The proposed equity deal between SA Rugby and the US-based private equity firm Ackerley Sports Group (ASG) has encountered another obstacle as a provincial rugby union president has voiced opposition to the transaction.
Ben Brinkhuis, president of the South Western Districts (SWD) Rugby Union, confirmed that his union’s executive committee has decided against supporting the ASG deal. This decision adds to the growing resistance against the proposal ahead of a crucial vote on Friday by the South African Rugby Union’s (SARU) main council. The council, which includes the presidents and chief executives of SARU’s 14 full member unions, must vote on whether to approve the deal.
Delays and Criticism Surrounding the ASG Proposal
The vote, originally scheduled for October 17, was postponed at the request of South Africa’s Minister of Sport, Arts, and Culture, Gayton McKenzie, who sought more information about the proposal. However, the ASG deal has faced significant criticism due to concerns about its financial structure, high commissions, and lack of guaranteed funding.
The proposed transaction involves a $75 million (approximately R1.3 billion) financial injection in exchange for a 20% stake in SARU’s commercial rights company. Approval requires at least 10 out of the 13 votes from the provincial unions.
Despite the potential financial support, the deal has been met with dissatisfaction from seven unions, with SWD becoming the latest to oppose it. Brinkhuis highlighted a key concern: the 15% commission to be paid to Eddie Jordan’s Jordan and Associates, a Formula 1 team owner, for facilitating the deal.
An Alternative Proposal Gains Support
Over the weekend, a group of South African rugby power brokers reportedly presented a counteroffer to challenge the ASG deal. This alternative proposal provides financial guarantees and eliminates the controversial 15% commission, a significant factor for unions like SWD.
Brinkhuis expressed support for the new proposal, emphasizing its advantages for his union. “The new transaction ensures that no commission is paid, which means that money can be reinvested in South African rugby rather than being allocated elsewhere,” he said.
The counteroffer also includes bridging financing, ensuring that SARU can continue its financial commitments to unions without immediately resorting to smaller payments if the ASG proposal is rejected.
Financial Security for Smaller Unions
Brinkhuis explained that the SWD executive committee held a meeting to assess the impact of the proposals on their union. They unanimously agreed to support the alternative deal, which guarantees better income for smaller unions like SWD.
“For us, it’s about having some form of financial certainty,” Brinkhuis stated. “As a smaller union, this proposal ensures a better and more stable income stream. We’ve already made commitments through player contracts and staff salaries, and now we have a clear guarantee in writing to back that up.”
This development underscores the mounting challenges facing the ASG deal as SARU prepares for the decisive vote later this week.