after failed vote with member unions
ASG’s initial proposal was heavily criticised with critics unhappy about the deal’s financial structure, enormous commissions, and the lack of guaranteed funds.
Ahead of the rejection of that proposal from the provincial unions early in December 2024, two opposing South African consortiums came forward with proposals in which they also expressed interest in investing in the commercial interests of SARU.
The first consortium was from a group of franchise union shareholders. Billionaire Johann Rupert, Marco Masotti and Johan le Roux, who respectively hold controlling interests in the Bulls, Sharks and Stormers, were behind that offer.
Another consortium, Altvest Capital, focuses more on democratising the process and making ordinary South Africans shareholders.
Negative reaction to ASG’s initial proposal
ASG’s initial proposal received negative reaction due to allegations that it was unfavourable to South African rugby.
A marketing document used to attract prospective investors to the consortium revealed that although ASG would only possess a 20% shareholding, they would exercise control over the board of the company in which the commercial rights would be held.
It would have the same number of directors as SARU and would also appoint the “independent chairman” (who would need SARU’s approval).
After plenty of opposition to the initial commission of 15%, that would be payable on the deal, ASG reduced that to 8%. Former Formula One team boss Eddie Jordan’s company, Jordan & Associates, would have been the beneficiary of the commission.
The proposals from the two South African consortiums indicated that no money will be paid to third parties in terms of the offers they intend to make.
Src: Planetrugby.com - https://www.planetrugby.com/news/unexpected-development-from-us-based-company-in-sa-rugbys-private-equity-deal-saga-report
